2020年3月11日 星期三


Outline of "Introduction of Construction Industry",  Lectures for Construction Department, NTUST University in Taipei

1. Infrastructure Projects and the Economic Development:

 1) Co-requisite to national development and economic growth.

 2) Essential to the establishment and continued prosperity of related industries.

 3) Civil engineers can be harbingers in establishment of meritocracies in young democracies.

 4) However, construction contracts risk to become cash cow of crony capitalism and the contractor the accomplice of kleptocracy(reference: FPCA, Transparent International). 

 5) Contractors use survival as excuse to steal public money but the truth is construction lucrative, professionalism the only antidote to fight the greedy and impunity behind the organized corruption, though patience required.

 6) Taiwan escaped endemic corruption in the construction works usually seen in the developing world.

 7) Civil engineering is always considered as sort of physical science; but unlike manufacturing or IT industries, its origin and background attached to history, culture and custom of the vernacular country.  One has to secure more           humanities attainment when he want to be the company leader and industry visionary with "construction" is an art rather than a science in mind.

 8) The implementation of public works should always be kind of choices rather than direct conviction that rngineers will decide. By rendering the new idea or criticize the existing things, he can shake, crumble, and change             public perception incrementally further demonstrate the construction industry inot a yes or no scientific verdict.

2. How a freshman to start himself for a successful engineering career:

 1) Think big, internationally; then prepare hard with grass root efforts.

 2) Attitude decide everything.  As engineer cdistinguish good and bad, right and wrong, anxiety and insouciance at early stage, he can take proper attitude to solve problem and retain a prominent position in the industry.

 3) Understand how political institutions, social establishment, and interest groups exert influence on each other and solve their difference to make government functioning and economy progressing in a real world.

 4) Identify own role in the future will be suject to uncertainty and things like licenses, certificates, and academic degrees can be useful that engineers should try to get as many as possible.

 5) In many industries the talent shall start early and untainted by the business, however, the founders of construction enterprises normally have to accumulate work experience and build human connections.

 6) The modern construction industry is governed with human distrust: terms of contracts, laws, certificates, checks, guarantees, tests, investigations and reports, as designed by "intrusive" white collars are used to elevate the         antagonism between confronting parties.

3. Modern construction Industry and its Major Players:

 1) Frontage Players: general contractors, engineers and consultants, architects, specialty contractors, labor gangs, investors.

 2) Supporting Entities: banks, guarantor (popular in US), insurance companies, investment companies or fund, operators.

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

 4) Stakeholders: Public, owner, authority, users, neighborhood and locals.

4. Features of Construction Industry explained in 5M:

 1) Man:

  (1) Managerial cadre, Professional, Occupational.

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

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

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

 2) Machine

  (1) Prototype, bespoke; portable, fixed.

  (2) Operation, maintenance and repair.

  (3) Rental and owning.

  (4) Construction method and machine selected.

 3) Material

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

  (2) Availability, reliability and transportation.

  (3) Permanent equipment and facilities to be installed.

 4) Money

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

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

  (3) Knowingly that the shared added values in a construction project by technology, skill and labor is diminishing as 21st century capitalism has morphed to become more favor of mammon.

  (4) Interests of investors are highly honored as delivery of the projects as for their dates, quality, functions, and values must be guaranteed with syndicates of financiers, big contractors capable of taking risks are preferred to the         third world entrepreneurs, it’s the trend.

 5) Market

  (1) Relative to the contract amount, the capital needed for constructors is low; in addition, risks and capital sharing to the sub-tier contractors  is easy, further lower the threshold entering the market, causing the industry                   extremely competitive.  

  (2) Style of competition: lowest bid, evaluated lowest bid, value for money.

  (3) Elements of competition: 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..

  (4) The developed countries’ big says on the codes, standards, disputes solutions and financial arrangement in antagonistic with rising power’s defying approaches to the international market, such as “belt and road initiative”     will decide whether it comes the end of the norm in next few years.

