Part 6, Advanced Civil Construction

台科大高等土木施工學教材(2023) 

MT KAO (Blog: http://mtkaoforum31.blogspot.tw/)

(mtkaoforum31@gmail.com)

7. Resource Required for Project Implementation

1) Man

a. Power to drive Individuals and Organizations to achieve Business Goal:

- Nature of Power 

Man loves power. Unlike animal 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 regard 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.

- Organization

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(s), hierarchy, and systems in an organization. It means engineers won't be immune from influence of power maneuver, only that an innocent engineering freshman may hesitate to touch.

- Leaders

However, in an organization where technology and experience are crucial to success, naked power manifested on the leader assigned through investment, heritance or tradition without assent of the follow members will have to share power with doyens of superior skill and knowledge for their cooperation. It's the same that commercial people will get their part of power when profitability is major concern. 

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, public or private, shall perform according to the principle of utilitarianism that worth taxpayer, shareholders or expert's trust. 

- Power Distance 

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

It's the fact that "genuinely cooperative enterprise" often appeared in Asian countries where "power distance" can be big between each layer of management. In In such an organization the young startups are always taught only to listen and the quest to satisfy their curiosity sometimes will be regarded as offensive, though minor as it is. 

But the deliberation of power in an engineering organization will affect its benefit, loss, even survival. Individuals always humbly don't like to touch non-technical issues and think by doing so they can be shielded from power manipulation of imperious person.

And it is wrong that people pretend they’re apolitical, instead, they’ve to care about the leadership and history of the organizations they want to join or deal with, not least for the reasons to judge and decide whether or not there’re people with whom it’s worth to fight together.

And it has to be noted, as organizations differ in size and type, common to them is the tendency that power sharing inequality will increase as member number increase. It's a confusion to young people who may have justice and fraternity in mind to consider the management in big company is rogue and exploitive. 

The power distance in an organization shall be kept as short as possible because the proportion of self-motivated and highly intelligent workers among the young generation is rising, vision articulation, action orientation, and management-by-exception are required, all depending on good communication.

b. Managerial cadre and their Recruitment:

- Inflated Titles for Professionals

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 matched 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 taking places every day in construction industry.

In Taiwan, there're 3,148 Class A Contractors, 1226 Class B Contractors, 7465 Class C Contractors, and 566 Specialty Contractors toward the end of 2022. Also not a smaller number of Consulting Firms, Architects and independent PE Offices have been registered.

That it means thousands post of which titles equal to general managers, and senior managers are wanted in the industry. The result is that the construction companies or consultants cannot hire those experienced enough for positions; and people also don't have opportunities to learn management or technical skills required in the career. 

- Recruitment

Under the circumstance, market fragmentation is ensured as many small companies or institutions in the industry struggle for survival. But people still cherish their titles such as vice president, manager or director of the companies even the jobs asking them to do works of more occupational content than professional ones.

The situation further worsens when authority tried to introduce project management system supposed compatible with international practice. Under the system, each position in the project organization requires the license or certificate, which makes the recruitment more difficult.  

Unless there is an overhaul in construction related companies that the vicious cycle to train and hire engineers will be repeating. Make it plain, the decimation of underperformed companies should be required, so that the fragmentation of market can be prevented. Engineers with better disciplines, grade, and initiative, will be able to work in more neat, clean and efficient 21st century construction industry.

- Diploma Over-Trump Proficiency

Conventionally, general public always considers diploma is equal to people's ability and it compels the authority to accept the idea that expertise can be tested through examination. And it turns out, the project owners and the parties responsible for supervision wouldn’t look into the true curriculum of job candidate. 

The outcome that bureaucrats waive their objective judgement to evaluate the real capability of proposed project staff, is that they have to use dull and useless contract stipulation to fortify their essential requirement in work safety, quality and progress; only to torment the submitting contractors.

c.  Professional and Occupational 

People working in the industry understand the difference between Professional and Occupational is whether or not they’ll use brain all the time. However, they must be aware a professional can easily and unconsciously become an occupational. 

The situation may include they practicing routine and unchallenged work too long, or simply losing the brain power to reason and judge.

Always the changes in the market or industry will bring in the impact, that people have to wary if their income are hardly raised or the employers asking for more training and test for the same job they’ve carried out. 

d.   Project-based or Department-oriented (functional) Management:

- The General Contractor’s Shrived HQ

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 the public work has an intention to assign more engineers for various discipline of construction so as to develop expertise for engineers over the course. 

