PHD ThesisfgITBV in Construction Industry - Dec 2012 HardCover Final-06!06!2013

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Information Technology Business

Value Model for Engineering and


Construction Industry

Yahuza Hassan Kassim


[B.Eng., MBA, CCE, FIntLM]

Research Institute for Built & Human Environment


(BuHu)
School of Built Environment [SoBE]
The University of Salford

In Partial Fulfillment of Requirements for


Degree Doctor of Philosophy
Student ID @00037366

December 2012

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DECLARATION

I certify that except where due acknowledge has been made, this
report (as part of PhD thesis) is produced by the undersigned alone.
The report is submitted under the University of Salford regulations
for the award of a PhD degree by research; it has not been submitted
before, in whole or in part to any university or other institute of
learning to qualify for any academic award.

Signed:

Yahuza Hassan Kassim


December 2012

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ACKNOWLEDGEMENT
All Praises are due to God for all His Mercies.
I would like to express my deep, profound and sincere gratitude to my
supervisor, Dr. Jason Underwood, Head of Construct IT For Business Manager,
Director of Ph.D. Program Admissions and Training, School of the Built
Environment, University of Salford. He provided me with inspiration and
encouragement through motivation that asked me to believe in myself and enjoy
the challenge of questioning and learning.
I am deeply grateful to my external supervisor, Dr. Benny Raphael an Assistant
Professor in the School of Design and Environment of National University of
Singapore. His wide knowledge and logical thinking process have challenged,
encouraged and provided me great value and personal guidance that created
good basis for the present thesis.
I wish to thank Professor Vian Ahmed Director of Postgraduate Research for
inspirational leadership providing vital information and guidance on the
requirements for the successful delivery of PhD within the program.
I also wish to recognise and thank all the support team of MERIT Program of
Salford University for their unflinching support and rapid responses to my
constant requests. They include Ms Rachel Lilley, Ms Sarah Ricketts.
I extend my appreciation to all the participants from the numerous Engineering,
Construction, Architectural and project management organisations that took part
in the discussions, comments and survey data collection.
I would like to acknowledge the financial support received from the Nigerian
Petroleum Technology Development Fund (PTDF). The financial support of the
University of Salford is also gratefully acknowledged.
I wish to thank my family for their support and enduring my absence during the
study period. Special thanks to my wife for her patience and encouragement, my
children, Fawziyyah, Yasir for the help in typing some of the manuscript and AlKassim and Khadija for enduring my absence.

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DEDICATIONS

Dedicated to:
My wife Fatima who has always supportive of all my endeavours
My Children: Fawziyyah, Yasir, Al-Kassim, and Khadija;
They paid the price of living without total dedication
of husband and father during the
period of this study.

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TABLE OF CONTENTS
DECLARATION ...............................................................................................................ii
ACKNOWLEDGEMENT ...................................................................................................iii
DEDICATIONS ...............................................................................................................iv
TABLE OF CONTENTS .....................................................................................................v
APPENDICES ..................................................................................................................x
LIST OF FIGURES ..........................................................................................................xi
LIST OF TABLES .......................................................................................................... xiii
CHAPTER ONE ............................................................................................................. 1
BACKGROUND.............................................................................................................. 1
1.0

Background................................................................................................................... 1

1.1

Definition of the Problem ............................................................................................ 2

1.2

Research Questions ...................................................................................................... 2

1.3

Research Aim ................................................................................................................ 2

1.4

Research Objectives ..................................................................................................... 2

1.5

Scope of Research ......................................................................................................... 3

1.6

The Research Processes............................................................................................... 3

1.7

Contribution to Knowledge ......................................................................................... 4

1.8

Thesis Structure ........................................................................................................... 5

CHAPTER TWO ............................................................................................................ 9


THE RESEARCH THEORITICAL PARADIGMS............................................................... 9
2.0

Introduction.................................................................................................................. 9

2.1

Concepts of Competitiveness..................................................................................... 11

2.2

Theories of Competitive Advantage.......................................................................... 12

2.2.1

Porters Theory......................................................................................................... 13

2.2.2

The Porters Five Competitive Forces Model ........................................................... 13

2.2.3

The Three Generic Competitive Strategies.............................................................. 16

2.2.4

Organisation Value Chain ....................................................................................... 16

2.2.5

Merits of Porters Theory ......................................................................................... 18

2.2.6

Criticism of Porters Theory ..................................................................................... 19

2.3

Process based View.................................................................................................... 20

2.4

The Resource Based View (RBV) .............................................................................. 20

2.5

Micro Economic Theory ............................................................................................. 23

2.6

Strategic grouping ...................................................................................................... 23

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2.7

Impact of IT on Organisations Performance........................................................... 24

2.8

IT Business Value (ITBV) ........................................................................................... 24

2.9

ITBV and Process view Paradigm ............................................................................. 24

2.10

ITBV and RBV Paradigm .......................................................................................... 25

2.11

Complementary Organizational Resources ........................................................... 26

2.12

ITBV and Economic Theory ..................................................................................... 28

2.13

Information Technology Resource ......................................................................... 31

2.13.1

The IT infrastructure ............................................................................................. 32

2.14

Nature of Construction Industry............................................................................. 36

2.15

Competitive Strategy in Construction .................................................................... 39

2.16

Competitive Domains for the Research.................................................................. 41

2.16.1

National Competitive Domain.............................................................................. 41

2.16.2

Industrial Competitive Domain ............................................................................. 42

2.16.3

Organizational Competitive Domain .................................................................... 43

2.16.4

Project Competitive Domain .................................................................................. 44

2.17

IT enabled Competitive Strategies ......................................................................... 44

2.18

Chapter Summary..................................................................................................... 46

CHAPTER THREE ........................................................................................................47


IT BUSINESS VALUE CONCEPTUAL MODEL ...............................................................47
3.0

Introduction................................................................................................................ 47

3.1

Conceptual IT Business Value Model........................................................................ 47

3.2

Engineering and Construction Value Chain ............................................................. 53

3.2.1

Strategic Planning.................................................................................................... 53

3.2.2

Engineering Design .................................................................................................. 54

3.2.3

Procurement ............................................................................................................. 55

3.2.4

Construction and Commissioning ........................................................................... 56

3.2.5

Maintenance and Operation .................................................................................... 57

3.2.6

Project Management ................................................................................................ 58

3.3

IT Application Areas in Construction ....................................................................... 58

3.4

The Components of the Model................................................................................... 62

3.5

The Research Question and Hypotheses .................................................................. 63

3.5.1

IT Shared Infrastructure (ITSI) ............................................................................... 64

3.5.2

IT Business Application (ITBA)................................................................................ 64

3.5.3

IT Human Skills (ITHS)............................................................................................. 65

3.5.4

Complementary organisational resources ............................................................. 66

3.6

Measuring ITBV .......................................................................................................... 68

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3.7

Input Variables ........................................................................................................... 68

3.7.1

IT Business Applications (ITBA) .............................................................................. 69

3.7.2

IT Shared Infrastructure (ITSI) ............................................................................... 71

3.7.3

Human IT Skills (ITHS)............................................................................................. 72

3.7.4

Complementary Resources (BWE)........................................................................... 72

3.8

Output Variables......................................................................................................... 74

3.8.1

Schedule Performance (SCHD)................................................................................. 76

3.8.2

Cost Performance (COST)......................................................................................... 77

3.8.3

Customer Satisfaction (CUSO) ................................................................................. 78

3.8.4

Safety Performance (SAFETY).................................................................................. 79

3.8.5

Contract Growth (CONTR)........................................................................................ 80

3.8.6

Overall Profitability (PROFI) ................................................................................... 80

3.9

Chapter Summary....................................................................................................... 81

CHAPTER FOUR ..........................................................................................................83


RESEARCH PARADIGMS AND METHODOLOGY..........................................................83
4.0

Introduction................................................................................................................ 83

4.1

Research Processes and Strategy.............................................................................. 83

4.2

Research Philosophy.................................................................................................. 85

4.2.1

Positivism.................................................................................................................. 86

4.2.2

Constructivism.......................................................................................................... 87

4.2.3

Realism ..................................................................................................................... 88

4.2.4

Pragmatism .............................................................................................................. 88

4.3

Paradigm Incommensurability ................................................................................. 89

4.4

Construction Management Research Paradigm ...................................................... 93

4.5

The Research Methodology ....................................................................................... 93

4.6

The Research Methods............................................................................................... 96

4.7

Triangulation .............................................................................................................. 97

4.8

The Data Collection Technique ................................................................................. 99

4.9

The Survey Questionnaire Design............................................................................. 99

4.10

Mail versus Web Survey Modes............................................................................. 100

4.11

Data Analysis .......................................................................................................... 101

4.12

Data Envelopment Analysis................................................................................... 103

4.13

DEA Versus Regression Modelling........................................................................ 105

4.14

DEA Models ............................................................................................................. 106

4.14.1

CCR Model ............................................................................................................. 107

4.14.2

BCC Model ............................................................................................................. 111

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4.14.3

DEA Models Extensions ........................................................................................ 112

4.15

Operationalising DEA Concept .............................................................................. 112

4.16

DEA Algorithm for Computing ITBV ..................................................................... 113

4.16.1

Strategic Grouping ............................................................................................... 114

4.16.2

Organisations Sample Size ................................................................................. 114

4.16.3

Inputs and Outputs Variables.............................................................................. 114

4.16.4

Solving a DEA Model............................................................................................. 115

4.16.5

Interpreting DEA Model ....................................................................................... 116

4.17

Reliability and Validity .......................................................................................... 118

4.17.1

Validity.................................................................................................................. 119

4.17.2

Reliability.............................................................................................................. 119

4.18

Chapter Summary................................................................................................... 120

CHAPTER FIVE ..........................................................................................................121


PILOT STUDY ............................................................................................................121
5.0

Introduction.............................................................................................................. 121

5.1

Organisations General Information....................................................................... 121

5.2

Analysis and Interpretation .................................................................................... 124

5.2.1
5.3

Input/Output Variable Correlation Analysis ...................................................... 126


Parameters for Data Analysis.................................................................................. 129

5.3.1

Potential improvements ........................................................................................ 130

5.3.2

Reference Set Frequency Analysis ......................................................................... 134

5.3.3

Input / Output Contributions................................................................................. 134

5.3.4

Reference Contributions Analysis.......................................................................... 135

5.3.5

Efficiency Plot Analysis .......................................................................................... 135

5.4

Graphical Repsentation of the Hypotheses............................................................ 135

5.5

Chapter Summary..................................................................................................... 140

CHAPTER SIX ............................................................................................................141


DATA ANALYSIS AND RESULTS................................................................................141
6.0

Introduction.............................................................................................................. 141

6.1

Data Sample Characteristics and DEA Protocols ................................................... 141

6.1.1

Strategic Grouping ................................................................................................. 142

6.1.2

Homogeneity of the sampled organisations ......................................................... 143

6.1.3

Size of Input / Output Factors................................................................................ 144

6.1.4

Measure of the Input / Output Variables .............................................................. 145

6.2

Data Analysis ............................................................................................................ 145

6.3

Result and Discussion .............................................................................................. 148

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6.3.1

Reference Set Frequency Analysis ......................................................................... 149

6.3.2

Input / Output contributions ................................................................................. 151

6.3.3

Potential improvements ........................................................................................ 151

6.4

Summary of the Chapter .......................................................................................... 155

CHAPTER SEVEN.......................................................................................................156
CONCLUSION AND RESEARCH CONTRIBUTION ......................................................156
7.0

Conclusion................................................................................................................. 156

7.1

Research Overview................................................................................................... 158

7.2

Research Findings .................................................................................................... 160

7.3

Research Contributions ........................................................................................... 162

7.4

Research Limitations ............................................................................................... 162

7.5

Future Research ....................................................................................................... 163

BIBLIOGRAPHY.........................................................................................................165
APPENDIX A 1.1: COVER LETTER ...........................................................................229
APPENDIX A 1.2: RESEARCH PARTICIPANT CONSENT FORM ...............................230
APPENDIX A 1.3: SURVEY QUESTIONNAIRE..........................................................231
APPENDIX B 1.1.: FRONTIER ANALYST REPORT ..................................................235
PILOT STUDY ............................................................................................................235
APPENDIX B1.1.2:

FRONTIER ANALYST REPORT ............................................240

Model: BCC OUTPUT ORIENTED WITH VARIABLE RETURN TO SCALE ..................240


Appendix C: Ethical Approval .................................................................................303
APPENDIX D: DEA Glossary of Terms......................................................................308

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APPENDICES
A. BIBLIOGRAPHY

165

B. APPENDIX A-1.1: Cover Letter

229

C. APPENDIX A-1.2: Research Participant Consent Form

230

D. APPENDIX A-1.3: Survey Questionnaire

231

E. APPENDIX B-1.1.: DEA Report - Pilot Study

235

F. APPENDIX B1.1.2: BCC Output Oriented With VRS

240

G. Appendix C: Ethical Approval

303

H. APPENDIX D: DEA Glossary of Terms

308

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LIST OF FIGURES
Figure

Page

2.1

The Paradigm Funnel

2.2

Five Competitive Forces Model

15

2.3

Porter (1998) Generic Strategies

17

2.4

Typical Value Chain

19

2.5

Conceptualization of ITI

34

2.6

UK Construction Industry Profitability and Productivity

38

3.1

The Research Domain

51

3.2

Typical Engineering and Construction Value Chain

51

3.3

Integrated Value Chain with Work Functions

53

3.4

Pre-Project Activities

55

3.5

Engineering Design work functions

56

3.7

Procurement Activities

57

3.8

Construction Activities

58

3.9

Conceptual ITBV Model Scheme for Construction Organisation

68

4.1

Schematic Representation of Research Process

86

4.2

Multiple Paradigm Approach

93

4.3

The Research Methodology

96

4.4

Graphical representation of DEA versus Regression

106

4.5

CRS Frontier Surface

108

4.6.

