Bidding competitiveness: empirical analysis from public construction contracts in Malaysia / Mohd Azrai Azman

This research attempts to contrast bid competitiveness with respect to the average bid auction (ABA) and the non-ABA bidding formats used by the Public Works Department (PWD) of Malaysia. The research uses the ordinary least square regression and the Monte-Carlo simulation to point out significant predictors which affect the bid ratio and fitting probability distributions to bidding data, respectively. This research shows that the bidding strategy adopted is dependent on the different formats used. In the ABA format, bidders are more likely to submit identical bid prices. In the non-ABA format, they bid according to the first-price auction (FPA) strategy, which suggests greater variation between bid prices as a winning strategy and the reduction in the bid price to an estimated price ratio when more bidders bid. In addition, bidders lose more money when the distance between the project location and a firm's operational office is greater. Best-fit probability density functions follow a gamma distribution for the ABA format and a Weibull distribution for the non-ABA format. The location and number of bidders affect bidders' strategy to win. A competitive bidding price depends on a number of bidders who enter the auction. It increases the intensity of competition and it reduces the purchasing cost. The number of bidders is important because the cost of bidding may become a sunk cost. The probability to win an auction depends on the expected number of bidders. This affects bidders' decisions on whether to bid or not to bid. The research uses several statistical analyses to examine the 195 bidding data collected from Public Works Department of Malaysia. It finds that the project value, the distance from the project site to supply source and state region affect the number of bidders. This research presents empirical insights concerning the comparisons of different type of bidding formats, and its implications towards the construction client especially when it comes to its economic consequences. Keywords: bidding, small and medium enterprises, public sector, tende ring, average bid auction (ABA), first-price auction (FPA}, competitiveness, construction; procurement; small; medium; contractor; microeconomics and Malaysia

How technological, environmental and managerial performance contribute to the productivity change of Malaysian construction firms

Purpose: Total factor productivity (TFP) change is an important driver of long-run economic growth in the construction sector. However, examining TFP alone is insufficient to identify the cause of TFP changes. Therefore, this paper employs the infrequently used Geometric Young Index (GYI) and stochastic frontier analysis (SFA) to measure and decompose the TFP Index (TFPI) at the firm-level from 2009 to 2018 based on Malaysian construction firms' data. Design/methodology/approach: To improve the TFPI estimation, normally unobserved environmental variables were included in the GYI-TFPI model. These are the physical operation of the firm (inland versus marine operation) and regional locality (West Malaysia versus East Malaysia). Consequently, the complete components of TFPI (i.e. technological, environmental, managerial, and statistical noise) can be accurately decomposed. Findings: The results reveal that TFP change is affected by technological stagnation and improvements in technical efficiency but a decline in scale-mix efficiency. Moreover, the effect of environmental efficiency on TFP is most profound. In this case, being a marine construction firm and operating in East Malaysia can reduce TFPI by up to 38%. The result, therefore, indicates the need for progressive policies to improve long-term productivity. Practical implications: Monitoring and evaluating productivity change allows an informed decision to be made by managers/policy makers to improve firms' competitiveness. Incentives and policies to improve innovation, competition, training, removing unnecessary taxes and regulation on outputs (inputs) could enhance the technological, technical and scale-mix of resources. Furthermore, improving public infrastructure, particularly in East Malaysia could improve regionality locality in relation to the environmental index. Originality/value: This study contributes to knowledge by demonstrating how TFP components can be completely modelled using an aggregator index with good axiomatic properties and SFA. In addition, this paper is the first to apply and include the GYI and environmental variables in modelling construction productivity, which is of crucial importance in formulating appropriate policies.</p

The preliminary results on the push factors for the elderly to move to retirement villages in Malaysia

Many countries are witnessing a rise in the ageing population, which has become a global phenomenon that all nations must address. As the population of greying people is expected to increase in Malaysia, the demand for senior citizen accommodation is predicted to have experienced a major rise by 2030. However, although studies related to retirement villages (RV) are highly important to understand how to provide a better ambience for the elderly, research on the development of retirement villages in Malaysia is yet to gather pace fully. Thus, this paper aims to explore the potential of the retirement village in Malaysia by focusing on the push factors for the elderly to move to retirement villages in the local Malaysian context. The outcome of this paper presents the initial findings derived from a literature review and pilot survey. Eight potential push factors were identified after questions were posed to potential respondents through a pilot survey questionnaire. The research revealed that the main potential reason why the elderly relocate to retirement villages was related to social factors, with the elderly preferring better access to healthcare and support due to their unique requirements. The findings of this study are relevant to Chapter 11, as underlined in the Sustainable Development Goals (SDGs), which call on all governments to offer access to a secure, green environment for everyone, especially the elderly. Theoretically, this research provides the first findings on the elements that encourage the elderly to relocate to an RV when they retire in Malaysia

E-procurement adoption in the Malaysian construction sector : integrating diffusionof innovations and theory of planned behaviour framework