But the companies cannot follow because elaborated and calibrated division of the works require more engineers to fit the jobs with more salary to pay thus weaken the parties' competence. Also, it's a realty that there're more than10, 000 constructors, consultants and architects in a small market busy for engineer recruitment.

All combined together, the general contractor’s will always be undermanned and have a shrived HQ.

- Project-based Management, Functional department-oriented Management.

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 support each other.

As we’ve shown 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 requirement imposed by the client. 

The project offices are presumed to gain technical and management backup from knowledgeable engineers in each functional department, however, it couldn't be done as fierce competition to get the tender has hallowed head offices; we saw the veterans disappeared over time.

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 capable of developing know-hows of projects. But in reality, the companies have to establish for the project something similar to matrix organization to furnish the required support provided by both project-base and functional department-oriented system. 

- Design an organization adapted to the actualities and open to the future development 

According to Max Weber (German Philosopher and Sociologist), an organization can be designed in consideration of the following:

* Task specialization: Tasks are divided into simple, routine categories on the basis of competencies and functional specialization.

* Hierarchical layers of authority: Managers are organized into hierarchical layers, each responsible for its staff and overall performance.

* Formal selection: Employees are selected on the basis of technical skills and competences, acquired through training, education and experience.

* Rules and requirements: Employees know exactly what is expected of them. In this sense, the rules and requirements can be considered predictable.

* Impersonal (Impersonality and Personal Indifference) : Regulations and clear requirements create distant and impersonal relationships between employees, 

* Career orientation: Employees are selected on the basis of their expertise, deployment of the right people in the right positions and thereby optimally utilizing human capital.

d. Personal and organizational behaviors:

-  Company Culture related to Size

Personal behaviors are different from person to person, also in different time for the same person. When an organization is formed, it behaves as a person but like persons it will have different faces overtime. It depends on the leaders very much; especially the way he handles coordination and communication. 

Organization mainly consist of engineers and ruled by them can be stiff and fastidious in giving orders and executing them. The reason and the result maybe it need to avoid mistakes and at the same time push things forward. 

But people with more liberal or creative thought may not appreciate and can be shut put; not good to business development and technological innovation. To mitigate that, a motley style of coordination and communication in a big company is highly valued.

-  High and Low Context Cultures

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 grows 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: 

＊ In elementary school, classmates and teacher fixed in the same classroom all day know each other; it is high context. In the university, professors and classmates come and go, interactive only in the class; it is low context.

＊ In smaller companies, boss know every employee, give orders and evaluate performance himself; it's high context. In big companies, management layers are many, the communication needs to be made in meetings with minutes or written mails, power must be delegated and the bosses are distant; it is low context. 

＊ The lawyers and accountants talk and writes to identify the truth, and it 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 the benefit of group is emphasized over individual, higher context cultures dominate, such as the Asian countries, probably an extension peasantry economy. While mercantile vigor were developed in European and North American countries; it 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 or not he can adapt or fit in the career, if he has the sense about the cultural context. And it is possible that people can change his thought and behavior when he is young.

e. Labor laws, quality, incentives, and unions

   

- Labor and Taxation Laws in Taiwan

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 for employees on the aspect as labor law and regulation interfere; 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 monetary evasion, they can be audaciously to recruit employees especially for foreign blue collars not obtaining legal stay permit. 

A well-organized company in construction industry will consider laws amended in favor of employees are draconian, and tend to be meticulous toward recruitment even for white collar professionals. So, when construction or design companies 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 big departure to the professionalism.

- Taiwan’s Scrupulous Professionals 

In Taiwan, a few professionals have problem to develop expertise. They lack patience to pursue the knowledge and expertise. They incline to accept jobs their quest of titles and income for short term benefit. So, they put more attention on employment conditions more related to income, welfare and work places. Some of them may need to share with spouse for family chores and tend to work on regular hours. 

We learn that the professionals are working with their brain and are hardly quit the job for entire 24 hours a day. It means if they can cut clean with the work after office hour, they’re not better than any occupational for at all. 

There could be a compromise likely to be reached with an irresponsible employer to sacrifice the work quality, but, and it opens the chance for those don’t have formal engineering background to fill the vacancy; thus, a degradation of professionalism.

Yes, it’s an industry that toil and sweat still overwhelm the brain-exhausting work style and leaving rooms for occupational. But the projects management system, public or private, continue to request the inclusion of certificated and licensed engineers, then people having engineering education and training may have chances to claim their dominance.

