Abstract
Although a main goal of low-bid procurement is to maximize project value, the approach can actually increase project cost and duration if construction document deficiencies are not resolved early on. This study examined in which construction phase (before or after contract execution) contractors discover document deficiencies, when owners learn of and resolve document deficiencies, and how document deficiencies affect project cost and duration. Data from 159 contractors and project owners indicate that 38% of all construction document deficiencies are discovered by the low-bid contractor before the owner has executed the contract. Conversely, owners reported learning of document deficiencies only 19% of the time before contract execution and 81% of the time after contract execution. These findings suggest a delay in communication between contractors and owners, resulting in asymmetrical information - a practice that industry professionals are aware of but that is often not openly discussed. This knowledge motivated contractors to delay reporting the deficiencies until after the contract was awarded. Furthermore, road projects and constructability concerns were found to be significantly associated with increased project costs.
| Original language | English (US) |
|---|---|
| Article number | 04019008 |
| Journal | Journal of Management in Engineering |
| Volume | 35 |
| Issue number | 4 |
| DOIs | |
| State | Published - Jul 1 2019 |
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ASJC Scopus subject areas
- Industrial relations
- Engineering(all)
- Strategy and Management
- Management Science and Operations Research
Cite this
Information Asymmetry on Heavy Civil Projects : Deficiency Identification by Contractors and Owners. / Pesek, Anthony E.; Smithwick, Jake B.; Saseendran, Anusree; Sullivan, Kenneth.
In: Journal of Management in Engineering, Vol. 35, No. 4, 04019008, 01.07.2019.Research output: Contribution to journal › Article
}
TY - JOUR
T1 - Information Asymmetry on Heavy Civil Projects
T2 - Deficiency Identification by Contractors and Owners
AU - Pesek, Anthony E.
AU - Smithwick, Jake B.
AU - Saseendran, Anusree
AU - Sullivan, Kenneth
PY - 2019/7/1
Y1 - 2019/7/1
N2 - Although a main goal of low-bid procurement is to maximize project value, the approach can actually increase project cost and duration if construction document deficiencies are not resolved early on. This study examined in which construction phase (before or after contract execution) contractors discover document deficiencies, when owners learn of and resolve document deficiencies, and how document deficiencies affect project cost and duration. Data from 159 contractors and project owners indicate that 38% of all construction document deficiencies are discovered by the low-bid contractor before the owner has executed the contract. Conversely, owners reported learning of document deficiencies only 19% of the time before contract execution and 81% of the time after contract execution. These findings suggest a delay in communication between contractors and owners, resulting in asymmetrical information - a practice that industry professionals are aware of but that is often not openly discussed. This knowledge motivated contractors to delay reporting the deficiencies until after the contract was awarded. Furthermore, road projects and constructability concerns were found to be significantly associated with increased project costs.
AB - Although a main goal of low-bid procurement is to maximize project value, the approach can actually increase project cost and duration if construction document deficiencies are not resolved early on. This study examined in which construction phase (before or after contract execution) contractors discover document deficiencies, when owners learn of and resolve document deficiencies, and how document deficiencies affect project cost and duration. Data from 159 contractors and project owners indicate that 38% of all construction document deficiencies are discovered by the low-bid contractor before the owner has executed the contract. Conversely, owners reported learning of document deficiencies only 19% of the time before contract execution and 81% of the time after contract execution. These findings suggest a delay in communication between contractors and owners, resulting in asymmetrical information - a practice that industry professionals are aware of but that is often not openly discussed. This knowledge motivated contractors to delay reporting the deficiencies until after the contract was awarded. Furthermore, road projects and constructability concerns were found to be significantly associated with increased project costs.
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U2 - 10.1061/(ASCE)ME.1943-5479.0000694
DO - 10.1061/(ASCE)ME.1943-5479.0000694
M3 - Article
VL - 35
JO - Journal of Management in Engineering - ASCE
JF - Journal of Management in Engineering - ASCE
SN - 0742-597X
IS - 4
M1 - 04019008
ER -