台科大營建系教材，海外工程，Part4

5. Working in the Foreign Land

1) Evolution of International Construction Projects:

(1) Stage 1: Movement of construction resources across the borders

Lack or insufficiency of construction resources in terms of material, working capital, and technologies prompted the host countries to accept foreign construction companies to come within their border. The local collaborators would act as sleeping partners or agents to recruit native labors, purchase bulk material, or approach the authority for more amicable working atmosphere. They may have chances to grow in strengths through the process to take over the projects and even to go outside of their own country following the paths their foreign partners ever experienced.

With the hope that they would finally out beat western contractors in international tenders, the construction companies in newly industrialized country (NIC) worked hard to train professionals, learn advanced technologies, and become apt to handle machines and plants over the years. But they're disappointed and confused now because the execution of construction projects no more stick at pure construction that the appearance of many un-engineering contractual stipulations is in favor with established big companies having strong link with the past.

As the share of cost apportioned to guard capital and accrue more profit become weighty, the values traditionally generated by technology, craftsmanship and labors for construction projects become less important. To work hard as the only way to thwart competitors from the developed economies isn't practical for NIC construction companies. When you're confident for the imminent success and only find rules of the game changed; what will you do? Change for another incarnation to imitate your competitors and wait for another decade to catch up?

Construction projects dealings are based on culture and custom, which includes the know-how of greeting ever evolving capitalism. The Asian NIC constructors will never learn so much, and the established western companies still retain privileges globally as contracts and systems for execution are rooted from their longtime practice.

(2) Stage2: Investment Security Overtrump anything else and in Favor of the Construction Industry Establishment

Requisition of construction resource may still be essential judged from the figures, but its relative share has been lower as none engineering part of cost rises in weight. In 21st Century, the investors don't like to face uncertainty and the professionals, now including commercial experts, know how to present risk free schemes to woo businessment. So the safe return of capital and schemed profit will overtrump anything else, then the concerned party's attention is placed in each phase starting from planning, design, construction, o&m and even marketing of the product as a sacrosanct word "assurance" will tell.

Under the new requirement the companies who know how to protect the juridical right of their investment will be those reputable enough to fascinate bankers, convince the investors and mobilized necessary certification. It's to say the new comers for contracting business will have problems to muster support like above for smooth project completion at least as the promptness is concerned.

It's a wonder that the main contractor today undertaking construction work of a big overseas project doesn’t need to own any construction resource and can have many choices to sub-let whole or part of the works in discretion. He may exercise control and deliver the work effectively similar to what Nike or Adidas have done over jerseys and shoes in the market; under the system the companies in less developed economies will provide labor and skill for substantial part of the works and share limited added values compared to those build up the norm, certify the doer's performance or assist in dispute resolution.

Unlike the capitalists of previous centuries having to plunder colonies or exploit residual value from proletariat for extra profit; the 21st century financier evolves, that they now can secure their capital and retain sufficient return through "possession" and "exchange" instead of creating merit in the course of production. 

This is applicable in the international contracting business where exploitation does exist as the establishment from "North Countries" implicitly holding the power to explain value, quality and acceptability of the project while fledgling constructors from "South Countries" struggle to become their sub-contractors.

2) Distribution of Added Value under the New Construction Market Order:

(1) "Labor" was most important element in forming a producing system, capitalist wanted to exploited it for maximum profit. For construction industry then came machine as it would be supposed to replace lot of human efforts in production. Engineering professionals would be vital in construction as to decide the performance of labor and machines and their surplus value; to certain extent the engineer is the "establishment".

But under the modern day project management system, bankers, notaries, law firms, inspectors, laboratories, certifiers, appraisers, unions, arbitrators and those who will assure the project be successful and such can hold positions and charge their cost relatively easy. It's no choice that the endorsement they offer is required to court moneymen will dominate the projects while the actual doers reduced to their subordinate.

(2) The redistribution of added values between technical and commercial professionals is possible because renowned international banks or institutions will seek opportunity to get involved in construction projects for possibility to offer financing arrangement.  The governments around the world, the ventures collecting toll or making profit from franchise always welcomes  loans. The "establishment", normally construction companies in western countries, are known to and more trusted by the banks or investment funds, so they can reach agreement with each other forming ventures for the projects.

The banks or investment funds may always prescribe, and it's not difficult for the western establishment to respond, that they will add specifications, standards, and contract terms familiar with into construction plans; inadvertently strengthen their positions in the projects, which, many NIC companies will feel not accustomed, and are actually excluded from competition.

Though, the contractors from "South Countries" will be assigned to do the real work but only under the established contractors from the "North Countries". It's a crucial fact tat the overhead and profit obtained from the drudgery work is limited and the risk tremendous; over long time or after many contracts that the best of NIC contrators going abroad can only get mere survival.

(also see
 http://mtkaoforum31.blogspot.com/2020/05/blog-post_24.html  
in this blog)

3) Chances for Taiwanese Construction Industry to go for Overseas Market

(1) Possibility exists that a NIC contractor like the one from Taiwan may be able to join the club of international contractors offering conditions allow them to share high added value in overseas projects, however, they have to bring loans at least for their part and still they need assistance from established company or face more uncertainty throughout the process.

Usually the loans offered for foreign construction projects must be earmarked with the commitment from the local government to guarantee safe return of the loans; this tends to be a little difficult when diplomatic relationship not existed between the governments.

Should Taiwanese contractors or engineering firms not able to offer loans are willing to work as the subcontractors of international joint ventures, they need to prove they will be able to save money, keep quality and speed up the progress for main contractors. And it means they have to contend with other NIC contractors or even the local ones of third world for playing secondary role.

(2) It must be admitted that to play the role of constructors in strange country, Taiwanese company cannot be as efficient as the natives to organize local labor force or purchase cheap material. Money is also something that the contractors from developing economics no more feel they are short of. 

Taiwanese contractors may be slightly better off in competition with locals, for their technology and experience in certain projects are good, but it's diminishing.

The sub-contracting system in Taiwanese construction industry is a problem that the resources are thinly distributed among many sub-contractors and leasers. Market is highly fragmented that the main-contractors owns no resource except limited number of engineers, and when they need to work abroad they don't have anything to move out: professionals or skill labors, forgetting about permits and licenses required to work in alien land.

So it seems like that only consulting companies can go to take meager amount of overseas design contract as much of planning and design works can be done remotely in Taiwan.

Of course, the engineering works done must conform with standards and norms such as BS, DIN, or JIS wanted by main contractors and not CNS or American codes usually followed in Taiwan. 

Supervision will be another challenge because the owner or international main contractor wouldn't pay as much of Taiwanese expatriate will cost. So it requires that a competent local partner's collaboration.