 (Part 5, NTUST, 5908701)

Part 5, Advanced Civil Construction, 台科大高等土木施工學教材(2023) 

MT KAO (Blog: http://mtkaoforum31.blogspot.tw/)

(mtkaoforum31@gmail.com)

6. Remuneration, Feeling of Fulfilment, and Chances of Promotion in Different

    Entities.

   

1) Academy 

a. Nationalization and bureaucratization of educational institution.

-  In medieval Europe, universities meant a place where students from everywhere were welcomed as they shared the common language-Latin and religion- Christianity. They were taught the arts and had at least one of the higher faculties (theology, law or medicine), by those with a master's degree. So, the term was studium generale as the aim was to provide students and the general public academic foundations in line with the humanistic roots.

- And the changes begun from Germany in 19th century, the academic study was considered more essential than to disseminate the knowledge to students and the general public as Von Homboldt maintained in his Berlin University. Instead now that the students were asked to select a topic, profession, or social problem conduct research on the subject, maintain a portfolio of findings or results, create a final product demonstrating their learning acquisition or conclusions.

 

The capitalist American went farther to introduce the ideas for universities and the colleges to become “technology research center” either by accepting chunky donation from privates or obtain funds in collaboration with big companies for programs. As the result, the “university” actually is “multiversity” and become kind of “knowledge industry” entice the talents and transform them to be “useful” in the market.

- As it evolves, there’re many academic communities of different scientific subjects established in the universities. The institutes have to achieve the goal assigned to them in the research program and so require the combined effort of various faculty members for minimal multiplicity. And it means the organizations have to be sizable to include scholars of different disciplines; specialists, technicians, and in some cases, the managers.

And because only the government or the donors can pay the money to sustain an organization of meaningful capacity, the nationalization and bureaucratization of the university is unavoidable. Then the autonomy of faculty is gone that the professors has to respect the imposed hierarchy, follow the government procurement law, honor the quantified evaluation system. And it means, the young men decide to work in the academy for life needs to know everything about scholar’s recruitment, pay, and promotion as many of the civil servants do.

There can be countries with thrive industries and successful businessmen granting huge sums of money to the university. For all their best intension or pragmatism to inspirit innovation, the receiving parties may proceed to employ needed people for the advance study programs not related to teaching and study. 

In addition to the salaries and bonus given to the scholars and specialist, tools, software and apparatus required to advance the innovation can be paid, thus facilitate the general study as well. 

Therefore, the conventional boundary between the ivory tower and the outside world is blurred. Lucky or not, the campus grows and aggrandized; but it looks as if it were a technical center of big company, buoyed, motived and boosted by the same market force plumped the industry.

 

- Cambridge and Oxford could be the last to insist its tradition that the university should bend on the “liberal education” to nurture the gentlemen. But in 1956, the UK government astonished that the country lagged much behind the US and Soviet Union in technology and science; had to issue a whitepaper for higher education mainly to accept the promotion of Colleges of Advanced Technology (CATS) to university level. 

The UK faculty leaders shared the government’s view realizing the fact there should be scientific culture in addition to the humanity culture, and the “Argument of Two Cultures” had to come to a hold. 

- In certain countries the university can be supported by charities, donation and wealthy alumni just like the universities and graduate schools in the American Ivy Leagues so as to be free from the government interference. 

b. Fate, connections, and politic may play part in the assignment and promotion of faculty positions.

- In theory, the assignment and promotion in the public faculty will be fair because the qualification set for the contested is stringent and people responsible to smack the decision are supposed wise and objective in such an independent organization. But in practice, the odd is high that the un-qualified may win out as they know how to use the connection and politic skillfully.

So, for those who expect the meritocracy will prevail in keep the academic body lean and competent can be disappointed.

The other side of the coin is when universities are funded by public money the regulations for personnel management are rigid, and less influenced by the powerful or the unprincipled. 

- Sometimes, the faculty may have their unique requirement for particular topics for researches, they may recruit scholars who would provide talent at that special moment and then they may start academic career; it’s the fate. The opposite also is true when an eligible can’t be picked over years just because lack of luck.

c. Inspiration, heart and soul are still required in developing scientific and engineering theories.

- People get fame in academic career may claim later that there’s no coincidence in his success and tell the young man to work hard because scientific and engineering theories can only be accomplished through endeavor. It’s true but not necessarily that the hard work will invite the success. Young starters have to learn that the aspiration is required in the process to initiate an idea, fill the void and perfect the defect. 