5. Working in the Foreign Land

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

 2) 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.

 3) Unmanageable Risks:

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

  (2) Exchange an d 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.  

 4) 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.

2020年3月3日 星期二


Curriculum for Lectures in Construction Department of NTUSC University in Taipei, Part2

C.  The Modern Construction Industry and its Major Players

1)      Frontage Players: general contractors, engineers and consultants, architects, specialty contractors, labor gangs, investors.

(1). General Contractors

In most of the countries (markets), general contractors are leaders of construction industry commanding critical portion of resource and exercising vast influence in democratic government and authoritative regimes alike. Wherever their interests go, the construction tycoons can decide how infrastructure projects are done, and affect politic at different levels. 

Given the imagination that big construction ccompany always have the clout to maneuver for what they want, young talents flock to them before they know the industry. The stories of power and money associated with construction projects are tellingly true from country to country as the industry get momentum to grow and prosper before any other business have chances to evolve.

However, in countries like Taiwan, the wary authority and public are too eager to see the raging competition flared among the contractors and always think it's a good way to save government expenditure. So, every contracting procedure related to public works from budget allocation till their completion is mired with details presumed to plague constructorss so public interest can be safeguarded. There it develops a mentality that the consultants responsible for design and supervision can be more trust-able to protect public interest in the ceaseless feuding with pigheaded contractors. 

As a result, the bureaucrats and public prefer to ask the contractors to do the works according to what had been specified on the drawings, i.e. pure construction; they believe they would be able to prevent collusion by squeezing the space normally granted to designer and contractor for settling the ensuing conflict. 

The practice dated backed to earlier days that the administration's general attitude toward business was to exert maximal supervision and control after the chaotic and restive years of hyperinflation and financial difficulties. Under the same philosophy, the government also set apart each business line, such as civil, HVAC, mechanic and electric, even pipe laying, requiring different license thus limit the contractor's work scope and chances of expansion. 

The purposed regulation as explained above existed so long has weaken the contractors, besides, in a society much influenced by Confucian culture, the traditional teaching that the scholars are superior to any other social classes further reinforce the prejudice that the employees of constructors working outdoors under all-weather would be secondary to pedants shouting instructions in the air conditioned rooms.

Finally the employees of general contractors have to do the most grinding part of the works to ensure punctual completion and well-functioning of the projects, which is nerve raking throughout entire contract period. And in return construction engineers only received diminishing amount of pay under constant annoyance that the threshold for tenderers to cross is lowered time after time allowing more people to contend.


It's true that general contractors in Taiwan were not so privileged compared to the coddled consulting firms because of some historical and cultural reasons. However, constructors of the 21st century should not only be able to deliver timely and quality completion of the projects, he needs also to give the clients solutions for challenges and risks brought by exceptional design, complicated operation and maintenance systems, special environmental protection requirement, unique financial arrangement; and it means, the imbalance between the images of general contractors and consulting firms now tilts a little bit toward the former.

It's also good for general contractors in Taiwan that the procurement laws and regulations overhauled in recent years: design and build contracts are welcome; division of business lines now blurred; BOT or BT style of contracting are taken and design consultants can be put under sovereignty of general contractors; projects become more sizable and fit for companies with bigger assets; labor law is more sensible thus favorable the contractors' employees who used to work in onerous long hours.

The trend compel owners, governmental or private, to accept more reasonable and liberal form of contracting, so that the constructors can pursue expertise and efficiency they need for true competition. Obviously, general contractors burdened with less red tap and enjoyed elevated status, are the biggest winners in the change. 

At the same time foreign contractors no more discriminated by previous inward looking laws also have chances working in Taiwan at least in the fields that the locals not well prepared, such as marine time, works require special process or equipment, or projects need huge capital(in the cases of BT or BOT).