The purpose to work in overseas countries shall be reviewed. Will the business expanded to cover foreign countries allow to fetch overheads, profits or service charges as required? Or will it increase the sales of home country made product, construction plants or permanent equipment indirectly? 

The calculation can be simple and only to become meaningful when contract amount become significant. 

4). Adjustment Imperative for Company System and Policy

(1) Consideration shall be given to the overseas allowance, vocation, compensation for tax incurred in foreign country, care of spouse and education of children for the expatriate sent to foreign land in addition to their regular salary and bonus in home country.

(2) People sent to foreign land will face challenges and can very likely be working in desolated situation; and only elite of each discipline shall be assigned to solve the quandaries.

However, two problems always appear in a company undertaking overseas works: 1. sectionalism exists in the concerned departments, chiefs tend to send less qualified people;  2. After distinguished performance in overseas projects, many expatriates coming back home only to find out "good" positions having been occupied by people of inferred capability.

There must be a fair policy and under it a mature personnel management system covering domestic and overseas projects. The chief of department must be a stakeholder for success or failure of the projects the company undertaken.

(3) The percentage of overseas sale amount may be just a few related to total company revenue, but efforts to spent for operation in different country, such as accounting, tax report, currency exchange, law and rules abiding, local standards and codes compliance, contractual administration, procurement, and financing arrangement can be great in headquarter. 

The prejudice that the supporting team of the Company usually has had is the reluctance to pay un-proportional attention to the meager sales amount in single different country.

There's problem other than huge cost spent for scant contract amount: the branch or project managers of overseas contracts may not have the knowledge or authority to recruit right  and sufficient local assistance. Unavoidable the suffering becomes deplorable at last; again to drag down the momentum to pursue the overseas business.

(4) The exploration and subsequent operation of overseas construction market call for the company to provide money, know-how, credited work experience and ready to deploy talented people for whatever the projects undertaken; but ironically big company and their follow managers only to think of overseas business at times when they feel jobs in hands aren't enough.

It takes time to obtain a contract, and the resources shall be paid out at any moment. Therefore the company to develop overseas work shall be big enough to dedicate for what they will have in hands given the short mobilization time. People have to realize the contracting business will not come only to fit your schedule.

The construction companies in Taiwan long suffered from overdue subcontracting system and resulted market fragmentation. The cruel fact is they don't have sufficient resource to go foreign land. 

Sometimes only sole determination of the strategy makers of a company to go for abroad could be tragic. 

5). Assignment of People to Run Overseas Works.

(1) In different countries, traditions, work conditions, and market competition are not the same; so people to be assigned for business can be unique. In general, personality of a representative is more important than his education; cultural adaptability than language, and impulsive energy than professional experience. 

There're political and diplomatic handicap Taiwanese people working overseas will have had; and under the circumstance maybe people of special trait will be able to do something unusual to overcome the difficult. 

(2) It take time to get the jobs, especially the good ones. Patience shall be the highest virtue for chief of concerned departments, end even the company head, to evaluate the performance of business people. It means that, for example, the annual assessment given to the overseas representatives shall not be translated into demands to force those evaluated to sign contracts whatever he has chances to sign.

For the same consideration that the people in headquarter shall not be hasten to recall representative(s) from foreign branches or even delete them after not getting satisfactory business and profit.

6). Mental Readiness for Construction Companies to undertake Overseas Business

(1) Before going for specific project, the Company must make sure it will have people experienced enough to go for the project; or it will have fair chances to recruit qualified people from the industry.

(2) The company management shall be knowledgeable for overseas projects operation; and is willing and passionate to develop business prospect in foreign lands. It is better that the decision makers will have overseas experiences themselves.

(3) The company employees realize the need to develop overseas business as only means to extend market and enhance technology; and the people are willing to adjust themselves to reinforce expertise, learn foreign language and change work attitude for overseas projects.  

They understand any domestically market protection is temporary, and only the industry essentially strong and internationalized, are their life long professional guarantees.

(4) For operation in strange country, the company management mentality shall be open. But it's easy saying than doing; the feeling of superiority toward the locals are hard to fend off and remains qualm of Taiwanese management. 

Anyway, an idealistic team shall be consist of agent, sponsors and partners through the intimate cooperation of local employees.

A capable and trustworthy agent or sponsor will obtain in time information, establish the links with authority, and acquire competitive local resource for the Company. Above all, they shouldn't sacrifice the Company for slim benifit to continue the agentship for minimal commissions.

In almost all the countries, the implementation of the projects, engineering or construction, require minimum participation of the local partner(s); a good one will offer the assistance to reduce the cost, solve licensing and authoritative problems, and truly to share the financial overburdens resulted from the unbalanced payment schedule.

The employment of locals, especially, in the branch office for business pursuance and project supporting is vital; the salary and promotion must be better than local market practice to ensure loyalty and reliability of the natives.

As people from Taiwan in strict sense will only work as passerby ultimately, trust and confidence must be rendered to the locals as they're there maybe forever. Even slight discrimination will be incubated and turn out to become source of disloyalty and misconducted behavior in the future.

And for a system that must be built on fraternity and egalitarianism, the decision makers in far-flung headquarter must have responsibility too.

7) License, Registration, Special Permit for Foreign Contractor.

(1) For ownership on land, housing and factory.

(2) For business operation to sign the contract

(3) To import the machine, permanent equipment and material

(4) To hire local engineers of required qualification and numbers

8) Acknowledge of difference and handicaps:

(1) Handicap in language.

(2) Difference in cultural perception.

(3) Difference in applicable code and standard.

(4) Difference in executing safety and environmental protection rules

(5) Difference in Tax code application and interpretation.

(6) Difference in labor management.

(7) Hindrance or inconvenience caused by entry visa and work permits for expatriates.

9) Unmanageable Risks:

(1) Politic risks (regime change, war, commotion, nationalization, sanctions,    embargo)

(2) Exchange and currency risks

(3) Economic risks (inflation, interference in manufacture and transportation system)

(4) Natural disasters (flood, typhoon, earthquakes, avalanches)

(5) Legal risks (change of law, unpredictable adjudication)

(6) Cultural Risks-incoherent mental and behavioral model between host country people and foreign contractor.

10) Manageable Risks (with care and monetary provision):

(1) Construction schedule and completion date.

(2) In time delivery of construction material and equipment both in quality and quantity.

(3) Contractual risks

(4) Safety and security of expatriates (persons, property, accidents).

(5) Free flow of capital.

6. Conclusions:

1) Design and construction technologies are prone to natural science while marketing and management of construction companies closer to culture science. An engineer blurs the division line of both and eager to explore more humanities within the business will have more successful career.