VRS Frontier Surface

108

4.7

DEA Algorithm

118

5.1

Grouping of the Sampled Organisations

125

5.2

Distribution of Turnover

126

5.3

Distribution of Scores

128
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5.4

ITBA-ITSI correlations across all sampled organisations

130

5.5

ITSI - PROFI correlation across all sampled organisations

130

5.6

PROFI CUSTO correlations across all sampled organisations

131

5.7

SCHD CONTR correlation across all sampled organisations

131

5.8

Screen Shot of Inefficient Organisation

132

5.9

Screens Short of Efficient Organisation

133

5.10

Potential improvements graph for O

134

5.11

Potential improvements for P

136

5.12

Input-Output Contributions for O

137

5.13

Radar Chat of Inputs/Outputs Contributions

142

5.14

Radar Chat of Input/Output Contributions

142

6.1

Strategic Grouping of the Sampled Organisation

145

6.2

Distribution of efficiency scores

152

6.3

Reference Set Frequencies

153

6.4

Input / Output contributions of CO26

154

6.5

Potential improvements graph for CO41

156

6.6

Potential improvements graph for CO49

157

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LIST OF TABLES
Table

Page

2.1

Construction Management Research Domain

39

3.1

List of Primary Activities and Work Functions

55

3.2

Examples of impact of IT on Organisations Performance

57

3.3

IT Application Areas in Construction Projects

71

3.4

IT Resources Constructs

70

3.5

Performance Metrics that Compose Firm Performances

77

3.6

Inputs and Outputs Variables

78

5.1

Inputs/Outputs Data

118

5.2

Efficiency Scores

120

5.3

Potential improvements (Slacks) for O

135

5.4

Potential Improvements (Slacks) for P

136

5.5

Impacts of Different Inputs

140

5.6

Inputs/Outputs Contribution for Efficient Organisations

141

6.3

Inputs / Outputs Slacks for CO41

155

6.4

Inputs / Outputs Slacks for CO49

157

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LIST OF ABBREVIATIONS
BCC

Banker, Charnes and Cooper

BWE

Business Work Environment

CA

Competitive Advantage

CCR

Charnes, Cooper and Rhodes

CIO

Chief Information Officer

COST

Cost Performance Parameter

CRS

Constant returns to scale:

CUSTO

Customer Satisfaction Parameter

CVC

Construction Value Chain

DEA

Data Envelopment Analysis

DMU

Decision Making Unit

DRS

Decreasing Returns to Scale

EMR

Experience Modification Rating

IT

Information Technology

ITBA

Information Technology Business Applications

ITBV

Information Technology Business Value

ITHS

Information Technology Human Skills

ITI

Information Technology Infrastructure

ITSI

Information Technology Shared Infrastructure

MPSS

Most Productive Scale Size

PROFI

Profit Performance Parameter

RBV

Resource-Based View

SAFETY

Safety Performance Parameter

SCHD

Schedule Performance Parameter

TFP

Total factor productivity

VC

Value Chain

VRS

Variable Return to Scale

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MATHEMATICAL NOTATIONS
Symbol

example

Meaning

a A

is an element in set A

a A

is not an element of set A

Set A is a subset of set B

A is an empty set

{a A :*}

a subset of A formed by the elements satisfying


property *
A

{x : x

A and x

{x : x

A or x

{x : x

A, x

A\B

A+B
N

B}
B}

B}

Euclidean space of dimension N


N

x,y

,x

y if and only if xn

1,2,....., N

y if and only if x

y and x

yn

Sum sign
if and only if
for all
there exists
s.t.

subject to
tends to +
Epsilon is a very small positive constant

Page xv of 332

ABSTRACT
The idea that the deployment and strategic utilization of information technology
(IT) resources as factors of production can be used by organisations to improve
performances has been around for many decades. The contributions of the IT
resources in improving organisations performances give rise to what is termed IT
business value (ITBV). There have been varieties of conceptualizations and
attempts to measure the ITBV by different researchers. However, most of these
attempts to quantify ITBV have led to inconsistencies and paradoxes.
Furthermore, a major part of the literature in the area continues to be anecdotal
and primarily descriptive. Therefore, there is little evidence of an accepted
theoretical framework for applying the ideas and there is even less in the way of
empirical evidence concerning the validity and utility of these concepts.
The research adopts multi-theoretical concepts of process-based, resource-based
and microeconomics views as the theoretical framework in order to mitigate the
absence of structured theoretical framework in the previous studies. A non
parametric approach of Data Envelopment Analysis was used for empirical
testing of the model developed.
The findings present an empirically tested model for benchmarking IT-induced
productivity in construction industry. Also the outcome of the research
establishes that IT provides business value in undertaking the engineering and
construction business processes, which leads to significant impact on the
organisations performances in the areas of project delivery, customer relationship
and overall profit growth.
For practical purposes, the model could be used to provide support to managers
in decision making on IT investments, utilization of the IT resources and how
combination of strategic IT resources with other organizational resources could in
increase efficiency in delivering project value chains.

Key Words: Information Technology Business Value, Engineering and


Construction
Organisations,
Construction
Management,
Performance
Measurement and Data Envelopment Analysis.

Page xvi of 332

CHAPTER ONE
BACKGROUND
1.0

Background
The strategic impacts of Information Technology (IT) on the organisations
performances have been of interest to both managers and researchers for
decades (Benjamin et al., 1984; Bakos and Treacy, 1986; Tan, 1996; Davis et
al., 2003). Studies in the field have led to the suggestion that IT-enabled
strategies could be used to gain competitive advantage. The argument is
that IT resources do offer strategic advantage to organisations through
efficient and cost effective delivery of the organisations value chain.
However, most of these studies were carried out through imprecise and
unstructured theoretical constructs that seem to lead to equivocal results
(Porter and Millar, 1985; Mahmood and Soon, 1991; Lee, 2001).
Furthermore, there is a dearth of empirically validated frameworks used
in most of the studies (King et al., 1989). Attempts to explain the
inconsistencies in the various studies on the impact of IT on organisation
performance

ascribed

difficulties

associated

with

modelling

and

measurements of the return of IT investment, mode of data collection and


sampling, industry type, and choice of dependent variables as some of the
major reasons (Brynjolfsson, 1993; Kohli and Devaraj, 2003; Oh and
Pinsonneault, 2007).
Despite a multitude of studies on ITBV and the concept of an
organisations competitive advantage using IT-enabled strategies, there is
no known model in literature that measures the ITBV value addressing the
unique nature of the construction industry. On the other hand, most of the
concepts of competitive advantage (CA) in strategic management are
derived with particular reference to manufacturing industries, hence, not
directly applicable to services industry such as construction. Therefore, the
objective of this research is to contribute in mitigating these drawbacks

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thereby filling the vacuum in the literature of evaluating IT investments in


the construction organisations and construction management.

1.1

Definition of the Problem


In scoping the research problem a detailed literature review on how the
utilization of IT resources impact on performance of engineering and
construction organisations was initiated. Thus, the gap in knowledge
related to how the impact could be evaluated was identified. This
invariably led to formulating the following research question.

1.2

Research Questions
To increase the understanding of the impact of utilization of IT in the
execution of engineering and construction organizations value chains and
their performances; the research study addressed the following question:
"What are the possible impacts of deploying and utilizing IT
resources in the presence of other complementary organisational
resources on the performances of engineering and construction
organisations in United Kingdom?"

1.3

Research Aim
The research was to develop and empirically validate information
technology business value model strategy for engineering and construction
organisations.

1.4

Research Objectives
The objectives of the research include:
To investigate the impact of IT resource utilizing on the performance
of engineering and construction industry in the UK.
To develop a comprehensive process-oriented model of ITBV to
investigate the impact of IT resources on the performance of
engineering and construction organisations.
To use the organisations value chain for delivering construction
project to measure the intermediate impacts of the IT resources and

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then aggregate to organisational level to establish the overall


organisational performances.
To use the non parametric technique of DEA to benchmark the
engineering

and

construction

organizations

IT-induced

performances

1.5

Scope of Research
The study considered the level of IT resources deployed and used by the
UK engineering and construction organisations as a form of automation to
investigate and reported the findings of their impact on the organisations
performances. The study integrated three theoretical perspectives of
process-based, microeconomic and resource-based views to develop a
conceptual model for the research. Using a non-parametric technique of
Date Envelopment Analysis (DEA) the conceptual model was empirically
tested and validated.

1.6

The Research Processes


The research processes adopted towards achieving the objectives of the
research included reviewing and synthesising the current literature on the
related field of the research; developing a new concept to describe the area
and subject of the research, empirical testing and presentation of the
findings in form of new knowledge (Sarantakos, 1993).
The overall strategy adopted for this research was survey questionnaire
with unstructured interviews; and the processes of the research is showing
the stages involved is depicted in Figure 4.1 in chapter four.
The first phase of the research involved reviewing the existing literatures
in filed of management strategy, information technology as a factor of
production,
processes

competitive
and

advantage,

management,

engineering

construction

and

construction

management

research

methodology, data analysis techniques, among others. Gaps and


drawbacks in previous studies were identified which provided the basis
and foundation for the current research (Davis et al., 1989). The research

Page 3 of 332

aim and objectives were established leading to defining the research


question.
In order to provide a medium for answering the research question, a
conceptual model was derived using the theories and paradigms from the
literature as the second phase of the research processes. The model
derivation is presented in further detail in chapter three.
The third stage of the process involved the mapping of the conceptual
model to the DEA mathematical model, empirical testing of the DEA
model using a pilot survey study in order to provide a first hand real
world

experience

on

issues

related

to

the

research

design,

conceptualization, interpretation of findings (Kezar, 2000; Nyatanga, 2005;


Thabane et al., 2010). The outcome of the pilot study provided a guideline:
To help validate the proposed engineering and construction value
chain and the work functions,
To improve the internal validity of the data collection techniques
and the set of questionnaires,
To improve the data collection methods including establishing the
sample size to satisfy the DEA protocols requirements.
The remaining parts of the research design including the strategy are
presented in the subsequent chapters. This chapter explain the processes
for determining the research methods appropriate for answering the
research question, the data collection approach and tools. The final
processes

involved

the

choice

of

data

analysis

approach,

tool,

interpretation and presentation of the findings with conclusion.

1.7

Contribution to Knowledge
The outcome of the research provides a theoretically improved structured
and empirically tested model for evaluating IT business value in
engineering and construction organisations. The model could be used to
benchmark and establish the relative IT-induced performances of the
organisations within strategic groupings of construction industry. For
Page 4 of 332

practical purposes, the model could be used to provide support to


managers in decision making on IT investments, utilization of the IT
resources and how combination of strategic IT resources with other
organizational resources could provide sources of sustained competitive
advantage in their organisations.
The research has made significant contributions in the areas of construction
management, alignment of IT and business strategies for better
performance in the industry, practical application of non-parametric
technique for evaluating productivity of IT-enable engineering and
construction business strategy. Specifically the research contributions to
the body of knowledge in these fields include:
The DEA ITBV model provides mitigation against the limitations
of the existing IT investments evaluation frameworks and
addressed the unique nature of the engineering and construction
value chain.
The model could be used to benchmark and establish the relative
competitive advantages of the engineering and construction
organisations within strategic groupings of the construction
industry.
The empirical evidence established that IT provides business
value in undertaking the engineering and construction business
processes leading to significant impact on the organisations
performances in the areas of project delivery, customer
relationship and overall profit growth.