(2). Consulting Engineers

The difference between the professionals and occupational regarding business ethics and attitude toward is that the former's must be dutiful, intelligent and conscientious for their clients and the latter do their works following the orders. To honor and guard the professionalism, the professional decisions in no way should be compromised, twisted and altered by particular one's interest, thronged opinions, or any form of punishment. 

When engineers are trusted and confided with responsibilities for safety, functioning, aesthetic, durability, budgeting and sturdy completion of construction projects, their judgement, opinions, and integrity must be respected, and most important, their service must be remunerated fairly as it's the backbone to support the idea that the professionals are the brains of their client. 

The professionalism allotted to engineers usually include investigation, feasibility study, planning, design, supervision, project management and other services related to civil and building works, both public and private. In Taiwan, how the engineering service is practiced is sanctioned in "Professional Engineer Act":

Article 7 A professional engineer shall practice the profession in any of the following manners:

1. Establish an engineering office organized as a sole proprietorship or partnership.
2. Establish a professional engineering consulting firm or be hired by one.

3. Hired by a profit-seeking enterprise or entity, other than those mentioned in the preceding subparagraph, which is required by law to hire a licensed professional engineer.

If we trace the history we will know that professional engineering service was originally taken by individual engineers or the partnership they formed. When it comes to modern-days, projects for all complex nature not only require advanced technology; but also need proposals with exceptional commercial skill to augment chances of as-planned completion or to seek ways of meaningful mitigation. So it takes kind of "omniscient "corporation consisting of bright people who are able to offer more inclusive solutions.

Apparently, the professionals can well exercise their knowledge and skill disregard what their choice to sign the contracts in "proprietorship", "partnership" or "corporation", but the industrial reality is that a corporation big enough may be better to accumulate experience, possess data, search for information, and churn out proposals.

Yes, only they are big they can have lots of talents adhered to share office equipment and software cost and are more affordable to meet the client's fastidious demands. Besides, financing, accounting, and administration rendered by big corporation will support the engineer for activities now needed to be more expeditious but intact, which can hardly be found in partnership and small company.

So it's understandable when the clients want to make award the engineering jobs of multi-discipline nature, they feel more comfortable to engage with organizations of size and reputation. But such an observation shall not be over interpreted as that the big corporation doesn't have any problem in performance and cost. 

We all know the professionalism stems from individualism and entails characteristics unique to each professional: vision, responsibility, work attitudes, which shall be prerequisite to shape a concerted team undertaking sophisticated engineering works in competition with individual or more coherent partnership for efficiency and responsiveness.

Remuneration to the professionals remains a big problem in managing engineering companies as people always view their own performance impeccable and believes they are entitled for more than actually received in regular salary and bonus. The argument's often originated from profit sharing, and stays at every junction where company elite flaunt their eminence. People may imagine  there could be a terminal arbiter in big engineering company busy to dole out verdicts to assure everybody's craving of money and vanity is met, but that's not the fact. 

The wish wise men may be there for positive intervention is a pipe dream in the real world, instead, egocentric human nature will prevail. Discords and disputes always happen between the quarreling parties, and the burst out usually take the form that people arguing over things abstract and philosophic like vision, responsibility, work attitudes, but money is behind, if contradiction not solved the result will be exodus of high minded people, or the cooling down of remaing people's motives to learn new skill and knowledge.

Modern professionals firms will use options such as extended partnership or stock warrant awarding to employees to keep their loyalty. It's important because many people consider the company's gain is only possible with their affectionate engagement and they're deserved to share profit as partners. The idea is different with the bonus and prizes scheme applied for companies to sell material, product, or simple services; requiring employees clinging to positions and to do more or less countable works. 

The arrangement can solve remuneration problem in many professionals firms, however, it's not elixir for small engineering companies, the bosses of which always grumbled that the employees are impatient to demand profit sharing before showing contribution; but the hired complained their performance not recognized all the time.   