2) As modern construction projects take more trades, disciplines and resources for its more complicated feature. The participants are imposed more risks by more demanding clients; only the construction companies with reasonable scale will survive and thrive facing demanding clients. Under the circumstance, the young talent have better to choose more sizable company for a brighter future. It's an international trend.

"After Pikkety" 這本書，討論了Thomas Pikkety「21世紀資本論」所指出的資本在放任自由主義下無節制發展，造成更嚴重不平等現象；套在營建業上，也顯示出資本先進國家與後進國家營建業不平等的分工與酬報關係。回想本人2016四月在土水雙月刊所寫的文章「從新自由主義全球化時代的國際工程市場看台灣營建產業」，對國際資本的強大宰制力量，真是感慨萬千。以下是本人2016年文章的摘要：

※早期的國際工程只是技術、機械、熟練施工團隊，在不同國家中的移動：

開發中國家開始其基礎工程建設時，多依賴密集勞務，本土化的特質非常濃厚；但當經濟進一步發展，基礎建設的規模與複雜程度越來越高，資本與工程技術的引進變得必要。在這個階段，其他國家的工程業者有能力填補當地工程產業資本、技術之不足者，就有機會進入該國承包工程；早期我國公、民營業者就是憑藉提供相對成熟的施工技術以及優質的藍、白領勞務，與當地的廠商互補合作，在中東、東南亞營建市場，承攬相當額度的工程。

※全球化時代的國際工程，資本及其法權維護者的參與成為關鍵，專業、技術、勞務的價值被壓低，先進國家廠商更容易掌握主導權：

但到了二十一世紀初的現在，因業主的觀念漸漸調整為不容許工程完工出現任何變數，再加上主流國際工程廠商、金融資本家與其追隨者的推波助瀾，工程投標資格門檻越高，履約條件越來越嚴酷，出資者與融資者們除了要求主承包商須具備足夠的履約資歷，與強大的財務能力；在投標、承攬過程的每一個階段都要求承包者就工程的進度、設計及施工圖說、各項性質付款的情形、施工機具的配備、勞工事務、材料與施工的品質、主要設備的性能、安衛設施與災變管理計畫、工程款的請領支付、法律事務的遵守、合約義務的履行等等，提出詳細嚴謹的計劃、承諾、具結、保證、證明、簽證、驗證、報告等；而要提供的這些資訊，除了承包商本身在其工作組織中要延攬足夠的優秀人才，確實的去執行，承包商也要得到同樣是跨國經營，有「品牌」的金融、保險、法務、顧問、評鑑、公證等組織或企業對其的認同與支持，才能在瞬息萬變的履約形勢中得到及時與足夠分量的背書。

這種合約管理手段非常複雜，而且成本很高，但已變成主流國際工程執行過程所不可或缺，尤其再加上PFI、統包、代操作等新合約形式的出現，資本與其法權維護者的重要性提高；也因此，工程技術及勞務的重要性在這種體制下被無情的壓低，所能分配到的資源相對減少。換句話說，一個以工程師為主體，重視技術甚於一切，卻無法證明其能如期、如質、不帶給業主或出資者風險，而能順利完工的承包商，是很難在今日的主流國際工程合約中擔任主導的角色。反過來說，藉著建立這種通常是排他性、甚至有些俱樂部性質的關係，相互進行微妙的價值交換，主流國際工程廠商已成功的拉開與新興國家工程公司的競爭距離；這使得他們能於相對貧窮的「南方」國家經營環境中，建立、佔有一個類似於在他們「北方先進經濟體」母國中的工程分工體系。諷刺的是，如此運作所分配到的高額附加價值，除了能支撐其龐大的公司管理費用與利潤外，還能讓他們用來築高競爭壁壘，進一步排除無法融入先進經濟體商業體系的非西方國家工程公司。

※全球化時代，資本主義直接藉「佔有」與「交換」，不必「創造」附加價值，即能取得利益，在工程產業亦然。

我們如果以更宏觀，甚至超越工程產業的角度來觀察這種發展趨勢，就知道在新自由主義全球化時代下，這種藉占有商業、金融建制(establishment)，進而對交易安全、工程品質、建造流程等掌握了解釋權，從而達成實質壟斷的演變是幾乎是無法反抗的，因為它是資本主義發展到現在廿一世紀，以佔有價值(value captured)代替附加價值(value added)，作為較「文明」剝削手段的一種結果。雖然反抗這種體制的人士，認為在它之下所生產出來的一大堆文書圖表，僅能服務資本，在工程上並沒有任何的「附加價值」，但對之卻莫可奈何；因為它所「榨取」的價值，是經由交換所成功佔有整個經濟體的價值之分額，正如銀行並未生產價值，卻大量佔有價值。

我們回頭看，資本主義的第一個階段，資本家藉著增加工時，剝削勞動者，以增加剩餘絕對價值；到了資本得以掌控生產過程的第二階段，即經由改良技術，如生產的機械化，從而減少工人的工時，製造出過剩的勞工，降低勞動的價值，以增加剩餘絕對價值。但到了普世擁抱新(放任)自由主義的現在，資本與勞動的關係成為全球套利的性質，先進經濟體領先企業已不再從事許多行業及商品的生產，而得以「占有」的手段，降低現由其「南方」國家合作夥伴承擔的技術及勞動的重要性，相對的增加其所掌控部分的剩餘價值；這種「占有」的手段除了一般所說控制與支配金融資本的能力，就國際工程競爭而言，包括各種規範標準的建立及其驗證與解釋權力、ISO或類似國際標準的認證、合約語言、適用法律與爭議處理機制等遊戲規則，都是由先進經濟體依其既有的體制運作情形而制定。

※國人傳統上鄙視商業，不承認「無形」的價值，反映在對公共工程的成見；但資本主義商業習慣裡的尊重專業，正視風險卻是產業要正常，社會要進步所不可缺的：

當然有許多人會以「純產品學說」的觀點認為財富的來源應該是生產而不是流通，鄙視這種不以物質的創造和量的增加作為財富生產的手段，因而指控西方先進經濟體藉著創造這類軟性的資產階級法權，去鞏固他們在新(放任)自由主義經濟下優勢地位，是一種看似優雅，但卻是殘忍，嚴重的剝削。但烏雲仍有銀鑲邊，至少它內含的法治與平權觀念，足可提供台灣許多人，尤其是業主及其監審機關工程採購及管理的參考，包括：信任專業人員，允許他們就個案有解釋及裁量的空間，而非為管理目的，依勉強建立之統一標準由非專業人員決定承包商的生死；認事用法，斟酌情節比例，而非不分鉅細，一體適用；處於合約或管理層面優位一方對權力行使，多少有所節制，而非對弱勢者予取予求，無限上綱；追究錯誤之發生，會適度區別個人與群體，行為與政策之差異，不會誤認連坐、互質之惡法，因為容許他們將對手趕盡殺絕，所以是最有效的管理手段；尊重市場機制，允許廠商在自行負責及不增加業主風險下，自行決定合約範圍內之商業行為，而非只為管理方便，變相限制廠商執行合約自由度。凡此種種，似乎也說明資本主義的發展，因它順著人性的好惡，所以可以所向披靡，也因為是這樣，與它的對抗雖然可是正義浩然，但終究無法持久？