1.8

Thesis Structure
The thesis is structured into the following chapters:
Chapter one: This chapter provides the summary of the seven chapters
that made up of this thesis from background to conclusion.
Chapter two: This chapter reviews the literature in detail utilizing the
paradigm funnel approach in the areas of information
Page 5 of 332

technology,

organisation

performance,

construction

management, strategic management, engineering and


construction value chain, theory of competitive advantage,
economic theory of production, resource based theory and
the concept of information technology business value
among others. The chapter starts with a broad review of
concepts and empirical works in these fields and narrows
down to the current research objectives focusing on the
current IT research methodology in engineering and
construction management. The insight gained led to the
research proposition, aim and objective with the view to
contribute and fill in the vacuum found in the literature of
IT business value in engineering and construction
organisation. The findings lead to challenging some of the
ontological and epistemological core assumptions of the
previous studies.
Chapter Three: This chapter provides a detailed description and analysis
that led to the conceptualisation and derivation engineering
and construction industry value chain and the formulation
of research question and hypotheses; conceptual ITBV
model and variables measures operationalisation. ITBV is
viewed as the positive outcome of deployment and
implementation of IT resources in the delivery of
engineering and construction projects value chain as a
measure of the performance metrics including cost,
schedule, profitability, safety and customer satisfaction.
Chapter Four: The justification for the overarching research philosophical
stance, methodology, methods and techniques adopted are
presented in this chapter. The chapter highlights the
researchers understanding of the assumptions of different
paradigms and how they were deployed in the research
Page 6 of 332

processes to bring about a good fit between paradigms and


methods. The chapter addresses the research methodology,
justifying the choice of strategy and method adopted. These
issues include philosophy, philosophy branches, paradigm,
paradigm types, research approach, research strategy,
research choices, time horizons, data collection techniques,
testing/validation/evaluation,

etc.

The

chapter

also

distinguishes between research methodology and method.


The chapter presented methods adopted to ensure the
validity and reliability of the research process. Both the
methodology and the research strategy were outlined,
linked to literature, and appropriately justified in line with
literature.
Chapter five: The chapter presents an analysis of primary data that was
collected from a pilot study. The aim of the pilot study was
to help test the methods and procedures proposed for the
research. The outcome of the pilot study provides a guide
used to fine tune the research design, establish the
effectiveness of the research methodology, sampling and
the internal validity of data collection techniques data
collection tools, validation of the proposed primary
activities of the engineering and construction value chain
and their corresponding work functions, establish the
validity of use of the DEA in evaluating the survey data.
Chapter six:

Following the pilot study reported in chapter 5, another


survey with larger sample size aimed at (1) satisfying the
DEA protocols requirements and (2) covering most of the
construction industry sectors was launched. This chapter
presents the results and analysis that lead to findings and
conclusion of the research.

Page 7 of 332

Chapter seven: The chapter presents the conclusions drawn from the
analysis and findings of chapter six. It highlights the
contributions to knowledge from the research findings,
recommendations, business management applicability and
future research.

Page 8 of 332

CHAPTER TWO
THE RESEARCH THEORITICAL PARADIGMS
2.0

Introduction
This chapter reviews the literature in detail in the areas of information
technology,

organisation

performance,

construction

management,

strategic management, engineering and construction value chain, theory


of competitive advantage, economic theory of production, resource based
theory and the concept of information technology business value among
others.
An extensive review of the information technology business value (ITBV)
literature utilizing the paradigm funnel approach (Berthon et al. 2003) was
carried out. Thus, understanding of the metaphysical assumptions upon
which streams of research in the areas of strategic applications of
information technology in delivery of engineering and construction
organisations value chains to gain competitive advantage was gained.

Figure 2.1 The Paradigm Funnel (Berthon et al. 2003)


The chapter presents what has been researched, how it has been
researched, and what the key issues therein distilled at different levels as
Page 9 of 332

depicted in Figure 2.1. The applicability and criticisms of the main


theories, frameworks and concepts related to the areas of the study were
reviewed and noted in a continuous cyclic process as part of the research
strategy. A brief catalogue of the previous research work in the same area
of the proposed study, with in depth analysis and selective enlistment of
opinions, propositions from previous research are presented in the next
subsections.
The review include a number of surveys conducted in the construction
industry to investigate the status of IT applications in the industry in
several countries were identified. These include countries such as Saudi
Arabia (Shash, Ali and Al-Amir, 1997; OBrien and Al-Biqami, 1999);
Scandinavia (Howard, Kiviniemi, and Samuelson, 1998); Australia
(Stewart, Mohamed and Marosszeky, 2004; Peansupap and Walker, 2005;
Chen, et al., 2001); UK (Obrien, and Al-Soufi, 1994; Aouad and Price,
1994); Japan (Pena-Mora, and Tanaka, 2002); USA (Hansen; and Grok,
1998); Singapore (Ofori, 2004); China (Jia Du and Feicheng, 2004); Brazil
(Chavez and Canongia, 2004); Taiwan (Tan, 1996); Europe(Hannus et al.,
1999); Canada (Hugues, 2000); New Zealand (Doherty, 1997); Sweden,
Denmark and Finland (Howard and Samuelsson, 1998, Howard et al.,
1998); Hong Kong (Futcher and Rowlinson, 1998; 1999).
The relationship between strategy and information technology (Weill
1992; Mahmood and Mann, 1993; Tan, 1996; Kettinger et al., 1995; Chan et
al., 1997; Palvia, 1997; Li and Ye, 1999; Palmer and Markus, 2000; Dans,
2001; Davis et al., 2002; Hyvnen, 2007) was then reviewed intensively
examined in the literature.
The chapter highlights filtered review of the broad empirical work on the
IT business value that were not engineering and construction domain
specifics, and then narrowing and focusing on the current IT research
methodology in engineering and construction management. The findings
lead to challenging some of the ontological and epistemological core
assumptions of the previous studies.
Page 10 of 332

2.1

Concepts of Competitiveness
The term competitiveness originated from the Latin word, competer, which
means involvement in a business rivalry for markets. One popular view of
Competitiveness is as a comparative concept denoting the ability and
performance of a given country, industry or an organisation. Thus,
competitiveness is viewed from these three levels of abstraction (Buckley
et al., 1988; Momaya and Selby, 1998; Murths, 1998; Ambastha and
Momaya, 2004; Henricsson et al., 2004; Flanagan et al., 2005; 2007).
The sources of competitiveness for an organisation to gain Competitive
Advantage include its assets and processes. The competitiveness processes
are defined as those processes, which help identify the importance and
current performance of core processes such as strategic management
processes, human resources processes, operations management processes
and technology management processes (Ambastha and Momaya, 2004)
and defined in the organisations value chain.
Porter (1990) argues that there was no accepted definition of
competitiveness, while Turner (1991) submits that the definition of the
concept of competitiveness is not important as long as the outcome of it is
good. On the other hand, Henricsson et al. (2004) stress that defining
competitiveness matters. These and other views led Flanagan et al
(2007:990) to conclude:
..researchers have failed to reach a consensus on the meaning of
competitiveness despite its widespread use in academia and
industry.
Nevertheless there are variety of working definition for the concept of
competitive advantage, theories for the sources of competitive advantage
and sustainable competitive advantage.
Day and Wensley (1994) insist that a complete definition of competitive
advantage must describe not only the state but also how that advantage is
gained. Sustained competitive advantage flows from organizational

Page 11 of 332

capabilities and resources that are rare, valuable, non-substitutable, and


imperfectly imitable (Barney, 1991; 2001; Lado and Wilson, 1994). It is
obtained by firms implementing strategies that exploit their internal
strengths, through responding to environmental opportunities, while
neutralizing threats and avoiding internal weaknesses (Byrd and Turner,
2001).

2.2

Theories of Competitive Advantage


Competitive Advantage (CA) can result either from implementing a valuecreating strategy that is not being simultaneously implemented by any
current or potential competitors (Barney, 1991) or through superior
execution of the same strategy as competitors. Hofer and Schendel (1978:
25) describe CA as the unique position an organisation develops vis--vis
its competitors. CA is mainly derived from resources and capabilities.
Resources have been termed assets, strengths and weaknesses and
stocks of available factors (Amit and Shoemaker, 1993; Wernerfelt,
1984). The capabilities of an organisation are what it can do as a result of
teams of resources working together.
An organisation is said to have a sustained CA when it is implementing a
strategy that is not simultaneously implemented by many competing
organisation and where these other organisations face significant
disadvantage in acquiring the resource necessary to implement this
strategy (Maa et al., 1995).
A variety of factors have been shown to have an important impact on the
ability of organisations to obtain CA, including the relative cost position of
the organisation (Porter, 1980), the organisations ability to differentiate its
products (Caves and Williamson, 1985; Porter, 1980) and the ability of
organisations to corporate in strategic alliances (Kogut, 1988).
Amongst the plethora of theories explaining how organisations could
achieve competitive advantage, three main schools were identified
(Flanagan et al., 2007) as most prominent:

Page 12 of 332

The CA and competitive strategy models (Porter, 1980, 1985)


The resource-based view and core competence approach (hereafter
the RBV) (e.g. Wernerfelt, 1984; Prahalad and Hamel, 1990; Barney,
1991) and
The strategic management approach (e.g. Chandler, 1962; Ansoff,
1965).

2.2.1

Porters Theory
Porters theory for organisations competitiveness is characterized as the
industrial organization view of CA, which was grounded on the earlier
works of Mason (1939) and Bain (1959) in the area of industrial
organization economics (Flanagan et al., 2007; Kale, 2002). Porter (1986:3)
states:
"Competitive advantage grows fundamentally out of the value a
firm is able to create for its buyers that exceeds the organisation's
cost of creating it. Value is what buyers are willing to pay, and
superior value stems from offering lower prices than competitors for
equivalent benefits or providing unique benefits that more than
offset a higher price. There are two basic types of CA: cost leadership
and differentiation."
Porters definition of competitive advantage seems to implicitly equates
competitive advantage to profitability, and sustainable advantage to
sustainable profitability (Ma, 2000). Major components in Porters theory
are the five competitive forces model, the three generic competitive
strategies, and the value chain.

2.2.2

The Porters Five Competitive Forces Model


Porters (1980) assumed five variables to model the competition within an
industry (Figure 2.2). The forces consists of(Thompson and Strickland,
2001):
1.

threat of new entrants;

2.

power of suppliers;
Page 13 of 332

3.

power of buyers;

4.

threat of substitution and

5. jockeying for position.


Porter (1980) suggested that the threat of new entrants within an industry
could be influenced by factors such as economies of scale; product
differentiation; large capital requirements and cost disadvantages
associated with learning curves and experience curves. Betts and Ofori
(1992) suggest that, .the threat of new entrants is not particularly
potent within the construction industry; however, they excluded large
construction projects and hightech end of the construction sector in their
analysis (Olugbekan, 1991; Aniekwu, 1995).

Figure 2.2 Five Competitive Forces Model (Thompson and Strickland, 2001)
The CA to be gained from powerful supply relationships is greatest when

Page 14 of 332

few organisations dominate supply, where there is no competing product,


and when the supplier holds a threat of forward integration over the
buyer. A forward integration business model allows an organisation to
take direct control of how its products are distributed; thereby helps
achieve greater economies of scales or higher market share. In the
construction industry, there are many different suppliers of many
products and services (Betts and Ofori, 1992). A backward integrating of
an organisations value chain tends to increase the competitive advantage
over its peers (Kassim, 2006). Furthermore, the potential for substitute
products give scope for competitive advantage within an industry.
There is evidence to suggest that the jockeying for position is strong
within the engineering and construction industry due to the relative size
of the competitors, the slow growth of the industry and the difficulties to
differentiate their products and or services (Betts and Ofori, 1992).
Despite Tatum (1988) suggesting that the construction industry has a high
fit with each component of the five force model, Betts and Ofori (1992)
contend that there is little evidence to suggest that construction
organisations are systematically examining these forces and their
relevance to the strategic planning and management of their firms.
Nevertheless, Porters choice of the five forces was criticized. It was
argued that the choice was arbitrary and there was no indication on how
to operationalize any analysis based on them (OSchaunessy, 1984; Shahid
et al., 1999). Porter's five forces model tends to assume a perfect market
situation and does not seem to explain todays dynamic business
environment.
However, Chaffey (2002) supports Porters classic model of the five main
competitive forces and he says that it still provides a valid framework for
reviewing threats arising in the e-business era. The value of Porter's model
enables managers to think about the current situation of their industry in a
structured, easy-to-understand way as a starting point for further analysis

Page 15 of 332

2.2.3 The Three Generic Competitive Strategies


According to Porter (1998a; 1988b), for an organisation to find a
competitive edge within the five forces model it must adapt one of three
generic strategies (Figure 2.3): cost leadership, differentiation, or focus. He
called these generic strategies because they can be applied to an
organisation in any industry. A cost leadership strategy is one in which an
organisation strives to have the lowest costs in the industry. A firm that
uses a differentiation strategy is one that tries to offer products or services
with unique features that customers value. The value added by the
uniqueness lets the organisation command a premium price. The focus
strategy can be either a cost leadership or differentiation strategy aimed
toward a narrow market.