In Taiwan, the government handled the importation of construction technology closely during the days resources were scarce, and many of the engineers were trained on jobs like dam, petrochemical complex, expressway and military installations. To counter balance the more advanced international companies, the government then sponsored big consulting and construction firms with the view that they could be reliable and competitivet to carry out public work for the future. 

Years after, the government was forced to withdraw from the construction companies sponsored as sprouting private contractors won over contention. However, the public consulting firms still remain and dominant in the engineering market, as they still receive the trust and patronage of government agencies anxious to launch infrastructure projects.

The government funded consultants pay their engineers of salary, bonus and dividends similar to what has been arrayed in other public enterprises of much less professionalism content. The practice omit that the services originally are individual-oriented and in the case of corporation the people must fetch not much less than their colleagues under sole proprietorship or partnership. Over time the side effect not pay enough to professionals will appear: efficiency discounted, talent lost to other industries, projects other than routinely implemented need to be done by international consultants. 
( 顧問公司是白領群聚,產出專業為主,其人員薪資、獎金比照其他國營公司,漸有後遺症,秀異分子無股權或如律師、會計師有合夥人資格,可以分紅。平均主義下,整體效率會低落,某些需奇才,非常態性工作竟要由國際公司來做)

The government funded consultants are more obedient to follow contract terms arbitrarily interpreted  by public servants short of flexibility in forcasting project requirement and rectifying them later. So the government agencies prefer to award sizable engineering works to government funded consultants and thus strengthen their dominant position in the industry despite private design firms always crying foul saying that the state shouldn't interfere the market.

It's nothing wrong in a society actually embraces egalitarianism and hates to pay some of professions high price to continue the practice contracting with government funded consultants as many public works can be carried out with minimum cost and completed in time desired by the officials and end users.  

But when technology bred domestically may not be sufficiently advanced as the result of individual's lacking of incentives under national capitalism, the foreign consultants or architects will be eager to fill technical gap but only at dear prices. And any attempt that the government agencies to ask affiliated firms to bridge the difference in terms of price and contractual obligation will introduce further procrastination and induce secondary damage.

Distribution of profit in engineering firms will be topic for further study in the industry; the answers can be profound and come up with next questions of what will be the most appropriate organization for works reqired devotion and inspiration?

(3). Architects 

Architects are respected all over the world, for the dual roles they played as artists and engineers. In Taiwan, they enjoy laws and regulations favorable for their solo performance with the support of a powerful guild organization.

The law now accepts joint venture of the architects, but basically it's the cooperation between the individuals. For huge and complicated building design, disciplines of professional engineer, and specialty companies has to be the sub tier contractors of relatively small architects; an arrangement not logical to the client think of risk averting.

On the other hand, recent earthquakes and associated perils shook the generally untroubled profession for liability as the latest enacts and verdicts hold them accountable for supposed wrongful design and supervision years after buildings completed, fair or not, the profession needs to be big at least for more risk absorbing capability, though it can hardly grow under the law that it can't be organized into company.

In reality, since the architects are short of profit sharing scheme with employees, that they have difficulty to keep fellow employee's royalty and recruit bright new ones. Ironically when the hired shrewd enough to see the situation not favorable to them will try to start their own business and worsen the competition in a small market.
And now in Taiwan, the new comers granted architects' licenses are in high number, but real estate boom is over; competition among architects, most of them small, is very serious.

So many architects in Taiwan are nervous and plead to relevant government agencies: 

1. The fees allowed for public building design are calculated as fix percentage of construction price, and now both the percentage and final construction cost are low so petitioners requested an improvement. 

2. That the cooperation with reputable international architects shouldn't be necessary as local architects are artfully good and technically competent. For officers fantastic with lavish building outline and avant-garde design should ask local architects to implement.  Current practice inviting foreign architects playing protagonist and forcing their local partner shoulder contractual obligation are not acceptable. Though, many private developers still court international architects because the "names" will boost the house sale. 