※台灣工程公司到海外的自我定位：替代主流國際廠商與當地公司合作，或與當地公司競爭技術、勞務提供者的角色？

依現況，台灣的工程公司到國際上去，是很難進入「建制」，與「先進經濟體領先公司」分庭抗禮的；退而求其次，去作他們的部分工程下包，或投標純屬施工的案件，也許可行，但仍然有兩個需要跨越的障礙：(一)、如前所述，在業主及出資、授信者的利益需得到萬全保障的思維下，承造單位事無鉅細，任何時段都要向監造、監理、業主與融資單位代表提供各種報告及文件，證明工程品質及進度萬無一失，各項合約規定已為承包商嚴守。要「應付」這樣的工程管理要求，必需要動用許多第一流的人才。然而現階段台灣的工程管理制度，無論公、私工程還只是注重絕對的技術及施工效率，並沒有付出高價錢，換取零品質瑕疵、零風險的概念。公共工程固然在文件及程序上有類似的要求，但卻不去編列相對的預算支付要做這些工作所需高級人才的費用，所以不論是包商或工程師，實質上沒有「練兵」的機會，一旦參與國際工程競爭，找不到足堪大任的人才。 (二)、台灣的工程公司若只能提供技術、勞務與單純的工作資本，在異境他鄉是否能競爭得過當地或其他發展中國家，具同樣條件的工程公司？「先進經濟體領先公司」承攬國際工程，其與發展中國家的工程公司在分工與資源提供上，會有互補的作用，但其為了要獲取高附加價值，壓低技術、勞務的重要性，是必要的手段。台灣的工程公司如果無法經由成功的「卡位」，努力擠進「先進經濟體領先公司」的行列，爭取國際工程分工體系中高附加價值的部分，只與「南方」國家競爭「低附加價值」的營建工作，是沒有意義的。

※工程業不能在國內因為制度和競爭，只能擺路邊攤；但到國外卻要開「米其林」認證的餐廳，搞不同的一套：

如果以餐飲業作比較，這種為國際工程及其他產業廣為接受，由保護顧客利益出發，任何階段不容出任何差錯的觀念，從食材開始，就要有來源證明、檢驗報告或認證標章，甚至必須是指定的品牌食品供應商；廚師與服務人員要經過訓練，必須有證照，最好要有受獎或有在頂尖如米其林餐廳的服務記錄；餐廳的面積、出入、裝潢、設備、油煙、電力等要通得過嚴格的消防及衛生檢查；付出高成本後，取得有型的合法執照，還要買保險來防止食物中毒或是其他意外。在傳統的業者來說，這些措施很多都是沒必要的，他們認為只要煮得出客人願意接受的美食，最低廉的價格，十、百、千年來餐飲業就是這樣的經營，要花那麼多時間、精神與費用，去讓顧客相信上的雞肉不會是鴨肉，侍者倒酒一定不會濺出酒杯等等，簡直匪夷所思。但在全球化經濟創造出許多經濟繁榮受益者的現在，這種對顧客提供美味食品與用餐環境的舒服感覺，卻已為期盼生活上流化(gentrification)的人們所喜愛，漸漸的在市場上占了一定的份量，這些餐廳的訂價與傳統的路邊攤的差異，並不完全是利潤，而是高附加價值，可能以高房租或房價的形式「滴漏」到房地產業者，可能以高價消防器材，或高價裝潢的型式「滴漏」到相關的業者，所以在有些國家，這不只是市場區隔而已，在文明必須進步、經濟必須升級的壓力下，執法者更要去取締傳統業者，如發生在香港的魚蛋革命。

當然，台灣的營建業如攤販或小飯店一直是在作低附加價值的代工，注重的是價廉(效率)、美食(技術)，因為消費者(政府及社會大眾)長期以來是這樣的要求，業者滿足於國內市場，也不必怕外來的競爭。但現在社會大眾除了對價錢沒有意見，好像對工程的品質、內容很有意見，業者也被開導必須向外拓展海外市場，不能依靠已顯現飽和、停滯的國內市場。所以營造業的問題是到國外開高級餐廳，與國際米其林認證的餐廳爭奇鬥艷？還是以價廉物美的台灣風味為號召，到各地方的大排檔與當地的小吃業一決雌雄？但不管怎樣，你在國內習慣什麼經營方式，有什麼規模，到國外不要差太多，才有成功的機會。但簡單的生意經告訴我們，遠渡重洋去作低附加價值的生意，會很辛苦，如同全世界的中國餐廳訂價都是低檔，一定要想辦法與有品牌，意即已「占有」市場的國際企業競爭有附加價值的生意，如米其林餐廳，才値得出去。所以台灣的工程制度與國際工程制度的差別如果越小，我們的學習曲線越短，繳的學費會越少。所以我們可以花一些工夫，從歷史上與工程性質上檢驗這種差別有多大，可不可能，或如何藉由大家的努力來把它縮小。

在台科大營建系對包括外籍生在內學生的教材綱要，Part3

Curriculum for Lectures in Construction Department of NTUSC University in Taipei, Part3

D. Features of Construction Industry explained in 5M:


1). Man:



(1) Power to drive Individuals and Organizations to achieve Business Goal



Man loves power, unlike animal’s content with existence and reproduction; human desires are essentially boundless and incapable of complete satisfaction.



A large proportion of the human race is obliged to work so hard in obtaining necessaries that little energy is left over for other purposes; but those whose livelihood is assured do not cease to be active, they look to power and glory. So young people start to drift in the world will wonder why the needs of obtaining the two become imperative for those have something.



The easiest way to obtain glory is to obtain power; this is especially the case as regards the men who are active in relation to public events. The desire for glory, prompts the same actions by the desire for power, and the two motives may be regarded as one.



Power exhibits in many forms, such as wealth, civil authority, and influence on opinion. No one of these can be regarded as subordinate to any other, and there is no one form from which the others are derivative.



Among the phenomena featuring construction industry, "Man" is most  relevant.  Because people can't be alone to work out big and complicated structure and buildings, they have to be molded into "organizations", to synchronize different expertise and sized up strength, then are capable of serving the society as a meaningful member of construction industry.



To make them functional and contributive, organizations need to be given goals, compatible resource, and rules for participants accepting rewards and punishments as inducements. So there must be leader, hierarchy, and systems in an organization; it means the engineers won't be immune from influence of power maneuver, which an innocent engineering debutant may hesitate to touch.