- in develop some theory in their career, often the people will place their attention more on time and effort they’ve spent over the issues and await the aspiration come to add favors on the plain calculation. It’s not realistic and people has to have heart and soul if they want to do scientific study. 

- People who are mediocratic actually shall avoid to pursue the academic achievement. 

d. Limited monetary remuneration augmented with infrequent plaudits complete full reward scheme of scholars.

- Monetary remuneration is limited for people working in academic. There may be something in compensation for the low income, that is the feeling of fulfillment and achievement. 

A real scholar will feel happy when he discovers or believes that he will be able to offer next generation people a branch of knowledge, though may not be perfect or permanent, even the plaudit is short and rare.

- However, the modern university may change. As we said, it will change to “knowledge industry” in collaboration with companies thirsty to find collaborators for technology improvement. We’ve witnessed big business pour in chunk of money to finance faculty in an unprecedent manner. 

The law also modified to allow people other than pure wonks join the faculty to conduct researches; and the pay is not subject to any limitation. Bonus and other incentives are offered to the people who’re supposed to be acclaimed for their virtue.   

2) Professional entities such as architects and consulting firms

a. The professionals don't produce, manufacture or build, they offer design report and solutions based on expertise that can hardly be quantified; so, they receive bonus and prize based on subjective review in addition to the fixed salary.

People who’re admitted to big architect and consulting firms are expected to listen to the orders and to begin as a simple part of complicated machine. Remuneration wouldn’t be high as the company consider you gain more in learning as new comer.

Promotion, or work adjusted for next stage seem to be taken grant; but mainly depend on your altitude. 

b. Managers of architects and consulting firms are critical to create a sound work environment for efficiency, recruit people of high talent, take the lead in competition, recognize and reward those who work hard with decent pay, and find the new customers and win their trust; so, they deserve high income.

Even though the market is not small in some of the countries, the architects and consulting firms would have their fix clients. The relationship cultivated are between, in most of the cases, the institutions and not the individuals. It’s very apparent in Taiwan, and the individuals have to be careful in asserting their business credit.

 

c. As a trend and also out of necessity, capital gains such as profit, dividend, interest, rent and royalty are offered to the employees in the form of company stock, partnership, or special agreement.

When the majority of shares held in government or big organization, the persons in custody tend to be more conservative and the not the persons running the company lose an effective tool to manage the company. It’s the situation for the two biggest civil engineering consultants in Taiwan. 

d. The rates and prices of consultancy contracts are low by international standard, so that the professional’s pay is restrained in Taiwan. 

The professionals, especially those in the consultant firms, have to work long time to get enough money compared to the engineers working in the other countries. The difference in annual remuneration between the senior and junior engineers are not so much and it decreases the incentives of the employees. The reasons are again, partly due to the government’ holding of the shares for big consulting company. 

The small, private and localized consultant firms always submitting low price is also the reason that the professionals in Taiwan don’t have good income as their foreign counterpart.  

The civil engineering consultants always require top talents, but, many of them ceased to work hard for the nature of the company and the difficulties to draw a smooth and reasonable clear path; many of them are said to have early retirement. Recently, it’s improves at least for the employees as demand is increased.

3) Construction firms

a. Contractors command more resources than any other players in the industry and the pay difference among their staffs is significant and decided by project profit and loss.

For the same project, different managers will significantly make the resulted profitability completely different. Therefore, the bosses will carefully choose the manager or won’t delegate any power to the under in the case of small company. And for big project, it requires good manager(s) and qualified staff to work around the clock. There’s nothing but to offer strong incentives as the boss is concerned. 

And it means, a devoted and smart employee will be able to distinguish himself in the construction firms. 

b. In Taiwan, the owners prefer low cost and hasten progress. So always construction companies are put under extreme pressure to meet contractual requirement, and only staff (leading by a relentless boss) can withstand the grinding work condition will get higher pay and the employment, not much to do with their proficiency, not mentioning feeling of achievement.

c. Reformation that allow the constructor to do the works in design and build has been introduced to the market, and now that the industry is less fragmented so the construction firms can grow and allow the professionals either technical or managerial developing their skill and climbing the company ladder. 

d. Specialty contactors if have more control on expertise shall be more dominant as the nature of the works now are more than simple concrete pouring and rebar binding when economy evolved and the project more complicated.