3. The architects consider the responsibility of supervision during construction shall not on their side and shall be rectified with clearer definition in the laws.
(建築師中有人對競爭環境憂心,請求政府:1. 增加設計監造費站造價百分比,並提高造價。2. 不要再找國際名建築師。3.釐清建築師在監造應負責任)

Traditionally, the market is small for Taiwan architects that they have to be more internationalized.

(4). Workers, Labor Gangs and Subcontractors

In Taiwan, that General Contractors did not own equipment and hired technicians and labors for actual construction. They would sub-let the labor work to subcontractors or worker gangs for the reason of convenience and so finally they would lose ability to deal directly with labor; sort of degeneration or eutrophication!

There might be craftsmanship existed among the labors to guarantee work efficiency and quality; but the contractors in Taiwan will prefer to replace the subtle labor management with simple rate and quantity relationship, and leaving gang leaders the responsibility to recruit workers and pay workers at almost fix rate wages. By doing so, general contractors would transfer the risk of income fluctuatuon to the labor gangs and subcontractors.

Originally main contractor may allocate the works to different gangs such as rebar, form work and concrete pouring, but still took care of coordination and supervision works required for the said structure construction; and now main contractor might ask one sub-contractor to undertake whole works so as to save cost for engineers required for coordination. The process continued, main contractor's role reduced, that in some cases, the workers at site had to be smart enough to do the works autonomously.

Though engineers will draw plans, pen proposal, and check mistakes; construction work has to be carried out by labors, technicians and foremen with hands, and it's them to materialize white collar's ideas for all difficult, dirty and dangerous work environs. The practice had historical background dated back from the days that labors were in over supply and their salary were suppressed, work condition miserable. At then, management of main contractors were able to leave the drudgery to social class distant from them.

Work division in Taiwan construction industry become vertical like fault line in many cases, i.e. a sub-tier will do in situ construction; the other maybe the main contractor offering the name, provide guarantees, and maybe take care of documentary works. It allows certain type and numbers of people venturing to obtain profit while the other part have to trudge for mere survival all the way. A reason that people like to gamble on construction business.  

But there is demography change, technology evolution, and managerial transcending in 21st century, now the labors reluctant to stay atfor hard labor. Crews shrink and members are aged, they demand safety, reject toil, fall short in dexterity, hesitated to commit in works as their forerunner. So the contractors signing up the construction contracts can't find enough gangs and workers for their projects even with TCN (third country national) joining the team. 

The work conditions at construction sites, compared to factories and service sector are bad. The parallel was like coal mines of Taiwan in 60's: unsafe, hard, and expensive to extract, the workers were aged and diminishing. Contrary to what bureaucrats thought of that it was the exploitative owner-labor relationship hurting the industry, the mine owner actually coddled the old men until the end of operation. 

So the contractors, designers, and the clients shall analyse the causation of labor shortage problem together and proffer public solution accordingly, or the unfinished works and facilities will be everywhere, and impatient users won't be foregiving.

(5). Specialty Contractor

General contractor usually don't improve or invent new technologies in construction industry; and it's the specialty contractors usually coordinate with the makers and manufacturers for innovation in terms of material, equipment, tools or working methods because they are at construction front line and know the details.  

First the specialty works was defined as special project requirement introduced from outside the country, they fetched prices and rates equal to international level which many Taiwanese contractors deemed unfair. So there had been strong tendency in Taiwan, everyone from client, consultants to contractors will encourage those dared to imitate the imported technology and break the oligopoly: foremen and fellow labors learnt the construction method, equipment and plants made in local, so was the material to corner the market replaced by those reachable in Taiwan. 

As the result, most of the international specialty contractors withdrew from Taiwan, and the natives took over; the stories happened to work items such as diaphragm wall, grouting, travelling wagons, system formworks, and cable and tendons, all taking places within very few years. 