However, in an organization where technology and experience are regarded as highly important, naked power manifested on the leader assigned not with assent of the members but through investment, heritance or tradition will have to share power with  doyens of superior skill and knowledges. It's the same that commercial people also will get their part of power apportioning when profitability is major concern. So when the organizations become big and complicated, power from creeds and over opinions of public will be another origin. As a result the leaders or candidates for them will be restrained for the power, and the organizations' behavior will have to be institutionalized.



So the entire system become more business-oriented at least in this part of capitalist world because we are sure that any organization, be public or private, shall perform according to the principle of utilitarianism that worth taxpayer, shareholders or expert's trust.



Although it takes on different guises from person to person, there's possibility that the leaders may pursue and profit from enacting their own agenda using their naked and traditional power, and it won't be conflicting that the follow employees who gains nothing will be cooperative as they seem to gain vicariously from the superficial achievements of the leaders.



It's fact that "genuinely cooperative enterprise" often appeared in Asian countries where "power distance" can be big between each layer of management and the young startups are always taught only to listen and learn. But the deliberation of power in an engineering organization will affect its benefit, loss, even survival. On the other hand, individuals always humbly don't like to touch non-technical issues and think by so they can be shielded from power manipulation of imperious person. So people shall care about the leadership and history of organizations he wants to join and make judgement whether or not it's an organization worth fighting with. 



But it has to be noted, as organizations differ in size and type, though common to them all is the tendency for inequality of power to increase as membership increases. It's a confusion to to young people who may have justice and fraternity in mind and consider big company management rogue.



The general effect of an organization, is either to increase the well-being of persons, or to aid the survival of the organization itself, apart from those resulting from governmental self-preservation.



(2) Managerial cadre, Professional, Occupational.



A successful engineering company requires good balance between managers, professionals and occupational. But the balance could only be achieved when number and quality of the "man" employed are met operational requirement.



Among all, loyalties to the company or the boss personally in an industry where small entrepreneurs are everywhere, are most important. It means steady employment that the "man" can be recruited and assigned to work places for required period under reasonable conditions. Qualification to fit the jobs is basic, and more than that, the hired must be trusted for many inter-person deeds happened in construction industry.



In Taiwan, there're 2,845 Class A Contractors, 1243 Class B Contractors, 7,057 Class C Contractors, and 547 Specialty Contractors toward the end of 2019. At the same time no less number of Consulting Firms, Architects and independent PE Offices have bee registered. That it means thousands post of which qualification levels equal to general managers, managers and senior engineers are wanted in the industry. The side effects under the circumstance can be that the construction companies or consultants cannot hire managers or engineers experienced enough for their positions; and people also don't have opportunities to learn management or technical skills in their career.



So market fragmentation is ensured as many small companies in the industry struggle for survival. But people still cherish their titles such as vice presidents or directors of the companies even the jobs require them to do works of more occupational content than professional ones.



The situation further worsens when impatient authority tried to introduce project management system supposed compatible with international practice. The problem is unless there is an overhaul in construction related companies to stop the vicious cycle of professionalism tumbling, make it plain, the decimation of underperformed companies following the restructure of enduring ones should be required first to transform the disciplines, grade, and initiative of engineers, and then proceed to neat, clean and efficient 21st century construction.



(3) Disciplines, expertise, project based management, functional department oriented management.



As it evolves, emergence of the subcontractors to undertake the field work in lieu of the main contractor becomes a trend seeming irreversible. And when competition goes further, many of the main contractors withdraw to the point that they don't keep sufficient engineers to stay in lowest notch of expertise. The educated retained by the companies won't divide the works in line with disciplines, levels and grades truly demanded by the complicated system.



The recent project management system imposed by government to supervise public work has intention originally to assign more engineers for different discipline of work so as to developed expertise over the course. But the companies cannot follow the system because careful and elaborated division of works require more engineers to fit the jobs thus weaken related parties' competence if strictly enforced.  Also It's a fact that there're more than10, 000 constructors, consultants and architects existing in a small market, making the recruitment seems difficult if not impossible.



To say it more candidly, most of the young engineers cannot learn proper construction knowledge throughout their careers because they're "generalist" under current practice. The problems come from, first, people are allured by the positions that a small organizations will give in their earlier days; and second they're more than willing to stay near their hometown or municipality causing perfect match with highly localized companies who never hear of functional department oriented management.



The conventional diplomatism accepted by general public recognizes people's ability and even expertise through examination compels the authority to make compromise in every occasion they should look into the true curriculum of job candidate. When bureaucrats waive their power to judge the adequacy of proposed project staff, they turn in all the tools and weapon that can safeguard the quality and progress of the projects.



Only a few companies in Taiwan have fortune to expand their organization into big, and sophisticated matrix structure, in which both project based and functional department oriented management co-existed and supposed to support each other.



As we show above, many entrepreneur led companies with limited business volume have to adopt project based management, of which, the practice is to assign people to site offices meeting minimum client's requirement. The site offices are presumed to gain technical and management backup from specialty engineers based in head offices, however, it couldn't be done as competition decimates knowledgeable veterans in the company.



Consequently, people are reduced only to work on projects of which the design and construction are general and routine because they don't hold engineers with know-how of posh nature because it only can be nurtured on an exclusive basis; and in reality, their employer has to be afford to establish a matrix organization embracing both project base and functional department oriented system.



(4) Personal and organizational behaviors, coordination and communication under high or low context culture.



Personal behaviors are different from person to person, also for different time for the same person. When they form an organization, it behaves always as a person but sometimes will have different faces. It depends on the leaders much; especially the way he handles coordination and communication in sizable companies.



Organization mainly consist of engineers can be stiff and fastidious in giving orders and implementing them. People with more liberal or creative thought may not appreciate.  To certain extent, it has to be like that to avoid mistake happening and push things forward. However, coordination and communication are always problematic especially in a big company with byzantine structure. It's also partly the reason that the old style boss wants their company to stick to more traditional organization. 



When organization is small, cultures can be defined as "high context', more inclined toward relational and collectivist. Message can be spread effectively aiding by gestures, relations, body language, verbal messages, or non-verbal messages between individuals.



But when organization grow big, communication shall be more explicit, direct, and elaborate; because under the circumstance the individuals are not expected to have knowledge of each other's histories or background, and communication can't be shaped by long-standing relationships between speakers, they depend more on the words being spoken rather than on the interpretation of more subtle or unspoken cues. In such case, the organizations need low context culture.



"High" and "low" context cultures typically refer to language groups, nationalities, or regional communities. However, they have also been applied to corporations, professions and other cultural groups. Though not all individuals in a culture can be defined by cultural stereotypes, it can roughly classify:



-When we're in elementary school, classmates and teacher fixed in the same classroom all day will know more each other, it's high context; and in university, people come and go, with professors and classmates the communication is made in lower context.