Figure 2.3 Porter (1998) Generic Strategies

2.2.4 Organisation Value Chain


Porter (1998a) suggests that a systematic way of examining a firms
business processes and how the individual activities interact is necessary
for analysing source of competitive advantage. The tool for these analyses
proposed by Porter is termed value chain.
A value chain disaggregates an organisation into its strategically relevant
activities and potential sources of CA. The value chain divides the
organisations activities into technologically and economically distinct

Page 16 of 332

value providers. A companys value chain is a system of interdependent


activities, which are connected by linkages. Linkages exist when the way
in which one activity is performed affects the cost or effectiveness of other
activities (Porter and Miller, 1998). The organisation gains competitive
advantage by performing these strategically important activities more
cheaply or better than its competitors (Porter, 1998a).
Porter (1985) argues that to identify the potential for competitive
advantage it is necessary to look at the individual parts of the whole
organisation using the value chain concept. He suggested that the
difference between value chains are a key source of competitive advantage
between competitors and stresses the importance of IT to value chain
analysis. Betts and Ofori (1992) state that there are no published examples
of specific application of the concept in construction enterprises, although
the principles are apparent in some other industries.
An important concept that highlights the role of IT in competition is the
value chain. This concept divides an organisations activities into the
technologically and economically distinct activities it performs to do
business in line with Porters value chain concept (Porter and Miller, 198).
Careful management of linkages is often a powerful source of competitive
advantage because of the difficulty rivals have in perceiving them and in
resolving trade-offs across organizational lines.
Though there is no universally accepted application of the concept of
value chain in the construction industry (Betts and Ofori, 1992); however,
engineering and construction organisation being a project based industry;
many authors have suggested phases of the construction process as the
primary activities of the value chain (Baden and Baden, 1993; Garnett and
Pickrell, 2000;

OConnor et al., 2000; Back and Moreau 2000). The

engineering and construction project phases identified include front-end


design, procurement, construction management, construction execution,
commissioning and start up, operation and maintenance.

Page 17 of 332

CA in either cost or differentiation is a function of a companys value


chain. A companys cost position reflects the collective cost of performing
its value activities relative to rivals. Similarly, a companys ability to
differentiate itself reflects the contribution of each value activity toward
fulfilment of buyer needs (Porter and Miller, 1998).
Competitive scope is a powerful too for creating CA. A broad scope can
allow the company to exploit interrelationship between the value chains
serving different industry segments, geographic areas, or related
industries. By selecting a narrow scope, on the other hand, a company
may be able to tailor the value chain to a particular target segment to
achieve lower cost or differentiation (Porter and Miller, 198).
The value chain provides a rigorous way to understand the source of
buyer value that will command a price, and why one product or service
substitutes for another. An organisations value chain is a system of
interdependent activities, which are connected by linkages.

Figure 2.4 Typical Value Chain


A typical value chain as in Figure 2.4 disaggregates a firm into its
strategically relevant activities and potential sources of CA. An
organisation gains CA by performing these strategically important
activities (the value chain) more cheaply or better than its competitors.

2.2.5 Merits of Porters Theory


In analysing the competitiveness of firms, Porters theory has been the
dominant tool for the past two decades (Flanagan et al., 2007). Its various

Page 18 of 332

merits include its simplicity (Miller and Dess, 1993) and its strong
theoretical underpinnings (White, 1986),
Miller and Dess (1993) evaluated Porters model of generic strategies on
the basis of its simplicity, accuracy (predictive and explanatory power),
and generalizability and conclude thus:
Even though it is a simple framework, it captures a great deal of
complexity.
It does not provide a completely accurate portrayal of strategyperformance relationship of the ability and durability of combining
strategic advantage, and
The generalibility of the generic strategies is questionable.

2.2.6

Criticism of Porters Theory


Murry (1988) argue that Porters generic strategy concept does not satisfy
the desire for a solid theoretical framework. He further stressed that for a
theory to be useful, it should guide empirical research; however, such
research generated by the concept (e.g. Dess and Davis, 1982; 1984;
Hambrick, 1983; Miller and Friensen, 1986a, 1986b; White, 1986) are not
comparable, and the results are contradictory concluded Murry (1988).
The concept does not address the internal mechanisms by which a
company converts the influence of a challenging external environment
into useful internal abilities (Lado et al., 1992). For some companies, the
pursuit of more than one generic strategy simultaneously is viable
(Kassim, 2006; Hambrick, 1983).
As a way to overcome the stated weakness of the concept, Murry (1988)
suggested a contingency approach. He postulated that the concept could
be clarified by linking each strategy to a set of environmental preconditions. Developing these pre-conditions also allows the key question
by Miller and Friesen (1986) on the compatibility of generic strategies to be
resolved and facilitates a discussion of the link between strategies and the
strategic means used to implement them (Dess and Davies, 1982, 1984).
Page 19 of 332

On the other hand, Ma (2000: 16) inquire whether either cost advantage or
differentiation advantage is sufficient and necessary for superior
performance; assuming a negative answer he concluded that competitive
advantage, within Porter's perspective (1980, 1985) at least, does not
equate to performance. He further argues that superior performance
could also come from other types of competitive advantage, such as speed
(Stalk, 1990; Eisenhard and Brown, 1998) or flexibility (Sanchez, 1993,
1995). CA and performance are two different constructs and their
relationship seems to be complex.

2.3

Process based View


Porters concept of generic strategy was criticized for not satisfying a solid
theoretical framework (Murry, 1988). It was argued that the concept does
not address the internal mechanisms by which a company converts the
influence of a challenging external environment into useful internal
abilities (Lado et al., 1992). Furthermore, for some organisations, the
pursuit of more than one generic strategy simultaneously is found to be
viable (Hambrick, 1983; Kassim, 2006).
However, Porter (1998) suggests that a systematic way of examining an
organisations business processes and how the individual activities
interact to gain CA is by analysing the organisations value chain. He
further argued that an organisation gains CA by performing these
strategically important activities more cheaply or better than its
competitors (Porter, 1998). Thus, Porters value chain concept satisfies
process-based view, which postulates that IT investments create
competitive

advantages

by

improving

operational

efficiency

of

intermediary business processes, which in turn, under the appropriate


conditions, lead to better organisation-level performance (Barua et al, 1995;
Qing and Jing, 2005).

2.4

The Resource Based View (RBV)


The RBV shifts the focus from the industry structure to the resources
developed by a firm (Flanagan et al., 2007). A major contribution of the
Page 20 of 332

RBV is that it provides valuable suggestions for an organisation to focus


on those organisational specific internal resources. Therefore, it largely
complements the limitations that are inherent in Porters theory (Miller
and Shamsie, 1996). However, the concept of resources remains an
amorphous one that is rarely operationally defined and tested in different
competitive environments (Miller and Shamsie, 1996).
The main propositions of the RBV are:
An organisation can be viewed as a collection of resources.
CA does not depend on market and industry structures but stems
from the resources inside a firm.
Not all resources are necessarily the source of an organisations CA,
it is only the organisation specific resources that meet the criteria of
valuable,

rare,

non-substitutable,

imperfect

limitability

and

imperfectly mobile.
An organisation must identify and strengthen those organisation
specific resources in developing its core competence.
Usually, resources here refer to not only the possession of
organisation-specific resources, but also to the effective utilization of
these resources to achieve CA.
The RBV proposed that the deployment and exploitation of valuable, rare
resources, and capabilities contributes to an organisations CA, which in
turn contributes to its performance (Barney, 1991). Based on this paradigm
it could be argued that IT-enabled strategy can improve organisational
performance by creating sustainable competitive advantage via unique,
immobile, and path-dependent strategic resources and capabilities
(Bharadwaj, 2000; Sambamurthy et al., 2003; Newbert, 2008).
The RBV shifts the focus from the industry structure to the resources
developed by an organisation (Flanagan et al., 2007). It is mainly based on
Selznicks (1957) seminal work on distinctive competences and on
Penroses (1959) early argument that an organisation is a collection of

Page 21 of 332

resources and its performance depends on its ability to use them


(Ambrosini, 2003). The perspective really took off in the 1990s, when a
number of conceptual papers were published (e.g. Barney, 1991; Conner,
1991; Mohoney and Pandian, 1992; Peteraf, 1993). Prahalad and Hamel
(1990; 1994) promoted the principles by proposing that organisations
should develop unique resources in order to achieve core competence and
sustain growth.
The future of the RBV relies heavily on the search for clear empirical
evidence. There is also a need to know which resources are valuable in
which contexts and how resources can be managed in such a way as to
sustain CA. Critics also pointed out that its inward focus may risk
ignoring the nature of market conditions (Hooley et al., 1997). It appears
that the strengths of the RBV are the aspects where Porters theory
presents limitations (Flanagan et al., 2007).
The theory has come also under critical scrutiny, partly because of the
assumptions it makes with respect to the philosophy of science (Priem and
Butler, 2001; Williamson, 1999). In particular, critics have focused on its
validity as a theory, i.e. whether it makes its assumptions clear and
empirically testable. The argument against it has been that it is
tautological, in that it rests on statements that are not theoretically
contestable or falsifiable. While the RBV has been spiritedly defended
(Barney, 2001), what is especially striking is the manner in which the
argument has been augmented by overt references to the philosophical
positions held by the theorists. For instance, Priem and Butler (2001: 22)
announce that their analysis is undertaken from a logical-positivist rather
than a post-positivist perspective (Mir and Watson, 2001).
The RBV of an organisation emphasizes the importance of heterogeneous
advantages, as firm heterogeneity lies in the core argument of that view:
unique, difficult to imitate, and organisational specific resources generated
CA (Barney, 1991).

Page 22 of 332

2.5

Micro Economic Theory


The microeconomics-based view postulates that IT investments create
excess return over other types of capital investments in production
processes of organisations (Brynjolfsson and Hitt, 1996; Dewan and Min,
1997). Microeconomic theory is useful in conceptualizing the process of
production and providing empirical specifications enabling estimation of
the economic impact of IT (Melville et al., 2004). This led to the argument
that microeconomic production theory is the natural choice for
investigating the productivity impact of IT (Mukhopadhyay, et al., 1997).
In microeconomics, the combination of feasible inputs and outputs is
called the productivity possibility set. The economic view of IT value is
that of input in the production function of an organisation and there is a
substituting effect between IT and other production factors (Dewan and
Chung-ki, 1997 The concept allows estimation of the measure of IT
resources usage as an economic production function using a nonparametric technique such as DEA.

2.6

Strategic grouping
In addition to using industry structure to determine the performance of an
organisation (Bain, 1956; Scherer, 1970; Porter1981) or using a resource
based approach (Wernerfelt, 1984; Barney, 1991; Grant, 1991); a business
could analyse the relationship between industry and the organisation
using strategic grouping (Thompson and Strickland, 2001; Claver et al.,
2003).
A strategic group consists of those rival organisations with similar
competitive approaches and positions in the market. They provide an
intermediate frame of reference between viewing an industry as a whole
and considering each organisation separately (O'Farrell, et al., 1993; Chen,
1996; Flavian and Polo, 1999). There has been limited attention in the field
of research on strategic management and strategic groups in the
construction industry (Claver et al., 2003). Using this concept to answer the

Page 23 of 332

research question could facilitate generalization of findings on the


industry.

2.7

Impact of IT on Organisations Performance


Several studies have suggested that when an IT-enabled strategy is
implemented in the presence of heterogeneous organisation capabilities,
such an organisation will be able to gain a sustained CA (Porter, 1980;
Barney, 1991; Clemons, 1986; 1991; Clemons and Kimbrough, 1986;
Clemons and Row 1987; 1991a; Feeny, 1988; Feeny and tves, 1990; Mata et
al., 1995). Such studies both theoretical and empirical provide evidences
indicating that organisations implementing IT-enabled strategy are able to
improve their performance and gain competitive advantage over their
direct competitors (Mata et al., 1995; Porter and Millar, 1995; Dehning and
Stratopoulos, 2003).

2.8

IT Business Value (ITBV)


The contribution of IT to the improvement of various measures of an
organisations performance metrics such as productivity, profitability,
cost, differentiation and market share is variously termed as IT business
value, strategic value of IT, strategic advantage, competitive
weapons, and IT-dependent strategy by different researchers (Melville
et al., 2004; Piccoli and Ives, 2005; Oh and Pinsonneault, 2007). In this
study ITBV is viewed as the outcome of the implementation of IT
resources in the construction project value chain on its performance
metrics including cost, schedule, profitability, safety and customer
satisfaction.