To certain degree the locals created wonders, many of them endured failures and finally  smack technical Okays. But financially it's not Okay for companies having done R & D works so much and only received puny overhead and profit because even among the winners the contention is harsh.
In general, the companies doing the specialty works in Taiwan can't distinguish with ordinary sub-contractors, instead, many of them under pressure that their equipment, plants and crew must undertake next job to continue the business. So they're forced to bid the total tender package as other general contractors if they're lucky enough also to be qualified. 

Then the borderline between the specialty and general contractors is blurring and either it's the cause or the fallout that specialty contractors are not respected for their expertise. The industry will cease to progress technically because the people exhausted fighting international colleagues only attained mere survival in the event they could win. So they wouldn't have motives and strength to go for another round of invention.

When the specialty contractors have little prospect to grow and go for international, it's not advisable for the freshman to develop their career in such companies.

(6). Investors

The investors play key roles in construction projects as they have vest-in interest for success of investment. For public projects there will be elected officers and administrative in government agencies speaking of requirement in details but they have to be confined by opinions from experts, media, and councilors. For private business, it seems like the investors have tremendous power searching for maximal benefit, but they have to be bound by laws, regulations and the same-public opinions, the hidden rule of democracy.

Investors in developing their projects must meet higher than standard rate of return, also from beginning, they have to decimate risk and uncertainty that fund and banks behind relentless to pursue. Among the concerns, quality and in time completion shall be most critical, but that's only fundamental. In the case of real estate developers, they must consider buyers or tenants' requirement for buildings; and for plant owners they must consider purchasing contracts for product and stability of the market. Because long term investment security is now desired, the frontage investors should pay additional premium to guard their principle and the eventual capital holders are assured and pleased. 

It's 21st Century, in order to deliver the projects, or to get hedged when odds do happen, cost paid to notaries, law firms, inspectors, laboratories, appraisers, and certifiers can be regarded as more important than expenditures for tangible object such as concrete and steel, despite they only add up puny protection for investment, complete reversal of material scarce yesterdays.

Public clients tend to be more difficult; though they may not quantize the risk and seek coverage, but everything must be definite at day one or they have to go through onerous procedural justification. Theoretically, consensus must be collected before set up project goal, but the political requirement: compromise, prejudice and well wish will overshadow the implementation and take away the experts' opinions. Election and office change further complicated the matters as politicians and voters are not predictable, sometimes U-turn is necessary, projects hard to finish is everywhere over the world. 

Investors, private and public, are now asking the professional companies to work for them as PCM, a good system but occasionally not functional because the clients don't really delegate powers. The other extremity is the government agencies don't have their own people installed in the high positions of the project to determine how their true demand will be met in concert with financial capability known to insiders.

For ordinary case, little can't be programmed according to records and data available at the hands of officials holding the powers of budget approval, progress control and performance audit; it means the non-professionals can claim their means based on statistic and bureaucracy is workable and better entrusted by the public to manage national coffer. 

However, the attitude said above is a kind of hubris under which the professionals are frustrated and muted. Because the construction market isn't always the same that the routine will not always be routine; only the professionals will offer solutions to overcome the blocks huddling the launch of construction works.   

2)      Supporting Entities: 

(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 related to 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 entities such as 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 amount reasonably required in performing contracts with ultimate owners, the main contractors or upper tier contractors.

Banks will evaluate the profitability, sizes, collateral, and reputation of the company, and grant them amount of credit and rates of premium and interest; there will be fluctuation of their offer 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. 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 they're sharply reduced the existing credit amount, it's pushing them 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 great damages like the case happened to the second biggest contractor, Carillion of UK. 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

All the 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 contractors to be compensated for maximum and paying minimal fee. The public work owners are big customer so they will prescribe what they want in the contract document, and supposed insurance companies and the follow contractors will comply the stipulation. 