-In smallest companies, boss know every employees, give orders and evaluate performance themselves, it's high context; in big companies, departments and levels are many, between them the communication needs to be made in meetings with minutes or written mails, power must be delegated and the bosses reduced to figurehead.



-The lawyers and accountants talk and writes to identify the truth must be precise in words and numbers, they're of the lower context; the engineers and businessman next, while the farmers deal with the same lands and climates for life can be higher context.



-In nations or societies where harmony and the well-being of the group is preferred over individual achievement, higher context cultures can be more prevailing in Asian countries, that many of them subsistent on peasantry economy historically. While European and North American countries long developed their industry, the culture can be lower context.



People grow up in different context of culture will have distinct response toward the organization which he is hired; however, he can judge how or whether he has to change himself in behavior if he knows more about the cultural group the organization belong to; people will have flexibility for change when he is young.



(5) Labor laws, quality, incentives, unions, big bosses.



Working at site as construction people or supervisors will have to follow the weather instead of the calendar for their agenda. There's considerable improvement on the aspect as labor law and regulation interfere for the employed; but the employer especially the big companies may not be able to observe to the law completely. It's also one of the reasons that sub-contractors and work gangs are introduced to the project for execution as they may be more "flexible' to follow the law.



More than law abiding for overtime assignment, smaller company in Taiwan can pay corporation tax in deemed amount in exchange of lax scrutiny into their books. It means sometimes they can neglect or under report their employees' personal tax, retire fund or health care premium. And beyond money evaded, they can be freer to recruit employees especially for blue collar people that many of them illegal foreign labors.



A well-organized company in construction industry will consider laws amended in favor of employees are draconian to them, and tend to be meticulous toward recruitment even for white collar professionals. So when construction or design companies finally have to rely on dispatched people to fulfill minimum contract requirement, they actually leave the responsibility to lay off people to manpower dispatch agencies; which is sort of surrender, and the departure to the professionalism.



Professionals also have their problem to fully develop their expertise; first people are lack of patient and demand titles and income, or withdraw to the situation allowing them stay near municipality or hometown and in many cases they need to share with spouse for family chores and thus only work on regular hours.  When those to be hired demand something for nothing and the employers have to do something to counter and that the easiest way could be to sacrifice the work quality, which usually is propped by professionals.



Fortunately in Taiwan, union, or engineer's' association aren't so active; the management won't be much teased in the interaction with their own employees, or those of subcontractors and any third party. Furthermore, for an industry notorious for its connections with mafia or packs leaders, the annoyance weren't be so buzzing thanks to the more complete and strictly enforced law for past two decades.



Taiwanese engineers’ received fair education since young and the general public won't put up with downright corruption, so the professionals should have decent chance to claim their dominance on the realm with patience and time.



2) Machine



(1) Prototype, bespoke; portable, fixed.



All the major players of construction industry need to know machine, plant and equipment to do construction works, for their type, cost and productivity. The general contractors used to own machines, in the days they're expensive relative to human cost.



When countries start to build infrastructures, they need to move earth, lift heavy weight and paving concrete and asphalt. There're machines typical to do these jobs and should be in prototypes: bulldozers, cranes, graders, trucks, mixing plants for concrete and asphalt, paving machines, compactors, or various working boats etc.. The works were big and many, so they design the machine in different capacity for the same function; they rolled out of equipment assembly plants like Caterpillar, Komatzu, Liebherr and Peri, in big numbers.



As construction become more sophisticated, the method to build structures and their dimensions different, the machine to do the desired work need special design and fabrication. Their use is limited unless it is a very big market and timing allowed; we called the order and the makes bespoken. The most obvious one is tunnel boring machine to suite for different diameters and shapes; and probably for the endurance because either the machine may not have second business chance for reuse and material designed be scraped for economical purpose.



Most of construction machines can be transported to construction sites, self-driving or mounting on trailer traveling for long distance and can move themselves arriving at construction site, we call them portable, such as dump trucks, excavators, dozers, loaders smaller mobile cranes, etc.. For mixing plants, TBM, tower crane, or machines too big for transportation, they're divided in parts or compartments, and then hauled to the site for erection; we call them fixed type of machine.



Engineers must take into consideration the cost require to mobilize and demobilize construction machine; cost for disembarking and embarking, installation. They also need to consider the damages possibly incurred to the parts or compartments, of plants and equipment during transportation, think about insurance and time lost to influence total project due to accidents. Also people need to know certain fixed plants depreciate their value very much in one usage, the remaining value after one project could be only the material cost after dissection.



(2) Operation, maintenance and repair.



In the days when the value of machine and spare parts far exceeded cost of people serving them, operators, crew for maintenance and repair, only companies big enough would buy machines as their main asset and source of revenue. For two reasons the machine ownership had to be shifted to specialty companies: 1. Facing rising human cost and fastidious labor law, only some companies could concentrate their effort to manage problems related to operation, maintenance and repair. 2. Company owning big fleet of machine would have financial problem when they didn't get works involving usage of machine, especially at time interest payment was high.



The machine owning cost shall be calculated as buying price plus interest payment over the machine's service life.  One is called flat depreciation method, use the buying price divided by estimated remaining service life; the other is weighted depreciation method, assuming the first 2 or 3 years the machine will have high productivity and place the cost depreciated for these 2 or 3 years certain fraction more. However, the amount permitted for depreciation depends on regulations announced by each taxation offices for different equipment. Interest payment can be considered for each company outside of the machine cost calculation.



Machine need operator to move, the owners must pay to the operators the hourly wage and overtime. And machine also needs daily, weekly or even periodical maintenance; the related cost comes from workers responsible for maintenance and the other small part for consumable, lubricant and tool. Repair cost in general is low when machine is new, but it will accelerated when machine's condition become less fair in later part of work life. The elements of repair cost consist of mainly two parts; one is labor, and the other will be cost of spare parts. In developed economy, depending on different equipment, the repair cost shall be between 100% and 200% of the initial cost according to statistic. 



In developing countries where machine price is high compared to human cost, the wage of operator can be 4-5 times of that of manual labor and output of machines will be higher than what can be achieved in advanced economy. Because when owner consider machine is expensive, he doesn’t care to give higher payment to operators and is eager to see it convert to higher machine production for the works.



(3) Rental and owning.



Started from 70's last century, general contractors wouldn't own construction machine themselves in consideration of big investment over uncertain business opportunity, difficulties to handle labor relationship with operators, maintenance and repair workers, and specialty judgement over replacement or repair of major parts.