2.9

ITBV and Process view Paradigm


There is a strong argument for the need to investigate the impact of IT on
the performances of organisations at process level (Barua et al., 1995 and
Melville et al., 2004). Porter (1985) value chain concept is adopted to satisfy
the process-based view which hypothesised that IT investments create
CAs by improving operational efficiency of intermediary business

Page 24 of 332

processes, which in turn, under the appropriate conditions, lead to better


organisational-level performance (Barua, et al., 1995; Soh and Markus,
1995; Mooney et al., 1996; Qing and Jing, 2005; Newbert, 2008).
Business process is defined as the specific ordering of work activities
across time and space, with a beginning, an end, and clearly identified
inputs and outputs (Davenport, 1993:5). An organisation executes
numerous business processes to achieve its strategic objectives, thereby
providing a range of opportunities for the application of information
technology to improve processes and organisational performance (Porter
and Millar 1985; Straub and Watson 2001).

2.10

ITBV and RBV Paradigm


It has been argued that IT resources alone do not confer sustainable
competitive advantage (SCA) to organisations deploying them (Carr, 2003)
since such resources are necessary, but not sufficient, for SCA (Clemons
and Row, 1991). Rather, it was submitted that IT resources form part of a
complex chain of assets and capabilities that may lead to sustained
performance (Wade and Hulland 2004). Therefore, another theoretical
base is needed to explain the complex interaction of IT with other
organisational resources to provide SCA to an organisation. One of such
theoretical postulation is the RBV. Many authors including Bharadwaj
(2000),

Santhanam

and

Hartono

(2003),

Ravinchandran

and

Lertwongsatien (2005) have suggested that adopting RBV as a theoretical


framework in IT business study can help address the productivity
paradox.
The RBV proposed that the deployment and exploitation of valuable, rare
resources, and capabilities contributes to an organisations CA, which in
turn, contributes to its performance (Barney, 1991).

Based on this

paradigm it could be argued that an IT-enabled strategy can improve


organisational performance by creating SCA via unique, immobile, and
path-dependent strategic resources and capabilities (Clemons and Row,

Page 25 of 332

1991; Mata et al., 1995; Powell and Dent-Micallef, 1997; Bharadwaj, 2000;
Sambamurthy, Bharadwaj and Grover, 2003; Newbert, 2008).
Furthermore, RBV recognises the role of resource complementarities in
creating and providing sources of SCA to organisations.

2.11

Complementary Organizational Resources


The concept of resource complementarities hypothesizes that the presence
of a resource enhances the strategic values of other resources it
complements (Teece, 1986). Drawing upon the concept RBV which
suggests that organisations exploiting the complementarily among their
resources and capabilities can create complex resource/capability
networks as barriers to imitation, thus enhancing the potential of
achieving durable CA (Collis & Montgomery, 1998; Barney, 2002; Colbert,
2004). Recent empirical studies have shown that the combinative effects of
complementary resources and capabilities influence the competitive
performance of organisations (Carmeli and Tishler, 2004; Song et al., 2005).
Song et al. (2005), for instance, found a synergistic effect between two
complementary

organizational

capabilities

(marketing-related

and

technology-related) on organisation performance in the high turbulence


environment (Zhang, 2007).
There are studies that investigated complementarities between IT
resources and non-IT resources at various levels of abstraction. For
example, Breshnahan et al., (2002) suggest that organisation-level
productivity increases when the level of IT spending on computers is
accompanied by work reorganization investments. Similarly, Brynjolfsson
and Hitt (1998) examine the complementarities between IT spending and
business work practices, and conclude that organizational work practices
are important determinants of IT demand and productivity. Powell and
Dent-Micallef (1997) concluded that IT alone does not explain variation in
measures of organisation performance, but that the advantages gained by
some organisations can be explained by their ability to combine explicit
technology (IT) resources with complementary human and business
Page 26 of 332

resources. Similarly, Zhu (2004) found evidence of complementarities


between e-commerce capability and IT infrastructure, and at the industry
level, Mittal and Nault (2008) found indirect effects of IT investment on
the productivity of labor and non-IT capital. At the process level, Ray et al.,
(2005) investigate the differential effects of various types of IT resources
and the moderating role of shared knowledge, but did not consider
complementarities between IT and non-IT resources. Jeffers et al., (2008)
empirically investigate complementarities between IT resources, especially
tacit IT resources, and non-IT resources at the process level. They argue
and empirically demonstrate that complementarity is but one potential
outcome of how IT resources could interact with non-IT resources in the
bundle; those resources can interact as substitutes as well.
Therefore, while technology is a core component of IT-dependent strategic
initiatives, enabling the system of value-adding activities, its successful
implementation requires a number of other complementary organizational
resources to be mobilized (Piccoli and Ives, 2005). Previous research has
investigated the role of information systems in leveraging these
organizational resources via co-presence or co-specialization (Clemons
and Row 1991b; Powell and Dent-Micallef 1997).
Although it is possible to apply IT for improved organizational
performance with few organizational changes (McAfee 2002), successful
application of IT is often accompanied by organizational wide change
(Brynjolfsson and Hitt 2000; Brynjolfsson et al., 2002; Cooper et al., 2000),
including policies and rules, organizational structure, workplace practices,
and organizational culture. When synergies between IT and other
organisation resources exist, the latter are called complementary
organizational resources. Applying Barneys (1991) classification of
organisation resources, complementary organizational resources may
include non-IT physical capital resources, non-IT human capital resources,
and organizational capital resources, e.g. formal reporting structures and
informal relationships within and among organisations. Similarly, Grant
Page 27 of 332

(1991) classifies non-IT resources into five categories: physical, human,


organizational, reputation, and financial (Melville et al., 2004).
Complementary

organizational

resources

include

scale

of

operations and market share (Clemons and Row 1991a; Kettinger


et al., 1994), organizational structure or governance (Feeny and Ives
1990), slack resources (Kettinger et al. 1994), access to distribution
channels

(Feeny

ownership

2001),

structure

physical

(Piccoli

assets

and

(Feeny

Applegate

and

Ives

2003),

1990),

corporate

culture (Barney 1986; Feeny and Ives 1990; Powell and DentMicallef,

1997),

top

management

commitment

(Henderson

and

Venkatraman 1993; Keen 1991), competitive scope (Clemons and


Row 1991a; Feeny and Ives, 1990), and software and process
patents (Atkins 1998; Mykytyn et al., 2002). Organisations with a
unique

activity

system

(Siggelkow,

2001)

or

unique

business

processes (Davenport, 1993) may also be able to leverage these


resources to create value for customers. External resources, such as
inter-organizational

relationships

(Dyer

and

Singh

1998),

brand

recognition, image, and trust, are intangible and developed over


time

(Porter

1991).

They

can

be

valuable

components

of

IT-

dependent strategic initiatives as well (Hart and Saunders 1997;


Kotha, 1995).
Melville et al., (2004) operationalize the IT resource, by melding
other

formulations

organisation
organizational

resources
capital

with
of

Barneys
physical

resources,

(1991)

capital,
the

classification

human

former

two

capital,

of
and

containing

components of the IT resource, while all three contain components


of complementary organizational resources.

2.12

ITBV and Economic Theory


Many studies on payoffs of IT investments have adopted the
microeconomic concepts of productivity to explain relationship between
IT investment and various measures of economic performance. The
Page 28 of 332

microeconomics-based view postulates that IT investments create excess


return over other types of capital investments in production processes of
organisations (Brynjolfsson and Hitt, 1996; Hitt and Brynjolfsson, 1996;
Dewan and Min, 1997; Siegel, 1997; Lehr and Lichtenberg, 1999).
Microeconomic theory provides a rich set of well-defined constructs
interrelated via theoretical models and mathematical specifications. Such
formulation is particularly useful in conceptualizing the process of
production and providing empirical specifications enabling estimation of
the economic impact of IT (Brynjolfsson and Hitt 1995; Melville et al.,
2004). This led to the argument that microeconomic production theory is
the natural choice for investigating the productivity impact of IT
(Mukhopadhyay et al., 1997). In microeconomics, the combination of
feasible inputs and outputs is called the productivity possibility set (PPS).
This set is characterized by free disposal and replicability, and is
monotonic and convex. The concept of a production function has been
developed over the decades to link quantities and qualities of inputs via
transformation processes to well defined outputs.
As IT is typically a cross-sectional business function rather than a primary
business process, recent literature on the business value of IT suggests a
rather indirect and more complex relation between IT and its business
value (Lee, 2001). Notably, Melville et al. (2004) propose a unified
conceptual model on IT business value. They show how the RBV has
provided very instructive general insights into how to use the IT resource
to generate and maintain a SCA. Still, like most parts of the literature, their
framework relies on broad constructs and is quite general. As a
consequence, the transformation process from IT to value still largely
resides in a black box and it is difficult to both, empirically substantiate
the ways in which IT creates value and to derive concrete managerial
guidelines on how to develop the IT resource (Wagner and Weitzel, 2007).
The fundamental argument of the economic view of IT value is that IT can
be treated as an input in the production function of an organisation and
Page 29 of 332

there is a substituting effect between IT and other production factors


(Dewan and Min, 1997). Thus, IT creates value for an organisation when IT
capital or IT labour produces higher return than ordinary capital and
labour (Brynjolfsson and Hitt, 1996; Hitt and Brynjolfsson, 1996). The
impact of IT investments can be estimated using an economic production
function. Significant returns on IT investments have been reported in
many similar studies at the organisation level (Barua and Lee, 1997; Rai et
al., 1997; Lehr and Lichtenberg, 1999; Kudyba and Diwan, 2002), industryspecific sectors (Siegel, 1997; Devaraj and Kohli, 2000; Menon et al., 2000),
and country level (Kraemer and Dedrick, 1993; Dewan and Kraemer,
1998). With a few exceptions (Loveman, 1994; Berndt and Morrison, 1995),
overall, the published empirical studies using the economic production
function approach have found significant impact of IT investments on
productivity and performance (Kohli and Devaraj, 2003).
The economic view of IT value, essentially a variance theory (Markus and
Robey, 1988), however, fails to explain where and why such impact occurs
(Soh and Markus, 1995; Mooney et al., 1996). In light of this, the process
view of IT value considers IT investments as a necessary but not sufficient
condition for superior organisation performance. It postulates that the
impact of IT investments on organisation performance is the result of
interactions among three processes: the IT conversion process in which IT
investments become IT assets, the IT use process in which IT assets create
impacts, and the competitive process in which IT impacts are converted
into organisation performance (Soh and Markus, 1995). Each of these
processes is influenced by a multitude of technological, organizational,
industry, and competitive environmental factors. There is plenty of
empirical evidence that supports the process view. For example, Barua et
al. (1995) suggested that IT has first-order effects on operational level
variables such as capacity utilization and inventory turnover for
manufacturing organisations and these intermediary variables in turn
affect higher-level variables such as productivity and profitability.

Page 30 of 332

Based on the microeconomic-view the starting point of the analysis is to


capture the underlying production state of the construction organization
highlighting the impact of IT (Alpar and Kim 1990).
The production transformation function can be represented by equation
(2.6) below:
Y = F (X)

2.6

Where, Y is the vector of outputs representing the performance metrics of


the organisations and X is the vector of inputs representing the IT and
non-IT resources.
To understand the possible contribution of IT on an organisations
performance, the definitions of IT, classification of the IT resources used in
deriving the conceptual IT business value model for the construction
industry are presented in the subsequent subsections.

2.13

Information Technology Resource


Information Technology (IT) is variously referred to as a collective
integration of computing technology and information processing as
something that includes equipment, applications and services that are
used by organisations to deliver data, information, and knowledge to
individuals and processes (Mentor, 1997; Turk, 2000; Alshawi and Faraj,
2002).
Resources are viewed as the assets and capabilities organisations utilise to
develop and implement a given strategy. Based on RBV and production
theory the term resource is variously called as assets, capabilities, inputs
and competencies. For the purpose of this study resource is viewed in the
broader general sense that encompassed all of the descriptions above
(Grant, 1991; Amit and Schoemaker, 1993; Makadok, 2001 and Jeffers et al.,
2008). IT resources, according to Grover et al., (1995), consist of IT shared
infrastructure (ITSI), IT competence, and organizational expertise in
employing and sustaining IT-enabled strategy. IT resources are considered

Page 31 of 332

to be the tangible and intangible organisations assets that are related to


the implementation of IT-enable strategy (Piccoli and Ives, 2005).
IT-dependent strategic initiatives consist of identifiable competitive moves
that depend on the use of IT to be enacted and are designed to lead to
sustained improvements in an organisations competitive position (Ross et
al. 1996).