However, in many occasions the crooked contracting parties seeking improper profit will ask acquiescent insurers to provide conforming policies with internal agreement deleting the critical clauses demanded by the employers. Though the insurance companies are more law abiding but there are brokers sticking to the old way doing business, its a headache for employers and reasonable contractors.

Compensation to the contracting parties when perils occur spelled another trouble for contractors, too. The appraisers' proffer can be wide ranged and unpredictable. On the other hand, some of the contractors in Taiwan didn't invest sufficient in construction facilities to avoid risk but later come up with plump figures for compensation and made money with obvious and intentional negligence of the insurers. 

There were stories that the re-insurer like Lloyd's of London rejected to re-insure tunnel work construction of Taiwan in 90's as many "names" losing so much money. We don't know the root reasons of tunnel failure are the result that they're too hard to drill or the peril mostly caused by insured, appraisers and insurers yet.

In the United States, the project surety is issued mainly by insurance company or bondsman for the full contract amount or its double. It's under different philosophy that in US, the employers want to be guaranteed for a completed project so the insurer or bondsman need to provide greater than or equal amount of project value to convince the employers that they've ability to finish the works. 

And in place like Taiwan, the employers demand pay immediately an amount considered to be 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 found it difficult to implement, so it only remained on the law.

The insurance companies provide so much in the construction projects, they're indispensable, but many in the industry including high ranking persons have wrong concept toward the insurance; 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 recognize there should be price escalation and it has been covered by inflation formula, and any other risk shall be identified and priced in the work items so there's no proper position for the risk that can't be named but a veteran constructor will perceive  that it is a cost finally will happen according to his understanding of the market and industry.

(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 they should be lucrative. But they were meticulous in Taiwan for such investment as they cared about the risks like design, construction and operation that can go wrong during construction phase

The tedious regulations imposed by the government and "not in my backyard" populism would also aggravate the budget and deadline problem. And as projects procrastinate, the impact could range from returns that are lower than expected, to bankruptcy in the most extreme cases.

So the international investment company or fund including Japanese trading houses have to wait until recent that they start to buy shares of solar power plants, wind mills and sewage system when they see government and grass root are more matured with regards to PPP initiative.

The international investment company or fund, despite its low investment in infrastructure projects here 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. 

In Taiwan the real estate business elicit capital and people for its high growth and profitability. Developers are busy to hunt lands, deal with building codes, handle design and construction, sell house and mansions, that they're not so interested in PPP initiative as released by the government, otherwise there will be forces pulling the government for un-conventional procurement. That's the reason why internatioal investment company or fund only settle themselves, in stock and security investment.

(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, machinery, building infrastructure, and supporting utilities in industrial, business, governmental, and residential installations. The requirement hasten the delivery of the company operating for new facilities while many of the owners don't have experience and also restrained by financial condition.

They're O&M companies, 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.
(世界上的政客與資本家對新建工程都較有興趣,前要投入運轉、維修會較計較,但也證明這部分市場被低估,O&M 公司大有可為。)

The Engineers and the Contractors alike need the Operators' feed back 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 increasing financial constraint and employees admission. 

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.

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 will he be, it will tell that an engineer of tomorrow won't be confined for doing structural calculation; that only realizing the profession is service oriented, i.e. to follow money's lead, he has future.

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

The modern construction contract bring in piles of paper plus those unprinted storing in the computer, most of them presented as letters, reports, records, sketches, lists, certificates, diagrams, affidavits, pamplets, 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 help to fuel the flame by asking 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 testify that the condisitons are fair. Or in the case that 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 unbiased and independent party and showing the subject party has met the requests are received by person in charge of the enquirer, it will be deemed as true and authentic. And as it evolves, there will be development such as:

* The party which demand information only trust issues from certain parties, because the former now depend on the latter for legitimation problem that theoretically could be surfaced for each document from strangers or aliens.

* Though that the 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 conform.