4) Government Employees 

a. In Taiwan and many Asian countries, the government employees are prestigious and respected despite its low salary and limited power. The reasons may be the employment is permanent and the work isn’t manual. In the case of civil engineering, the mandarins are responsible to certify the progress in every stage and accept the completed stuff of the project, highly influential to the public works and the contractors. So, it can be the top choice of graduates.

b. But as the economy grows the government enact many laws and regulations, which aren’t flexible in nature for implementation but the civil servants need to follow. In addition, the politicians, media and public frequently overrule the professed opinion; making young engineer uncomfortable and hesitate to go after the government posts. 

c. At the time when resources were scarce, only the government would be affordable to import construction technologies and appeal to the talents to work for big projects. It’s attractive for engineers. Now that working for private companies could get even better access for modern technology under more discerning evaluation. The incentives for young talents to work for government are drastically reduced.

5) Bosses or self-employed

a. In a market-oriented economy, the individuals are free to exercise will and power in their own enterprise plus that the sub-let system in Taiwan will allow new comers to deliver the works easy; then the threshold to start construction business looks low. Many young people thus select to become entrepreneurs before they can learn something as other’s employees.  

b. A contractor needs capital, follow engineers, business connections, access to resources required for execution, and above all a mentality to lead the teammates you want to summon for successful performance; therefore, it requires years of experience. But the rigor and aggressiveness to found an enterprise will only attached to a young brain, then you’ve to determine whether to be boss or self-employed at early stage of your life.

In other words, “connection network’ shall be critical for the young professionals seek to establish their own business. It can be supported by family or friendly ties; but most importantly, the future boss shall look carefully into his own personality and take opportunities.

c. However, construction people often risked to become accomplices of authority, super or sub tier contractors stealing public money. The temptation is overwhelming: providing bad material, not build according to the drawing, faulting the contracts. The bosses always excuse themselves for the need of survival. But actually, they like to enjoy lucrative contracts and believe they’re well protected. 

Nevertheless, the systematic fraud could be exposed and the professionals forsaking ethic principles would be sacrificed by the politicians. 

Unlike many countries in developing worlds, Taiwan escaped endemic corruption during and after the days massive infrastructure projects are under construction. If you want to be a boss in Taiwan, the risk is smaller.

d.   The boss of modern days construction company practically needs to know he shall also be a good manager in an organization to lead a team of knowledgeable workers, who are skilled, motivated, and challenge-seeking. It is because whether or not the business will survive, prosperous and develop will depend on the boss’ ability to articulate a vision of the future to inspire the people. It is necessary to let them believe their future are included in your plan.

In other words, people need to examine before they want to become the bosses or super managers in the engineering or construction companies, their competency of technical and interpersonal skills including being open to the truth, treating everyone fairly and equally and sticking to their principles.

Also, the boss must be sure that himself shall equip with an intelligence to embody the value of his organization, impose the integrity on the follow professionals, and culture the resilience to maintaining the momentum of the organization when business is in setback.

 

(Part 4, NTUST, 5908701)

Part 4, Advanced Civil Construction, 台科大高等土木施工學教材(2023)

MT KAO (Blog: http://mtkaoforum31.blogspot.tw/)

(mtkaoforum31@gmail.com)

 

(1). Banks

 

Banks offer credit lines, grant loans, and acting as agents to collect or pay bills, draft, and cheques to companies or individuals doing business of construction and engineering.

 

Banks issue guarantee letters or cheques to the clients for bid bond, performance bond, advance payment bond, and warranty bond at the request of construction companies, design consultants, professional engineers, and architects.

 

In many cases, banks will issue letter of credit for contractors to buy equipment, material and service required to complete the project.

 

There will be overdraft facilities for companies to pay outstanding cash amount reasonably required in performing contracts.

 

Banks will evaluate the profitability, sizes, collateral, and reputation of the company, and grant them credit lines or loan, and quote the premium and interest rates subject to fluctuation over time.

 

There is possibility that the banks agreeing to offer loans for BT, BOT, or BOO projects, based mainly on feasibility, completion guarantee, and the ultimate owner of the projects (and in the case of overseas projects, the government and the owner). Usually commercial banks need backups of fund, investment companies or even state.

 

When construction related entities wouldn't obtain the credit lines as required or the existing credit amount sharply reduced, they could be pushed toward insolvency. The consequence usually is very serious and could probably invoke chain reactions for subcontractors and sub vendors for several times the amount main contractors indebted.

 

If the state won't go for rescue, banks, subcontractors, vendors, their employees will be induced for damages like the case happened to the second biggest contractor, Carillion of UK (https://www.arlingclose.com/insights/what-happened-with-carillion). But normally in a democracy, no sane politicians will vote continuing to finance the troublemaker, that's why banks are cautious in Taiwan.

