Subcontractor Resource Allocation in a Multi-Project Environment – Field Study

Michael Harel1 & Rafael Sacks2

1PhD Candidate, Faculty of Civil and Env. Engineering, Technion – Israel Institute of Technology, Haifa 32000, Israel Phone +972-4-8292245, harelm@techunix.technion.ac.il
2Senior Lecturer, Faculty of Civil and Env. Engineering, Technion – Israel Institute of Technology, Haifa 32000, Israel Phone +972-4-8293190, cvsacks@techunix.technion.ac.il

Abstract

Various strategic considerations lead construction companies to reduce their core staff and employ subcontractors. Productivity is a critical determinant of profitability for subcontractors working under unit price contracts. When the flow of work on any project is unstable or unreliable, they are forced to adjust their resource allocations across the multiple projects on which they work in parallel. Earlier research explored subcontractors’ economic motivation; this research explores project managers’ and subcontractors’ behaviours de facto, through 57 in-depth interviews with experienced practitioners. The work focused on the decision-making process in allocating limited resources across multiple projects. Motivating factors other than productivity, such as cash flow, financial exposure, motivation and reputation, project work flow, etc. were explored. The main results show that productivity and work flow are in fact the primary motivating factors; that more than 50% of project managers use push control in a way that prevents subcontractors from achieving their desired productivity rates; that subcontractors believe on average that approximately 60% of the work promised will in fact become available on schedule, and therefore engage in overbooking; and that project managers tend to respond by exaggerating their resource demands by an average 20%. These findings support the hypothesis that mistrust and competition, rather than cooperative behaviour, are the norm. They form the basis for continuing research toward a descriptive theoretical model of the multi-project subcontracted environment.

Keywords

Subcontracting, behaviour model, resource allocation, field survey, decision-making

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Reference

Harel, M. & Sacks, R. 2006, 'Subcontractor Resource Allocation in a Multi-Project Environment – Field Study' In:, 14th Annual Conference of the International Group for Lean Construction. Santiago, Chile, 1-. pp 467-478

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