2.13.1 The IT infrastructure


McKay and Brockway (1989) define IT infrastructure (ITI) as the enabling
foundation of shared information technology capabilities upon which
business depends. They view ITI as the shared portion of the IT
architecture. Earl (1989) defines ITI as the technological foundation of
computer, communications, data and basic systems. He views ITI as the
technology framework that guides the organization in satisfying business
and management needs. Duncan (1995) refers to ITI as the set of IT
resources that make feasible both innovations and the continuous
improvement of IT systems. Weill (1993) noted that ITI was a foundation
for capability across business and/or functional units. Davenport &
Linder (1994) referred to ITI as that part of the organizations information
capacity intended to be shared. They concluded that an ITI is an
organisations institutionalized IT practice the consistent foundation on
which the specific business activities and computer applications are built.
Broadbent et al. (1996) describe ITI as the base foundation of budgeted-for
IT capability (both technical and human), shared throughout the
organisation in the form of reliable services, and usually managed by the
information system group. Rockart et al. (1996) reflected the ideal goals of
an ITI in referring to an IT infrastructure of telecommunications,
computers, software, and data that are integrated and interconnected so
that all types of information can be expeditiously and effortlessly, from
the users viewpoint routed through the network and redesigned
processes (Bruce et al., 2003). ITI, according to Mitchell and Zmud (1999),
offers an organization the ability to effectively leverage IT resources.
Page 32 of 332

Broadly, ITI refers to enabling technologies, outsourcing arrangements,


and policies (Mitchell and Zmud, 1999).
ITI provides the foundation for the delivery of business applications and
services (Will & Broadbent, 2000; Melville et al., 2004; Piccoli and Ives,
2005). Therefore, ITI is an important organizational capability that can be
an effective source of value (Bharadwaj, 2000; Broadbent and Weill 1997,
Ross et al., 2004; Sambamurthy, 2000; Bhatt and Grover, 2005). ITI provides
organisations with the ability to share information across different
functions, innovate, and exploit business opportunities, and the flexibility
to respond to changes in business strategy (Weill et al., 2002). However,
the existence of open architectures and standardized enterprise packages
suggest that this capability might not be heterogeneously distributed
across organisations and / or the access to infrastructure is not restrictive
(Carr, 2003). Therefore, despite some contrary evidence ITI is argued to be
valuable but not a source of competitive advantage (Bhatt and Grover,
2005).
ITI

represents

composite

of

shared

technical

components

communications technologies, data integration, software applications, and


human skills (Byrd and Turner 2000).
Thus, different authors have operationalised ITI in dimensions and
viewed from different perspectives. Mudie and Schafer (1985) view ITI in
process terms having the following components: data architecture,
communication networks infrastructure, and support organizations.
Duncan (1995) suggested that the components of an organizational ITI
include networks, databases, practices, and applications. Broadbent et al.,
(1996) argued that ITI consists of both technical and organizational
capabilities to provide the opportunities to share IT resources within and
across the organisations (Broadbent et al., 1999). Using some of these
postulations, Bhatt (2000) hypothesized four dimensions of ITI: extent of
intra-organisation

infrastructure;

extent

of

inter-organisation

infrastructure; extent of infrastructure flexibility; and extent of data


Page 33 of 332

integration. She further combined the first three dimensions into one and
called it network infrastructure measuring the extent of network
connectivity and network flexibility. The second component of IT as
conceptualized by Bhatt (2000) was data integration with a measure of
level of availability and consistency of data across different departments
of an organisation.
Bruce et al (2003) operationalised ITI using eight dimensions of Chief
Information Officer (CIO), IT planning, IT security, technology integration,
advisory committee, enterprise model, information integration and data
administration. The CIO dimension measures both technical and business
knowledge of the head of IT section. IT planning views alignment of IT
strategy with business strategy and the security awareness is captured
under IT security dimension. Level of automation and integration is
represented by technology and information integration dimensions. The
advisory committee monitors end user participation and senior managers
participation.
Fink and Neumann (2009) identified three theoretical approaches to ITI
including technical-oriented approach consisting of platforms, networks
and telecommunications, data, and core applications, component-oriented
approach involving technical and human components and processoriented approach which incorporates organizational processes and
activities utilizing the rest of the components.
Fusing McKay and Brockway (1989), Weill (1993) and Bhatt (2000) ITI
concepts, a four-layer conceptualization of ITI is derived (Figure 2.5).
Therefore, for the purpose of this study IT resources are refer to as IT
infrastructure (ITI) that include both tangible and intangible assets of the
organisation, and are conceptualized in four dimensions of shared
technical components, IT Human competence, IT application, and
business process (Bhatt, 2000). The shared technological component of the
ITI model (Figure 2.5) consists of the hardware portion of the

Page 34 of 332

infrastructure. They represent what Bhatt (2000) called network


infrastructure including data integration.

Figure 2.5 Conceptualization of ITI (Kassim et al., 2009b)


The other component is the human IT capabilities (Ross et al., 1996;
Bharadwaj, 2000; Melville et al., 2004) that are needed to effectively utilize,
leverage and bind other components into robust and functional IT
services. McKay and Brockway (1989) refer to those human and
organizational capabilities as mortar. Duncan (1995) refers to them as
infrastructure planning and management factors. This layer represents
capabilities that combine and deploy the technological components into a
shared set of capabilities or services that are fundamental to the operation
of the business. The elements of this layer allow other direct purpose
uses of technology to be feasible, and allow the successful implementation
of the IT architecture.
IT human skills (ITHS) represent not only the technical skills but also the
managerial and organizational skills of IT professionals to innovate and
support critical business processes. IT planning and management practices
produce the architectures, plans, standards, policies and rules that govern
the development of the technological components of IT infrastructure
across the organization.
IT business applications (ITBA) refer to any application that is important
to running and delivery of the engineering and construction organisations
value chains, these may include engineering analysis packages,

Page 35 of 332

administration software, planning and schedule control, purchasing


systems, sales analysis tools.

2.14

Nature of Construction Industry


The Construction Industry is made up of organisations and all enterprises
that are engaged in some or all of the following activities: engineering
design, engineering consultancy, project management, architectural
designs,

procurement

of

construction

material,

and

construction

management activities (Betts and Ofori, 1992). The construction process is


made up of the whole life cycle of a project, including pre-design, design,
construction, and operation and maintenance (El-Ghandour, and AlHussein, 2004). The process is heavily dependant on exchange of large and
complex data. Successful completion of a project depends on accuracy,
effectiveness and timely communication and exchange of critical
information and data between the project teams (Akinsola et al., 2000).
The construction industry has been characterizations as fragmented as a
result of many stakeholders and phases involved in a typical construction
project (Nitithamyong, and Skibniewski, 2004). Most construction projects
involve many phases such as feasibility, design, construction and
maintenance. Each phase involves communication and coordination
among many project participants/stakeholders such as the owner,
contractor, designer, consultant, subcontractors, and suppliers.
The fragmented nature of the industry has made it difficult to achieve
economies of scale and made it information intensive (Chen et al., 1993;
Latham 1994; Egan, 1998; Howard et al., 1989, Crawford, 1999; Johnson et
al., 2002; Macomber, 2003; Nitithamyong and Skibniewski, 2004). A large
volume of information is required to run a typical construction project,
which involves the different parties and phases that are normally
geographically dispersed. Further difficulties in capturing, sorting,
communicating and acting on project information are also attributable to
the fragmentation (Ng et al.; 2001; 2005).

Page 36 of 332

As a result traditional management practice within this construction


environment has been criticized for not being conducive to improving
construction productivity (Latham 1994).
Rather than changing the nature of the construction industry, Egan
(1998) suggested that the construction workforce should be wary of
attempts to improve construction productivity and process by blindly
adopting innovation such as new management techniques, construction
techniques or IT. Any adoption of innovation should be mindful of
existing industry constraints to overcome barriers with a more systemic
approach to change rather than undertaking isolated piecemeal change
initiatives.
Construction is a major industry throughout the world accounting for a
sizeable proportion of most countries gross domestic product (GDP)
(Crosthwaite, 2000). For example construction contributes some 7% of the
GDP in most OECD countries and up to 12 to 14% in Japan and Korea
(Gann, 2000), while in developing countries investments in construction
projects could be as high as 50-60% of national budgets (Dharwadker,
1979).
In United Kingdom construction is one of the largest industry. The sector,
according to NESTA report (2007), generates around ten per cent of GDP
about 90 billion from more than 182,000 firms employing 1.17 million
people (NESTA, 2007). The UK construction industry contributes
significantly to the economy and calls for improving productivity and
performance of the industry have been made through Latham (1994) and
Egan (1998) reports.
The decline in profit margin from 2010 reflects the squeeze on contractors
margins from falling tending prices and the rising cost of materials fuel due
to higher world commodity prices argued the UK Construction Industry
KPI report (2011). However, the productivity jumped sharply as contractors
made more efficient use of a slimmed down workforce as shown in Figure
2.6
Page 37 of 332

Figure 2.6 The UK Construction Industry Profitability and Productivity


Nevertheless, due to the significant business contribution of the
construction industry to nations economies many studies were undertaken
in order to find ways to overcome the problems caused by fragmentation
such as communication (Aouad and Alshawi, 1996; OBrien, 1996); and to
improve construction management methods and techniques that could
increase industry productivity (Hampson and Tatum, 1994; Hampson and
Tatum, 1997; Lenard and Bowen-James, 1996; Tatum, 1988). They finally
lead to identifying the nature of construction industry practice as a barrier
to improving its productivity (Latham, 1994).
Suggestions for the use of IT in order to increase efficiency, communication
and productivity in the construction industry were also made (McMahon,
1996; Sachin, 2003; Charoenngam

et

al.,

2003;

Skibniewski

and

Nitithamyong, 2004; Zhen et al., 2005).


The need for effective information processing and exchange increases with
the increasing degree of task-uncertainty, number of organizational units
involved, and extent of interdependence among the units. By sharing
information within the organizational units as well as among the
Page 38 of 332

participating

organizations

significant

integration

in

construction

processes can be achieved (Ahmad and Ahmed, 2001).

2.15 Competitive Strategy in Construction


For the purpose of this research, the construction industry includes all
organisations that engage in engineering consultancy, project management,
architecture, procurement, construction management and maintenance
activities (Betts and Ofori, 1992). The industry is project based (Garnett and
Pickrell, 2000) with a typical project life cycle consisting of the following
phases: bidding and contractor selection, conceptual and detail engineering
design, construction and construction management, and operation &
maintenance. Despite the sizable contribution of construction to a nations
GDP, the UK construction industry, in particular, is being criticized for its
inefficiencies and has been identified as under-performing (Egan, 1998;
Latham, 1994; Kagioglou et al. 2001). To improve the competitiveness of the
industry through increased efficiency, communication and productivity, a
strategic use of IT is suggested in delivering projects (Zhen et al., 2005).
Such strategy involved careful management of the construction value chain
through deployment of IT resources couple with the organisational
complementary resources.
The concept of strategic thinking has increasingly become important in
construction organizations (Junnonen, 1998). This is partially due to longterm, survival need of the construction organizations operating in a highly
turbulent and competitive environment (Price and Newson, 2003; Betts and
Ofori, 1992).
Early writers (Betts and Ofori, 1992; Warszawski 1996) dealt with the
theoretical concept of strategic choices in the construction industry, while
Jennings and Betts (1996) provide an empirical analysis of strategies in the
industry.
Attempts to establish the relationship of the competitive positioning with
the construction firms performance was also made (Akintoye and

Page 39 of 332

Skitmore, 1991; Hampson and Tatum, 1997; Kale and Arditi, 2002), and
recently by Flanagan et al., (2005; 2007). However Green et al., (2008) argued
that generally, the understanding of the competitive strategy of
construction firms has stagnated within recent years.
As they gained prominence quickly, the general theories on firms
competitiveness have been introduced into the construction sector.
Introduction, adaptation and application of these theories into the sector
have attracted enduring research interest as the industry has long been
viewed as heterogeneous. Porters theory for firm competitiveness has had
certain popularity in the construction industry (e.g. Male and Stocks, 1991;
Betts and Ofori, 1992, 1994; Langford and Male, 2001). The RBV has also
been explored in the construction sector. Haan et al. (2002) demonstrate its
validity in construction. Kale (2002) engages it as an essential part of his
framework for identifying the sources of competitiveness for construction
firms. The strategic management approach is also used to achieve
construction firms CA. Typical works on strategic management in
construction include Fellows et al., (1983), Newcombe et al. (1990),
Warszawski (1996), Venegas and Alarcon (1997). The above-reviewed
studies have provided different levels of insight into the achievement of
competitive advantage for construction firms. Nonetheless they were
criticized for having adopted an anecdotal or descriptive research approach
(Kale and Arditi, 2002). The lack of rigorous empirical data has resulted in
minimal improvement in our realistic understanding. This leads to recent
empirical competitiveness research at the construction firm level. Some
findings that are different from Porters original propositions have been
reported. For example, contractors in the US market who adopt a neutral
strategy that falls between a narrow and a broad strategy can also achieve
CA (Kale and Arditi, 2002) whereas according to Porter (1980; 1985)
contractors with such a neutral strategy also called stuck in the middle,
possess no CA.