 

(2). Insurance Company

 

a.      Most of construction contracts need insurance company to provide coverage for damages to property and persons related to the projects unless it happens due to excepted risks.

 

The employers wish themselves and the follow contractors to be compensated for maximum and paying fee in minimum. The public work owners are big customers so they will prescribe what they want in the contract document, and insurance companies and the contractors usually will comply the stipulation.

 

However, in many occasions the crooked contracting parties, seeking to reduce even very few percent of the insurance premium, will ask acquiescent insurers to provide conforming policies with covert agreement deleting the critical clauses demanded by the employers.

 

Though the insurance companies ostensibly are more law abiding these days, but there are brokers sticking to the old way doing business. It’s not fair to the honest contractors.

 

b.      Compensation to the contracting parties poses as a hard bargain when perils occur. The appraisers' proffer can be wide ranged and unpredictable. The approaches are much influenced by the commercial interest of the insurance industry, which is conflicting to the requirement of the insured, not mentioning the request of the endured.

 

The reality in Taiwan is that many of the contractors don’t pay much attention in safety requirement and spend money for proper construction facilities. When peril occurs, the insured may come up with plumped figures and ask for compensation.

 

There were stories that the re-insurer like Lloyd's of London rejected to reinsure tunnel work construction of Taiwan in 90's as many "Names" losing so much money. There were days that many tunnel failures occurred in Taiwan, whether or not they were the result of complicated geological condition or insured’s wicked intention o solve the progress and cost problems, we didn’t know. But we understand that the local appraisers and insurers weren’t innocent.

 

c.      Note always the proposed settlement has more to do with the commercial convenience of the insurers than what the contractors ought to accept. In other words, the staff and the managers of the contractors shall resist the mesmerizing persuasion by the policy sales and appraisers.

 

The insurance policy buyers shall study words by words for the compensation clauses attached to the main policy; and be careful about the practicality of the blockers, insurance company and appraisers before they procure the policies.

 

d.      In the United States, the project surety is issued mainly by insurance company or bondsmen for the full contract amount or its double. It's a different philosophy that the US employers want to be guaranteed for in-time and quality project completion so the insurer or bondsman needs to provide greater than or equal amount of project value to convince the employers that they'd have ability to finish the works.

 

And in place like Taiwan, the employers demand pays immediately an amount no less than their loss in the project with reservation that they can claim the difference of their loss later. Once people in Taiwan advocated that the insurance company can issue policies to serve as performance bond or for other purpose but find it difficult to implement, so the alternative only remains on the law.

 

e.      The insurance companies are involved so much in the construction projects, they're indispensable, but many in the industry including high ranking persons have wrong concept toward the insurance. The biggest problem is they can't distinguish the difference between contingency cost and insurance premium paid, the mistakes come from that they considered everything can be covered by insurance.

 

They may recognize there should be price escalation and it has been covered by inflation formula, and they continue to think that any other risk shall be identified and priced in the work items and a risk that can't be named shouldn’t be a risk. 

However, an experienced constructor will perceive that it is a cost attached to the project only in a way that nobody will know how and for what magnitude it will happen.

 

Finally, people responsible to establish the project budget will consider the contingency provision shouldn’t be entered for unnamed items lest it should become the additional profit of the tenderer. It’s wrong but widely accepted by the officials here.

 

(3). Investment Company or Fund

 

The international investment company or fund strolled around the globe seeking opportunity for investment in infrastructure projects as they felt revenue should be stable and return lucrative. But they were meticulous in Taiwan as they cared about the risks in design, construction and operation of those projects may not be in a way they’re familiar with.

 

The tedious regulations imposed by the government and "not in my backyard" populism would be detrimental to the budget and progress issues which are most critical to the infrastructure projects: returns are slower and lower, financial overburden heavier, and the market changes cancelling the necessity of the projects. And in the extreme case, the franchise company can be bankrupted.

 

So, the international investment company or fund including Japanese trading houses have to wait until now, start to buy shares of solar power plants, wind mills and sewage system when they feel the government, industry and the related player are more matured with regards to PPP initiative.

 

The international investment company or fund do bring in another risk mitigation concept: placing more emphasize on unanticipated and disadvantageous market changes in demand or supply, and the long-term interest rates and the underlying asset value; subject to variation in the so-called risky macro environment.

 

There can be two types of investment in infrastructure projects: one is to secure the opportunity for investment when everything is still blank considering that the profitability is proportionate; the other is to take over the project when everything is known and the return fixed shunning of risks.