* If the verifying party has long working relationship with the requesting party, he would have more confidence on and become easier to what he is required to verify, though they are independent and neutral. It happens to law firms, inspectors, laboratories, certifiers, appraisers, and arbitrators.

The industry reward frequent customer, so big companies that always have more chances to contact third party participants will find it's easier and more swiftly to work out require document demanded by their clients; it's the same that the so called independent parties or organizations enjoying prestige in their domain also receive more recommendation from establishment, thus more opportunities for their works.

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 they're doing in their homeland, if that's not enough, also out-flanked by parties or organizations claimed to be independent to ensure adaptability. 

As a first timer Asian contractor to go out to compete international giant, he would have encountered invisible barricades, sometimes deadly in performing the works, because he may be strong technically together with his subcontractor and vendors but he wouldn't be familiar to and get supported by the western third party participants who historically are not accustomed to working with oriental minnows.

Despite its laissez-faire appearance, 21st century capitalism is complicated in its work division, in construction industry there's no exception that the added value are invented to the extent that will outweigh the substantial works in the form of "norm", "standard", and "proof", out of the mutual distrust created by the businessman

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

(1). Public

The public is volatile and can't be reliable that one day it's warm and next day cold. Technical people have to leave the job to convince the public to politicians, who, seems to be invincible for some time, but many of them ebbed after elections, and it's a war of attrition that politician's career life expectancy is lower than the technical people like us, from which we may find comfort.

The professionals in Taiwan all but lose their prestige facing public, the media, councilors and TV host will be much louder in all technical aspects. Because the public demand 100% perfect over construction projects: budget, progress, durability, aesthetic, and functional for all purpose, that only polititians will be answerable. 

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 then the public will be awaken learning politicians won't meet their commitment; but the professionals has been tainted during the process that their credit will never be recovered though the media, councilors and TV host as accomplice also will go to hell.

Infrastructure construction is always associated with corruption, and some of the professionals are not innocent in the scandal, giving impression that engineers may be not cleaner than the pandemic officials and councilors. The industry also have problem when supervision is not in place, collusion would happen that's why the public will be always suspicious.

(2). Authority

The Authority referred here means the government agencies responsible to award permits, edit regulations that the owner and his contractors shall be observed for planning, design, construction, occupation and operation during initial, completion or operation phases. 

Land acquisition for public works shall be local government's responsibility, and usually they don't do well and procrastination is unavoidable, maybe 5% of recalcitrant landowner will stop 100% of the works for commencement, and it's daily life you see in Taiwan.

Safety measures are among the critical issues the government will interfere and the contractors have to follow though always overdone. 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 comuters are sacrosanct. 

And disposal for wasted and surplus material shall be subject to the stipulations of local government; in general, the cost of excavated soil dumping is calculated by people close to mafia and hardly the outcome is rational. 

Utilities authority poses another problem for the developers and the contractor; outstanding drawings and missing locations cause the digs and laying delaying and costly and sometimes dangers emerged. 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 born with rights for fishing, agriculture and irrigation in their premises, to which any encroachment shall be bought with exorbitant price through hard negotiation.

In rural area down to the village level, public or private project investors shall work amicably with the authority.

(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. Roads, parks and sewers can't be built in many places as people don't want be disturbed even for short time. The stories may be dated back when the ex-ruling party and regime abuse the power conscript land and suppress people against construction.

And now it goes another extremity, for example, people don't want to accept any deflection or slight damages in their house when the excavation nearby produce them even within the tolerable value. Some of the people consider the contractors will abuse like before, and 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 don't stand on the moral high ground when they discover god and priest are in the opposite front.

Many people even started to miss gloomy days of martial law and thought any sort of construction back then wouldn't have any problem. But it's democracy that people have made choice and nothing is more important than liberty and egalitarianism embraced by the people; so that the developers and contractors have to have patience and take it soft to convince the neighborhood and locals for their cooperation.