In recent years, environmental problems have become more prominent in the construction industry. The production and use of building materials are still one of the main reasons for various ecological and environmental challenges in the industry. Compared with traditional building materials, green building materials are environmentally friendly. Therefore, the adoption of green building materials in the construction industry can generally solve the industry’s ecological and environmental problems and promote green and low-carbon development. Research on contractors’ green procurement behaviour can promote the construction industry’s sustainable development. Many scholars discuss and agree that the implementation of e-procurement is a green approach towards sustainable construction. However, current evidence indicates that procurement stakeholders, especially contractors, are struggling to implement e-procurement effectively. Therefore, there is a need to study contractors’ behaviour in relation to green e-procurement. In response, this study investigates the adoption of e-procurement by Malaysian contractors by adopting planned behaviour theories and diffusion of innovations in their decision-making process. Here, a conceptual framework has been developed which focuses on factors influencing contractors’ adoptions. The framework can be used for understanding the contractors’ adoption decision of e-procurement. The result will help to find the critical key factors affecting green procurement behaviour from contractors’ perspectives and extend the theories further. This framework is also in tandem with the Construction Industry Development Board (CIDB), Construction 4.0 Strategic Plan (2021-2025) in identifying critical factors that affect the adoption of green procurement on construction projects

Diversification, institutions, and productivity performance of large construction firms in Malaysia

This research investigated the relationships between diversification strategies and productivity of large construction firms in Malaysia. The Generalised Method of Moments was adopted for modelling the impact of diversification strategies on productivity. The research revealed that product and market diversifications affect long-term productivity by altering firm efficiency in managing resource allocation. However, the effectiveness of diversification strategies depends on the changes in formal institutional dimensions and informal context of ownership concentration. The research findings will help construction firms to take into account the effects of institutional contexts when formulating their optimal diversification strategies for better firm productivity

A Methodological Application to Construction Economics Research for Theory Refinement and Extension

The inability of econometric modelling alone to unveil the underlying mechanisms and contextual information from the built environment’s perspective has been observed. Using an explanatory sequential mixed methods research design, this chapter outlined how this research design can be used to support the results from econometric models to provide a meaningful explanation of causes and effects drawing from theoretical and practical perspectives. Accordingly, the explanatory sequential mixed methods research design was used to validate the quantitative results and to refine the economic theory regarding the diversification of Malaysian construction firms. The chapter serves as a guide for researchers seeking to apply explanatory sequential mixed methods research design in studying construction economics with the prospect of theory refinement and extension

The Significance of Coordination for Industrialised Building System (IBS) Precast Concrete in Construction Industry

IBS precast concrete is construction system which is meant to improve the conventional construction process. However IBS precast concrete projects are suffering from serious problems such as cost overrun, delays and less quality of the end product. The absence of coordination is perceived as the reason for this issue. The purpose of this paper is to review the significance of coordination for IBS precast concrete in the construction industry. It if found that the fragmentation which occurs in the construction industry requires continuity of coordination due to the construction activities are intertwined in nature. Coordination is designated to assist stakeholders in completing and complementing each other with the paramount focus of achieving the objective. Proper coordination is required in delivering the desired construction product at the ideal time, cost and quality. As for the findings, the significance of coordination for IBS precast concrete can be seen through the precast concrete construction phases which consist of planning; design; manufacturing; transportation and installation/construction. These phases are meant to complement construction process with the purpose to reduce issues of fragmentation and enhance IBS precast concrete project delivery

The Significance of Coordination for Industrialised Building System (IBS) Precast Concrete in Construction Industry

IBS precast concrete is construction system which is meant to improve the conventional construction process. However IBS precast concrete projects are suffering from serious problems such as cost overrun, delays and less quality of the end product. The absence of coordination is perceived as the reason for this issue. The purpose of this paper is to review the significance of coordination for IBS precast concrete in the construction industry. It if found that the fragmentation which occurs in the construction industry requires continuity of coordination due to the construction activities are intertwined in nature. Coordination is designated to assist stakeholders in completing and complementing each other with the paramount focus of achieving the objective. Proper coordination is required in delivering the desired construction product at the ideal time, cost and quality. As for the findings, the significance of coordination for IBS precast concrete can be seen through the precast concrete construction phases which consist of planning; design; manufacturing; transportation and installation/construction. These phases are meant to complement construction process with the purpose to reduce issues of fragmentation and enhance IBS precast concrete project delivery

A Meta-frontier method of decomposing long-term construction productivity components and technological gaps at the firm level: evidence from Malaysia

There is a need for a better approach to measure construction productivity rigorously, multilaterally, longitudinally and decomposed into its components. In response, this paper offers a robust approach to analysing construction productivity at the firm level that has been lacking in the industry to date, by measuring the Total Factor Productivity (TFP) of 37 public-listed Malaysian construction firms over 14 years (2003–2016), based on the Färe-Primont index. In comparing different groups of building, civil and specialist construction firms, this is the first application of a meta-frontier framework to capture the technological gaps involved. Based on the construction firms’ financial data, it is found that TFP improvement generally occurs due to Technical Efficiency (TE) and Scale-Mix Efficiency (SME) (largely scope economies), and significant technological gaps exist among different groups. Moreover, the industry suffered a decline in technologically related production environment over the period–prompting the conclusion that long-term policy engagement should focus on technological improvements. The paper provides a robust approach to analysing construction productivity at the firm level that also can be used for accessing productivity components and technological gaps in construction and other industries.</p