It gave the rise of equipment rental companies, the stories were always at beginning the boss acquired construction machines with puny capital while seeking blessing from big construction companies to guarantee their works. It's important in Asian countries that this kind of company expanded their business with cooperation from fleet machine owners, who were operator com maintenance workers, will always be able to keep equipment and trucks in good conditions, building reliable images motivating general contractors thinking owning machines won't be necessary.



The machines like pets need to be taken good care, even after their full computerization. So the general contractor cannot compete with big machine companies, which, actually comprise of many small entrepreneurs. However, the rental now goes to include operator and depreciation/maintenance/repair according to work hours and nowadays the market rates can be high that 2 years rental may be equal to the buying price because all the owner/operator/maintenance workers think and bear the same cost for interest/livelihood.



(4) Construction method and machine selected.



Designing a feasible and efficient construction method is key to success of infrastructure works, the right sequence, get through of the most critical part of work, and avoid or minimize interference of hazardous incident shall be top consideration when the plan is drawn. Engineers may have wide range to select machines for construction method; however, it will be influenced by the market availability. Sometimes people will be more accustomed for certain type of machine, for example, in Taiwan excavators are everywhere but dozers and loaders are hard to see contrary to North America. The reasons could be incidental that the ones first introduce the them to Taiwan thought of something and others just followed suit.



Capital availability and market demand could play a part, the other example was the use of tower crane wasn't so popular and rental fee became higher because maintenance cost shared by small number was much; but tall buildings were popular and tower crane made construction convenient cost was relatively low against mobile crane. The introduction of local made, at least for major part, further brought down the buying and repair cost; for other equipment, similar stories also happened.



In small or particular construction market, the selections of machines can be restrained by several reasons like above; so there no standard or distinguished construction method. A proof that civil works is very local. In countries like India, machines face strong competition from man power; Bulldozers and earth moving machine are levied with high import duty and surcharges so hoe and dustpan will have chances to outperform construction method based mainly on mechanization.



There are situation that prototype machines will not meet construction requirement, the bespoken one, bigger plant assembled by smaller plants or fabricated for that special purpose will be the only solution. People need to know: 1. Lead time to design and to build the plant is long; not so convenient to acquire like ordinary equipment immediately to get on the market. 2. When one part of them goes down, entire system will be idle. 3. Though people will try for next use after one project, actually it's difficult. 4. So it scraps after one project, and the residual value of the bespoken plant can be very high. 5. Turnkey contracts become popular these days; the contractors will have chances to design structure sections optimal and fit into owned bespoken equipment.



3) Material



(1) Local, traditional construction material as first choice.



Civil engineering work is local business. Many of us consider construction material is universal but actually in many places the engineers must think of to use maximal extent of local material.  When considering availability, transportation cost and local employment, bulk material like aggregates, sand, stones, brick, tiles, etc., will be traditional. Even for cement, in the days carbon reduction was not a major issue, people wouldn't like to use imported ones, instead, using tariff as a way to stem their import.



In the old days, human's weight lifting capacity was limited, the long distance hauling capability also prohibitively expensive and could only go through waterway. People had to use small and light material from local, like timer, brick and mortars for buildings and structures in most of the cases. Granite and basalt were used in part of Europe especially for churches, castles or monumental structures but the unit weight is limited. Wooden structure was erected in Asia for aristocrats and land lord, but the timber size reduced as a result of deforestation. In general the masses had to live in hut and dens for which they built with any material they could pick up from nearby area. As a whole construction was slow and expensive, always took human life and the toils.



Discovery and use of steel in civil engineering works really change the world; they're expensive but can replace a lot of traditional construction material leading to great cost saving not mentioning augment of built structures strength and neat dimensions they become. Steel in the form of rebar, sections and strains flow freely around the globe and no sanction of its trading against any single country seems like possible. Though people still think of innovation for construction material better than steel, such as fiber glass or high strength concrete, but commercially it wouldn't go popular for long time.



There's possibility that local material and construction method can be used in orthodox construction projects. For example, the Baku piles were used in Southeast Asia for soil retaining and promote compaction effect in embankment (behind the abutment) is now incorporated into design for international class project as it's locally available and conveniently to install.



Mankind are smart to utilize everything from nature but sometimes it can be tragic. For instance, there's one country consist several hundred miles of extended alluviums, where hard stones and sand difficult to obtain. So the local people burn clay into brick like material and asking women and children to break them into sizes of aggregates and sand with hammers. Then they mix them with cement to obtain concrete. The solution risks human life because buildings and bridges sometimes collapse for the meager strength those improvised materials can only provide. It's wrong type of localization; however, ugly human apathy and commercial interest force people to continue the practice.



(2) Material and Equipment to be incorporated into Permanent Project.



As economy advances in a country, the construction work won't be simple structure again; many systems and equipment will be installed in the project which becomes more sizable and sophisticated. So the task of procurement won't be limited in basic material; specification will be more complicated than talking about composition, dimension and strength. Required system shall be functioned, monitored and controlled well before their punctual and proper delivery to the site. And of course commissioning and test run will be done now for entire project and should be more important than certificates and test that are still required for single material.



Since the owner may actually designate the maker of the system and equipment to be incorporated in the works; the winning contractor has to sign the subcontract with the specified makers after the tender. So he is to overtake the responsibility of system and equipment delivery toward the owner, which will include risks in quality and schedule starting from engineering, making, shipment, installation, commissioning and test run. In other words, he has to take care of whatever may happen in foreign countries: strike, sabotage, mistakes, bad performance, act of god, all kind of disruption that may occur to strangers.



When someone is asked to buy aggregate, cement, steel or even tiles, he's not supposed to spend so much expense as overhead; we call it conveniently as handling charges, which plus costs for bank guarantees, insurance premium, communication and attending fees, will be the overhead. But if he's buying equipment or system, for instance, the baggage handling system to be used in air terminal, he has to have people knowing the vendors at procurement, engage with the lawyer for international contract, do the entire necessary monitor before delivery, and take contingency cost for possible disruption during making and shipment, total overhead could be tremendous.



However, many people are still ignorant about modern day project. During budget establishment, there will be bureaucrats in authority, engineers in design consultant, accountants and auditors, still think offering the contractor the same fixed percent of overhead as before will do the job. They consider the frontage contractor won't increase anything physical on the equipment or system to be installed and thus added no value on the works. The denying of invisible cost stemmed from grand pa and ma's days when the economy still cling to agriculture and manufacturing and difficult to remove nowadays.



But one thing very fundamental is that the boss of contractors from their mind also accept the near physicrat saying that anything not physical wouldn't worth real payment because themselves also don't have experience to handle a construction project involving complicated sub systems and equipment which will cost them money to ensure a smooth and punctual delivery.



4) Money



(1) Payment: cash, in kinds or goods (barter), deferred (BT), franchise revenue (BOT, PMI).