 

In Taiwan the real estate business elicits capital and talent for its high growth and profitability. Developers are busy to hunt lands, deal with building codes, handle design and construction, and sell house and mansions, that they're not so interested in PPP initiatives. They could be tomorrow’s investors for ppp (public-private partnership) initiatives.

 

(4). Operator

 

After completing the public facilities, the government agencies or the private plants or building owners need people to do operation, functional checks, servicing, repairing or replacing of necessary devices, equipment, and machinery; and sometimes for system adjustment and expansion. The requirement hastens the delivery of the new facilities while many of the owners don't have the experience to do O&M especially the government agencies under recruitment, financial and efficiency restraint.

 

They're O&M companies, which should be an inseparable part of construction industry, always working under the poor financial conditions as politicians and capitalists over the world are good at dispense money for new fund buildings and facilities but less generous for their operation and maintenance. But now it is different.

 

Technicality will also be favorable to the O&M companies. The Engineers and the Contractors alike need the Operators' feedback to get sufficient knowledge for new facilities. 

And it's a tendency that the government prefer to using public–private partnership for O&M of the facilities to solve problems of lacking of flexibility in financial support and employee’s recruitment.

 

Over the years, the owners, government or private will ask the contractors to offer engineering, construction, plus O&M; there will be different models, and more sophisticated management contract will include improvements in efficiency and performance, which only is possible to include as much scope of service in one hand.

 

As it evolved, the Operator may be required to collect bills on behalf of the utility company, and may accept some collection risk, especially the clients are governmental, and the customers will be general public.

 

Engineers of next generation must think about whatever he will be, it tells of tomorrow’s engineers to realize the profession is service oriented, and to follow money's lead.

 

3)      Third-Party Participants: notaries, law firms, inspectors, laboratories, certifiers, appraisers, unions, arbitrators

 

The modern construction contract bring in piles of paper plus those un-printed storing in the computer, most of them presented as letters, reports, records, sketches, lists, certificates, diagrams, affidavits, pamphlets, photos, books, all of them filled with words, lines, symbol, sound, totem enough to decide the success or failure of the projects, though nobody is able to read through.

 

It's more than computer technology that the frontage players, supporting entities and participants of construction contracts all are the accomplice to ask for more document. For example, when contractors want to get loans, the banks may ask them to get reports from law firms to examine the contract conditions and to ensure the applicants are accepting everything. Or, the clients may demand the records of successful operation in completed facilities, certain laboratories may be asked to do the inspection works and submit the reports accordingly.

 

When the required documents bearing the names of the supposed independent party and showing the subject party has met the requests are received by the enquirer, it will be deemed as true and authentic. And as it evolves, there will be development such as:

 

* The party which demands information only trust prints from certain parties. Because the former now depend on the latter to identify the authentication of submissions from strangers or aliens.

 

* Though that the verifying party shall be independent and only responded to the requesting party, but the demanding party will have a big say to recommend the "right" verifying party; and in most of the cases, the requesting party will comply.

 

* If the verifying party has long working relationship with the requesting party, he would have more confidence to verify what he needs to verify within sort time frame, though they are independent and neutral. It happens to law firms, inspectors, laboratories, certifiers, appraisers, and arbitrators.

 

The industry reward regular customers, so big companies that always have more chances to contact third party participants will find it's easier and more swiftly to work out required document demanded by their clients. It's the same that the independent parties or organizations who are reputable in their domain also receive more recommendation from establishment.

 

Languages and culture should be the problem but not the only, the reality of the world is that the westerners will go to international arena using contracts, codes, standards, specification and practice the same as what are used in their homeland. The advantage is more apparent when the third-party participants with fame are confident to endorse them; actually, sort pf fortification.

 

Asian contractors go out to compete international giant, would have encountered invisible barricades, sometimes can be fatal to the projects. The story can be simple just because he wouldn't be familiar to and get supported by the established third-party participants who historically are not accustomed to working with oriental minnows. Right now, they’re real third-party participants.

 

Despite its laissez-faire appearance, 21st century capitalism is complicated in its work division, allocation of added values and borderless monopoly to collect rents.

 

In construction industry, the conventional added value attached to exercise of craftsmanship and dexterity to maneuver the machines now become relatively small as competition is harsh between the same contractors of developing economies. The new added value is created even to surpass what can be obtained from the exercise of the substantial works. The people familiar with "norm", "standard", and "proof" usually can avoid to do the risky and competitive tangible works and usually are done by the firms and organizations in the developed economies.