Page 40 of 332

2.16 Competitive Domains for the Research


Buckley et al. (1988) suggested three categories of competitiveness
measures, as actual performance, the generation of assets and the process,
which may turn assets into performance (Henricsson and Ericsson, 2004).
Also national, industrial and the firm are identified as the three levels of
abstraction for measuring competitiveness (Momaya and Selby, 1998;
Flanagan et al., 2005) while Flanagan et al., (2007) extend the levels to
include project in case of construction industry.
Furthermore, Flanagan et al. (2007) provide taxonomy for analysing
competitiveness of the construction sector within the four domains.
Nevertheless, they did not seem to categorically answer their question Is
there a research domain for competitiveness of industry? Flanagan et al,
(2004) concluded that competitiveness can be measured at any of the four
levels abstraction and the choice of approach will dependent of the level
(Flanagan et al., 2005).

2.16.1 National Competitive Domain


There is no apparent agreement on how to view national perspectives as a
domain for analysing the construction sector. However, Different
researchers use variety of models, while deploying different methodologies
to investigate a nation competitiveness in construction sector. A summary
from Dikmen and Birgninul (2006) is shown the Table 2.1.

Page 41 of 332

Table 2.1 Construction Management Research Domains

Author

Study/Survey/Research

Arditi
and Factors
that
affected
the
Gutierrez (1991)
competitiveness of US contractors
working abroad during 1980s
Crosthwaite (1998) International performance of British
construction companies.
Ofori (1994)
Formulation of a programme for
developing Singapores construction
industry
Pheng et al. (2004)
Explored the advantages of top
British and Chinese contractors in
the global market

Model

Used
Porters
diamond Model

(1998)

Used internationalisation
ratios in the OLI + S
(ownership, locational and
internalisation advantages
+ specialty advantages)
model,
Oz (2001)
Investigated
the
sources
of Used
Porters
(1998)
competitive advantage of Turkish diamond model
contractors in international markets
Seymour (1987)
Analyse
the
multinational Used Dunnings (2000)
construction industry
eclectic paradigm
Pheng
and Investigated the internationalisation Used Dunnings (2000)
Hongbin (2003
of Chinese construction enterprises
eclectic paradigm
Cuervo and Pheng Analysed
the
significance
of
(2003)
ownership advantage and the
disadvantage factors of Singaporean
transnational
construction
corporations in the international
construction market
Pheng
and Proposed an OLI + S model for Used Dunnings (2000)
Hongbin (2004)
measuring
the
degree
of eclectic paradigm
internationalisation of multinational
corporations

Examining the competitiveness of construction in relation to a nation is


viewed the same as analysing how the construction organisation within the
nation competes with rest in the world (Flanagan et al., 2007).

2.16.2 Industrial Competitive Domain


To summarize, firm competitiveness is related to market performance, with
high productivity and low costs being the keys to success. By moving one
level higher, to the industry level, the analysis is likely to lose a significant

Page 42 of 332

level of detail. Often, a valid sample of projects or firms performance is


aggregated to represent the industrys performance. However, whilst this
gives an interesting overview, it makes it very difficult to analyse cause
outcome- relationships. (Flanagan et al., 2005).
An organisations competitiveness is related to market performance, with
high productivity being the key to success. The objective of firm
competitiveness, after having secured survival, is the creation of new
growth options that create value for shareholders. Hence, competitiveness
is associated with achieving an objective. In other words, competitiveness is
not an end but a means to an end (Buckley et al., 1988).

2.16.3 Organizational Competitive Domain


Firm-level competitiveness is of great interest among practitioners. It has
been argued that nations can compete only if their firms can compete
(Porter, 1998). Porter says, It is the firms, not nations, which compete in
international markets. The environmental factors are more or less
uniform for all competing firms. The variance in profitability could be
attributed to the firms characteristics and actions (McGahan, 1999). Other
pro-firm views (Bartlett and Ghoshal, 1989; Prahalad and Doz, and 1987;
Prahalad and Hamel, 1990) focus on individual firm and their strategies
for global operations, and resource positions to identify the real sources of
their competitiveness.
Parson (1983) explained the three-level impact of IT in detail. At the
industry level, it changes an industrys products and services, market and
production economies. At firm level, it affects the five key competitive
forces. At the strategic level, it affects the firms strategy in low-cost
leadership, product differentiation and concentration on market or
product niche (Tan, 1996).
For a firm to gain SCA it must continuously seek to add value to its
activities. This could be done through continuous improvement of
operational effectiveness, efficiency, improve business performance and

Page 43 of 332

increase stakeholder satisfaction (Porter, 1998; Nicoletti and Scarpetta,


2003; Flanagan et al., 2004).
At the firm level, all projects completed in one fiscal year may be
aggregated to show the firms performance in delivery and profitability.
However, firms are often interested in more overall financial and market
performance, which is not covered by the project approach (Flanagan et
al., 2005).

2.16.4 Project Competitive Domain


In summary, national competitiveness often includes elements of
successful trade performance in the international markets that will in turn
lead to sustained and rising standards of living in terms of rising real
incomes. In other words, the objectives of the competitiveness of nations
centre on human development, growth and improved quality of life
(Flanagan et al., 2005).

2.17

IT enabled Competitive Strategies


IT-enabled strategy involves organisation's strategic moves of deploying
IT resources to support the delivery of its value chain for sustainable
improvement in its competitive position (Bharadwaj, 2000; Stratopoulos
and Dehning, 2000).
Results from previous researchers on the impact of IT-enabled strategies
on the performances of organisations have been equivocal. Some reasons
for the inconsistencies include lack of contextualisation of the studies
based on business specifics, choices of inconsistent variables, impact of lag
between investment and outcome and methods of data analysis (Kohi and
Devaraj, 2003). Some of these drawbacks are highlighted below and
mitigation incorporated in the model proposed in this study.
The need to develop a model that appropriately represents ITs value in a
business context is recognised as an important step in evaluating IT
payoffs correctly (Thouni et al., 2008). There were limited theoretical
frameworks used in previous studies to provide a basis for investigating
Page 44 of 332

the impact of IT on an organisation's performance within a business


context (Lee, 2001; Kohli and Devaraj, 2003). Therefore in order to
understand the unique characteristics of ITBV in the construction
industry, a conceptual model is developed using the typical industry
value chain for examining the effect of IT through a web of intermediate
level contribution (Barau et al., 1995).
The equivocal results from different IT payoff studies are also attributable
to the use of inconsistent input and output variables (Weill, 1988). The
contemporary IT investment evaluation approach has focused on varieties
and inconsistent quantitative financial assessment and appraisal methods
(Chen et al., 2006; Tallon and Kraemer, 2006). There were also emphases in
using monetary values in the form of IT related expenditure to represent
independent variables. Sigala et al., (2004) argue that using such financial
metrics do not provide insight to the actual usage of the IT since the
outcome is more likely to be dependent on the IT resources that are
deployed and used. Therefore, the impact of IT investment on the
construction organisation performance is operationalised through a
measure of availability, degree of usage and the level of integration of its
IT resource as a complement to certain unique and heterogeneous
resources such as work practices, organisational structure and culture
residing in the organisation. However, data is required to empirically test
any declaration of the relationship between the selected variables. Thus,
the type of data and the method of analysis have significant impact on the
outcome.
The realisation of the benefits from IT investments may not be accounted
for at the time of data collection due to maturity issues and the lag
between the investment and the payoffs (Brynjofsson, 1993). Also Weil
(1988) suggested that because of the time lags among the variables, a
priori reasoning on the direction of causality is often difficult. The use of
longitudinal or panel data in examining the impact of IT investment is
suggested to improve the accuracy of the results, since it allows
Page 45 of 332

researchers to examine the lag effects (Devaraj and Kohli, 2000). With the
difficulty in collecting longitudinal data, cross-sectional data to simulate a
time series can provide good insight as suggested by Shafer and Bryd
(2000).
OConnor and Yang (2004) suggested that increased integrated usage of IT
resources may contribute significantly to project performance in terms of
cost and schedule success. El-Mashaleh et al. (2006) found a similar
quantitative result, when they also examined the impact of IT on
construction firm performance specially cost and schedule.

2.18

Chapter Summary
This chapter reviewed the literature on the application of IT from a high
level of a country to the organisational level. While numerous studies have
investigated performance measures and strategy, and information
technology and strategy, research on the combination of performance
measures, strategy and information technology is sparse. Thus, the
literature review highlighted the dearth of research in field of strategic
utilization of IT in construction management evaluate IT induced
productivity.
The review focused on the strategic application of Information Technology
in the execution of engineering and construction business to gain
competitive advantage. The insight gained lead to the research
proposition, aim and objective with the view to contribute and fill in the
vacuum found in the literature of IT business value in engineering and
construction organisations.
The next chapter introduces the conceptual model for the ITBV, which has
been developed using the theories and paradigms described in the
literature along with establishing the hypotheses and identifying the
variables and their measures of the research.

Page 46 of 332

CHAPTER THREE
IT BUSINESS VALUE CONCEPTUAL MODEL
3.0

Introduction
This chapter presents the conceptualization and development of the ITBV
model using the theories and views described in chapter two. ITBV is
viewed as the positive outcome of deployment and implementation of IT
resources in the delivery of engineering and construction projects value
chain as a measure of the performance metrics including cost, schedule,
profitability, safety and customer satisfaction.
The chapter also contains the derivation of hypotheses along with
providing definitions and selections of the input and output variables in
addition to the techniques deployed for quantifying them.

3.1

Conceptual IT Business Value Model


Diverse conceptual models and frameworks at different levels of analysis
have been used by different researchers to study the impact of deploying
and using IT resources as factors of production on the organisational
performance. Some of the concepts and theories used to formulate and
explain the relationships between the strategic application of IT resources
and organizational performance include economics, strategy, accounting,
and operations research, philosophy, and sociology (Brynjolfsson 1993;
Wilson 1995; Brynjolfsson and Yang 1996; Ross et al., 1996; Bharadwaj,
2000; Dehning and Richardson, 2002; Dedrick et al., 2003; Melville et al.,
2004; Piccoli and Ives, 2005).
On the other hand, other researchers have taken an alternative approach
in modeling IT Business Value (ITBV) by focusing on the attributes of IT
and other organizational resources that together may confer a competitive
advantage. For example Bharadwaj (2000) models three key IT resources
and their relationship to a firms capability to deploy IT for improved
performance: IT infrastructure, human IT resources, and IT enabled

Page 47 of 332

intangibles. However, Clemons and Row (1991b) argued that IT is widely


available to all firms and can only confer a sustainable competitive
advantage if applied to leverage differences in strategic resources. Mata et
al., (1995) derive a resource based conceptual framework mapping the
attributes of IT to competitive advantage (Melville et al., 2004).
On the other hand, Weills model (1992) focuses on the ability of
organisations to convert IT assets into organisational performance,
identifying several conversion effectiveness factors that mediate the ITperformance relationship. Francalanci and Galal (1998) propose that
managerial choices regarding the mix of clerical, managerial, and
professional employees mediate the relationship between IT and
organisation performance. Soh and Markus (1995) develop a conceptual
framework which posits that IT investment leads to IT assets, IT assets to
IT impacts, and IT impacts to organizational performance (Melville et al.,
2004).
However,

most

of

these

constructs

do

not

provide

adequate

methodologies for measuring and analysing ITBV. Furthermore, there is


no specific integrated ITBV model addressing the unique nature of the
construction

industry.

Difficulties

in

formulating

performance

measurement have been identified as a contributing factor in the apparent


lack of positive findings for IT impact on performance at organisational
level (Barau et al., 1995). Most of the early models seem to have focused on
an aggregate level of analysis (e.g. Bailly and Chokrabarti, 1988; Jonscher,
1983; Roach, 1987 and Stabell, 1982). Such studies attempt to relate IT
expenditure directly to output variables at the organisation level using
microeconomic production function as a model; thus, the intermediate
processes representing the organisations value chain through which IT
impacts arise are ignored (Barau et al; 1995). Therefore, it was argued that
the effect of deploying IT resources on organisational performance could
best be identified through a web of intermediate level contribution
within the organisations processes (Crownston and Tracy, 1986;
Page 48 of 332

Kauffman and Kriebel, 1988a, 1988b; Mukhopadhyay and Cooper, 1992;


1993; Barau et al., 1995); in line with organisational value chain analysis
suggested by Porter (1985).
The varieties of theoretical frameworks used in modelling and evaluating
the ITBV have led to fractured research streams with many simultaneous
but non-overlapping outcomes (Chan, 2000). Thus, in order to
accommodate the multiple theoretical frameworks and account for the
complex linkage of how IT resources impact on organisational
performance, multiple theoretical paradigms were used to conceptualize
and model ITBV (Melville et al., 2004).
Therefore, to develop a conceptual model for evaluating ITBV in
engineering and construction organisations multi-theoretical perspectives
(Qing and Jing, 2005) of process-view (Barau et al., 1995; Porter, 1985; 1998;
Melville et al., 2004); resource-based view (Clemons and Row, 1991; Mata
et

al.,

1995;

Powell

and

Dent-Micallef,

1997;

Bharadwaj,

2000;

Sambamurthy, Bharadwaj and Grover, 2003; Newbert, 2008) and


microeconomic-view (Soh and Markus, 1995; Mooney et al., 1996;
Brynjolfsson and Hitt, 1996; Hitt and Brynjolfsson, 1996; Siegel, 1997;
Devaraj and Kohli, 2000; Menon et al., 2000; Kohli and Devaraj, 2003) were
adapted.
The proposed model is developed at the organisational domain level
within the construction industry domain as shown in Figure 3.1. The level
of analysis was focal organisations and its related value chain for the
delivery of engineering and construction projects. The level analysis used
a web of intermediate levels of construction project processes, in line with
the value-chain analysis suggested by Porter (1985). Several conference
papers (Kassim et al., 2009a; 2009b; 2010a; 2010b; 2010c) were published
during the stages of the development and testing of the proposed model.
Applying strategic group concept when sampling for data collection
minimized the impact of industry structure variations.