Men work for money, only after the contractor can get full payment the completion of the project is meaningful to him.



And because the construction contracts normally are with big amount of money, public or private owners will have various form of payment according to their financial conditions. Normally they will be paid in cash, kinds or goods (barter), deferred payment after completion and transfer to the owner (BT), or paid through franchise revenue (BOT, PMI).



It also possible that the form of payment can be mixed between the above mentioned methods. The contractor must evaluate its own ability to accept the form of payment, for example, when he would have accept the payment in crude oil over long period, he has to evaluate the possible oil price fluctuation and the extent and cost that he would have been protected by the fortunes.



The reliability of the owners, government or private companies must be taken into account.



(2) Standard international contracts to regulate: FIDIC, NEC3 (New Engineering Contract3), AIA(American Institute of Architects), JCT forms of Contract(Joint Contract Tribunal)...etc..



It's not enough that the contractor will get the owner's pledge to pay him. It depends on the contract conditions through which the contractors get paid. Normally we'd have type of contracts such as: FIDIC, NEC3(New Engineering Contract3, used for civil works in UK., Australia, New Zealand and Hong Kong, the language of it is simpler and the signing parties are said to be more equal), AIA(American Institute of Architects, form of contract popular in USA.), JCT forms of Contract(Joint Contract Tribunal, for architectural works in UK.)...etc..



As projects are different for each other, the contracts need to be modified to fit the situation; they will be reflected in so called Special Application (or Conditions) and leave the General Application (or Conditions) unscratched. However, slight difference in Special Application will result in big departure so that the contractor need to read carefully even the author of standard contract or the Owner would have claimed they're the most friendly contract terms.



(3) Money beget Money.



The added values of technology, business skill, labor and money (in terms of capital) changing their respective shares in construction project of 21st century-engineers are no more to play the dominating roles.



Though money is everywhere (due to QE?), but they get more respected; people like to invent idea to attract the capital, for that they provide guarantees, mitigations and even placebo like assurance to woo the mammon. Under the new trend, a big part of the construction projects will be ceded to be controlled by hordes of non-technical people.



For example, the government has restricted financial resource for construction project and it will almost be spent exclusively for construction related items last century. And right now much of them will be paid as financial cost for BOT and/or PMI as people argue commercial capital will be required to accelerate the public investment.  The other part of money will go to so called independent third parties for their certificates, report and affidavits at non bargainable cost (as to be  disposed by those non-technical people), while the construction hands need to compete each other.



Engineers must realize, somehow, they would become a secondary role for the construction projects, but on the other hand, they could become a better manager than people of other discipline to control the whole project because they know better among all only they reject to become more "general" they will lose the chance to be the dominating figure of their project.



5) Market



(1) Contractors with Lemming Mentality



As it's said above, there're 2,800 strong Class "A" contractors in Taiwan to share a small market; the threshold to go into the construction market isn't high as capital (relatively low to the contract amount) is concerned. When they get contract, the contractors will find many sub-tier contractors more than eager to share their risks and sometimes loss.



The maintenance cost for a Class "A" contractor can be low, the minimum can be fee paid to registered PE, a tiny office, plus a secretary to answer the bell. When the bosses are frustrated for not to get business, they can go for "hibernation" for some time; they can wake up at any time when they get contract, to recruit people including manager and engineers, the employing market won't be against shoot and off requirement.



So the contractor of the "entrepreneur" type are majority among all, they're competitive and cause the awarding price, especially of public works, spirally downward, impossible to nurture big contractors with know-hows and experience.



But one day it will come, provoked by market mechanism such as sudden stoppage of trucks in 1990 (resulted in soil haulage hike and aggregate short supply) and steel price escalation in 2006, many contractors broke and their number culled to more reasonable extent.



The process repeats again and again; that contractor will spring up when they feel time is good (may be just illusion), employees and crews may go out of original company to fund new one, and the industry will be swelling, like lemming near pole area grow to incredible number within short spring time and jump from the cliff collectively, and it's construction industry in Taiwan.



(2) Style of Competition: Lowest Bid, Evaluated Lowest bid, Value for Money.



The problem of construction industry in Taiwan comes from over competition. Lowest bid is blamed because under the bureaucratic system, the budgets were considered to be right and standard by the contractors, and the winning price was considered as true market cost and will become good reference of next tender. After several vicious cycle the system become less flexible and further to worsen the industry.



Evaluated lowest bid is taken with the hope that the best contractor and their offer can be selected as the best for the project; however, the winners may not be the most outstanding one, and the judges' supposed imparity can be second-guessed. Authority try to improve the criteria for evaluation of the bid only invite more criticism and so the lowest bid system stopped at 2007. For similar stories, BOT and PMI also suspended except for very special project; and it means the tendering system returned to lowest bid after the first decade of 2st century.



The lowest bid tendering system were proven to be devastating for the constructors, the contractors claimed they're enduring big losses under harsh competition and they've to undertake the contracts only to maintain minimum operation, it could be true that in recent years there're cases that no one participated the tenders. So the evaluated lowest bid is coming back, the authority may get lessons and they’re also careful to choose the "judges" this time so maybe there's improvement that it will last longer, hopefully.



The final goal for government spending shall be "Value for Money", in which, the project completed will worth money spent. It's subjective as modern construction will involve different requirement by different sectors, thus giving different evaluation. But it's starting, we wish the bad element in the market will be eliminated and professionalism will have chances to prevail after improvement on the good one.



(3) Elements of Competition.



A market considered normal will be the one that the consumer maybe most important the government who's single biggest buyer of the public works to select the contractor based on their performance, past experience and readiness for the current tender: price, technical approaches, time of completion, safety record, experience in similar works, existing work loading, managerial and technical resource in hands, records of contract disputes (with owners)...etc..



It's true that during the selection of the contractors, the Authority and invited judges will "play god" to bring up some companies, and the result maybe the selected aren’t the right one because the selecting ones are never to be god; but the right ones will be chosen over long period, so the public especially the media and the society have to have patience.



(4) Defying the International Norms.



For long time, the developed countries especially Europeans and Americans have big say on the codes, standards, disputes solutions and financial arrangement of the international projects. They are establishment enjoy privileges and power more than their competency. The Asian powers maybe due to their introvert personality and late coming to the market, suffers considerable in international construction market, in which only south Koreans have obtained slightly better positions (in plant construction and high rise building projects).



We believe it's not an intended design based on the race and culture but is an essential market problem after long time practice, and realize to change it can be almost impossible because again you've to be in antagonistic with existing power. China approaches it with big loans supposed to be unstringed like Belt and Road Initiatives maybe effective at least for some African and Latin American countries, but it's again is more political that we need to watch out for some years.