 

4) Stakeholders: Public, Authority, Neighborhood and Locals.

 

(1). Public

 

The public are the users of infrastructure and facilities, but they are volatile and can be convinced for opposite proposals. And it seems only the politicians claim they’re their representatives are knowing everything and the engineers have little to say for the true benefit of the public.

 

The professionals in Taiwan aren’t prestigious and dignified facing the public, instead, the media, councilors and TV host will be louder in all technical aspects than the engineers. Because the public demand 100% perfect over construction projects: budget, progress, durability, aesthetic, and functional for at all time, which are not possible in engineering, but they are spoiled because they’ve votes.

 

The politicians will take chance at the expense of the professionals, who will be depicted as pedant never knowing the true requirement of the people and the progressiveness of the society. 

Of course, there will be sometime that the public will be awakened learning politicians won't fulfill their commitment but the professionals has been tainted during the process. It’s easy in Taiwan the professionals including those from academic will be the scapegoat but their credit will never be recovered.

 

Infrastructure construction sometimes is associated with corruption and scandal, and some professionals may be involved, giving the impression that the engineers are not cleaner than the officials and councilors. So, the public is skeptical to the construction contracts and insist to have stringent supervision and they may feel comfortable when there will be supervision on top of supervision.

 

And when, most of the government agencies in charge of public construction in Taiwan openly claim that they will accept the citizens to supervise the construction works, a political approach, is a hurt to the professionals.

 

(2). Authority

 

The Authority referred here means the government agencies responsible to award permits, edit regulations, or decide the applicable codes so that the owner and the contractors shall observed for planning, design, construction, occupation and operation from initiation, completion until operation.

 

Land acquisition for public works shall be local government's responsibility, and usually it’s a procrastination process; maybe 5% of recalcitrant landowner will stop 100% of the works for commencement; and you’d see every day in Taiwan.

 

Safety measures are the critical issues that the government will demand the owners and their contractors to follow though. If incident to happen, the law and regulation will allow the authority (under Labor Ministry and their local branches) to exert severe punishment

 

It’s also possible that the public attorney can indict the representatives of the companies or institutions for crime charges. It’s also part of the reasons that the man contractors would sub-let the works to smaller companies with the ideas that the subcontractors will shoulder the responsibility.

 

Traffic diversion plans around the site in congested towns and area can be critical which the foreign companies coming to Taiwan will have difficulty to think about; but the commuters are sacrosanct. One of the impacts to urban construction, for instance, can be the use of more tower cranes in lieu of the mobile cranes.

 

Disposal for wasted and surplus material shall be subject to the grand soil reuse and disposal plan by local government; in general, the cost of excavated soil dumping is “managed” by people close to mafia and hardly the outcome is rational.

 

Utilities authority poses another problem for the developers and the contractors; outstanding drawings and missing locations cause the digs delaying and costly. Sometimes dangers would emerge.

 

License for buildings and plants shall go through the utility authority to ensure links with existing system. In Taiwan, utility company is called company, but people would think it's a kind of authority, not least they are run by government.

 

The fishing, agriculture and irrigation cooperative surely are the juridical association membered by ordinary people, but they are offered with the rights for fishing, planting and irrigation in their premises, to which any encroachment shall be bought with exorbitant price through hard negotiation.

(3). Neighborhood and Locals

 

The mentality of Nimby (Not in my back yard) affected construction very much; nuclear power plants and its refusal treatment can't be solved, for instance, as well as substations and transmission lines.

 

Roads, parks and sewers can't be built in many places as people don't want to be disturbed even for short time. The stories may be dated back to the old days that the authority abuse the power conscript land and put the people against construction down.

 

And now it goes for another extremity, for example, people don't want to accept any deflection or slight damages in their house when the excavation nearby have influence even within the tolerable value. Some of the people exercise extra judicial means to stop the works. It happens in chemical and power plants the neighborhood always cemented together to bar or interrupt construction and operation.

 

The governments of all level are relatively weak because the officers and councilors need votes; temples and churches for their grass root nature always sided with neighborhood defying the legitimate development. It's devastating but foreign and sometimes people from big city not well aware they are standing in lower ground if Buda and God aren’t stand beside them.

 

Many business people might miss the days when construction wouldn't have any problem to deal with ordinary people decades ago. But it's the democracy that people have chosen the system to defend their property and will; and as it flourishes the developers and the contractors must have patience in communication with the neighborhood and locals to move the project