Page 49 of 332

Figure 3.1 The Research Domain (Kassim et al., 2009, 2010a)


The economically distinct activities of focal organisations are represented
by its value chain within the research domain as depicted in Figure 3.1.
Using the process-based Porter (1985) a typical engineering and
construction value chain consisting of five primary activities of strategic
planning, engineering design, procurement, construction and start-up and
operation and maintenance were identified shown in Figure 3.2.

SSttrraatteeggiicc PPllaannnniinngg EEnnggiinneeeerriinngg DDeessiiggnn

Procurement

CCoonnssttrruuccttiioonn

MMaaiinntteennaannccee

Figure 3.2 Typical Engineering and Construction Value Chain


Based on the literature (OConnor et al., 1999; Back and Moreau, 2000;
OConnor and Yang, 2004; Yang et al., 2006; Yang 2007) and discussions
with managers in field of engineering and construction; the primary
activities of the engineering and construction projects value chain were
further broken down into work functions as depicted in Figure 3.3 and
Table 3.1. The degree of IT resources deployment, utilisation and
integration of hard and software applications was measured at the level of
the work functions (OConnor and Yang, 2004).

Page 50 of 332

Table 3.1 Lists of Primary Activities and Work Functions

Project
Management

Maintenance and
Operation

Construction &
Commissioning

Procurement

Engineering
Design

Strategic
Planning

Primary
Activities

Work Functions (WFs)

ITw
1 2 3 4 5

Conduct market analysis


Control of bidding process
Prepare contract strategy
Develop bid packages
Review potential bidders
Develop manpower plan
Develop Design Basis
Engineering deliverables
Preliminary Estimate
Project master schedule
Execution plan
Interface management
Quality and safety issues
Material specifications
Material requisition
Issue Inquiry
Bid Evaluation
Delivery and Expediting
Inspection
Field document control
Safety Management
Test packages control
System turnover control
Fabrication status control
Materials inventory
Field request for information
Conduct pre-operations testing
Train facility operators
Track and analyze maintenance history
Develop maintenance plans
Monitor & assess equipment operations
Track maintenance / modifications requests
Update as-built drawings
Monitor/track/control energy usage
Monitor environmental impact
Detail schedule preparation
Detail cost estimate
Track project progress
Document Management
Change Management
Progress reporting
Invoicing process

Page 51 of 332

Figure 3.3 Integrated Value Chain with WFs (Kassim et al., 2009, 2010a)
The value chain concept provides a typical business process of an
engineering and construction organisation. The components of the critical
activities (Porter, 1985: 37) representing the work functions for each
primary activity of the value chain are further developed. A critical
activity is one, which has a large impact on the organisational CA. This
means that an activity becomes critical if it creates a large potential for cost
reduction or differentiation (Michael and Deigan, 1989). Using these
guidelines each of the primary activities of the value chain in Figure 3.2
was further broken down at the process level. For example, the primary
activity of strategic planning is subdivided into: (a) market research, (b)
bidding process, (c) contract strategy, and (d) manpower planning etc.
These subdivisions of the primary activities of value chain are referred to
as work functions (WFs) in line with OConner et al., (2000) and ElMashaleh et al., (2006). Production processes in engineering and
construction organisations are significantly different from those in the
manufacturing organisations; thus, work functions where technologies are
identified to be applied were adopted (Seaden et al., 2003). The detail
breakdown of the primary activities of the construction value chain into
the respective critical work functions is presented in Table 3.1. The

Page 52 of 332

breakdown was derived from the literature (OConnor et al., 1999;


OConnor and Yang, 2004; Yang et al., 2006; Yang 2007) and with extensive
discussion with managers in the industry. The individual WFs were
validated through the pilot survey through questionnaire as described in
Chapter 4.

3.2

Engineering and Construction Value Chain


Careful management of linkages is often a powerful source of competitive
advantage because of the difficulty rivals have in perceiving them and in
resolving trade-offs across organizational lines.
There is no universally accepted application of the concept of the value
chain in the construction industry (Betts and Ofori, 1992). However, with
construction being a project based industry (Baden and Baden, 1993;
Garnett and Pickrell, 2000), a typical value chain for engineering and
construction processes was proposed by Back and Moreau, (2000) and
OConnor et al., (2000).
In order to predict the impact of information management-driven process
changes on project schedule and cost, Black and Moreau (2000) developed
primary

activities

for

conducting

engineering,

procurement

and

construction (EPC) processes. They established the EPC main levels of


activities in a hierarchical form based on the consensus of 40 engineering
and construction organisations surveyed. The first level of Black and
Moreau (2000) primary EPC activities were: (1) Pre-project planning (2)
Engineering Design (3) Materials management (4) Construction (5) Startup. This level was further broken down to the second and third levels. The
third level of the activities were mainly project level specific rather than at
the organisational domain.

3.2.1

Strategic Planning
Generally business strategic planning could be viewed as the selection of
ideas and assets to deliver the long-term goal of an organisation.
Nevertheless, Bob and Ron (2000) insisted that there is no general

Page 53 of 332

agreement on the fundamental areas of business strategy. However, they


conceptualised strategy in three dimensions of process which represents
the manner in which the strategy come about; the content referring to the
outcome of the strategic planning and context to highlight the
environment the organisation operates.

Figure 3.4 Pre-Project Activities (Back and Moreau, 2000)


Back and Moreau (2000) used pre-project activities to capture the planning
process at the organisational domain to set up engineering and
construction business. Some of the level 2 activities include business
planning, business technical plan. However, including project strategy
and contracting strategy tend to include project domain at this level.

3.2.2

Engineering Design
Engineering design is a creative, iterative and often open-ended process of
conceiving

and

developing

components,

systems

and

processes

Engineering design process, thus, is systematic and creative application of

Page 54 of 332

scientific and mathematical principles that proceeds manufacture or


construction of product or facility (Saraforde, 2006).

Figure 3.5 Engineering Design work functions (Back and Moreau, 2000)
Gwendolyn and Vreede (2009) argued that regardless of the domain, the
act of designing involves proving a solution to a problem. Engineering
design is a multi-disciplinary and multi-step process that includes
research, conceptualization, feasibility assessment etc. (Ertas and Jones,
1996; Eggert, 2010).

3.2.3

Procurement
Procurement is viewed as an activity in the project construction life cycle
that involves the acquisition of goods and/or services from preparation
and processing of a requisition through to receipt and approval of the
invoice for payment. It commonly involves (1) development of
specifications (2) issue for inquiry to suppliers (3) analysis and evaluations
of bids submitted and (4) making the purchase (5) expediting the delivery
and (6) contract administration (Shaw, 2010).
Page 55 of 332

Figure 3.6 Procurement Activities (Back and Moreau, 2000)


Back and Moreau (2000) categorised the procurement process under
material management, giving it a specific reference to construction project
activities as depicted in Figure 3.6.

3.2.4

Construction and Commissioning


Construction is the process that translates the completed design and
procured materials into fabricating, erecting and or installing finished
facilities such as buildings, bridges, road, refineries, petroleum rigs, and
jetties.

Page 56 of 332

Figure 3.7 Construction Activities (Back and Moreau, 2000)


The final stages of construction projects include pre-commissioning,
commissioning and start-up. Pre-commissioning especially in oil and gas
construction projects include the process of installation of all instrument
loops, equipment items and electrical supplies. With the establishment of
overall facility functionalities n safety and controls the commissioning of
activities were conducted.

3.2.5

Maintenance and Operation


Operations and Maintenance are the decisions and actions regarding the
control and upkeep of property and equipment. To achieve this, the main
activities involved the following, no necessary in the same sequence: (1)
Conduct pre-operations testing (2) Develop maintenance plans (3) Monitor
& assess equipment operations (4) Track and analyse maintenance history
(5) Track maintenance / modifications requests (6) Monitor/track/control
energy usage (7) Update as-built drawings (8) Monitor environmental
impact (9) Train facility operators. The aim of operations and maintenance
activities is to prevent failure of facilities or equipment, decline in
efficiency, reliability, and safety of the facility Sullivan (et al., 2010).

Page 57 of 332

3.2.6

Project Management
Project management is a methodical approach to planning and guiding
project processes from start to finish. According to the Project
Management Institute, the processes are guided through stages that
include (1) initiation, (2) planning, (3) executing, (4) controlling, and (5)
closing. The project management concept can be applied to almost any
type of project and industry. A project is typically viewed as any
temporary endeavour with a defined start and end, further constrained
by specification and cost undertaken to meet unique goals and objectives
(Martin, 2002; Paul et al., 2005)
The primary challenge of project management is to achieve all of the
project goals (Lewis, 2006) and objectives while honoring the
preconceived constraints (Paul et al., 2005). Typical constraints are scope,
time, and budget (Harold, 2003). The secondaryand more ambitious
challenge is to optimize the allocation of necessary inputs and integrate
them to meet pre-defined objectives PMI (2010).

3.3

IT Application Areas in Construction


Different IT systems are used at country, organizational and projects
levels. IT systems used at organizational level are mainly related to data
processing on finances, business strategies and investments decisions.
Example such IT systems deployed at organizational level include
geographical information system, expert systems, inter-organisational
information sharing, communication systems, etc., (Hassan and McCaffer,
2002; Kaklauskas, 2007). The deployment of IT at organizational levels has
recorded several empirical impacts on the organisations performances as
exemplified in Table 3.2.

Page 58 of 332

Table 3.2 IT on Organisations Performance


Impact of IT on Organisations
Performance

Reference

Improve their market share and


profitability through innovative use of
IT

Ives and Learnmonth, 1984; McFarlan,


1984, Porter and Miller, 1985; Rockoff et
al., 1985

Possible role in creating sustained


competitive advantages for firms

Barney, 1991; Byrd and Turner, 2001;


Clemons, 1986; 1991, Clemons and
Kimbrough, 1986; Clemons and Row,
1987; 1999; Feeny, 1988; Feeny and Ives,
1990; King et al., 1989; Parson, 1983

Achieving a competitive advantage


through the application of IT

Betts et al, 1991; Betts and Ofori, 1992;


1994; Porter and Miller, 1985; Tan, 1996;
Yeo, 1991, Melville, et al., 2004

IT can improve a companys


performance and competitive position

Dehning
and
Stratopoulos,
2003;
Bharadwaj, 2000; Stratopoulos and
Dehning, 2000)

Advantage granted by IT is short lived


because such advantages are easily
replicated by rivals

Alter, 1998; Ballou and Slater, 1994, Carr,


2003

Theoretical and empirical evidences


indicate that company implementing
IT-enabled strategy are able to gain
competitive advantage over their
direct competitors

Andersen, 2001; Bharadwaj, 2000; Feeny


and Ives, 1990; Konsynski and McFarlan,
1990; Mata et al, 1995; McFarlan, 1984;
Porter and Millar, 1995; Stratopoulos and
Dehning, 2000; Kassim, 2006

Sustained
competitive
advantage
through barriers to entry, switching
costs, and mobility barriers

Porter, 1979; 1980; Mata et al., 1995;


McFarlan, 1984; Sambamurthy, 2000

Sustained
competitive
advantage
would require bundling IT with
differences in the value chain

Clemons and Row, 1987; Clemons and


Row, 1991

Sustained
competitive
advantage
would require bundling IT with
tangible or human resources

Ciborra, 1994

IT can bring competitive advantage to


companies within an entire supply
chain

Salmela and Turunen, 2003

IT-dependent
strategic
initiatives
contribute to sustained competitive
advantage

Piccoli and Ives, 2005

Page 59 of 332

The areas of IT systems application at project level include those that


encompass

project

planning,

scheduling,

cost

control,

project

management, construction methods, and human resource management


(Mohan 1990; Kaklauskas, 2007).

Others include web-based tendering

processes (Alshawi and Ingirige, 2003), a web-based construction


monitoring (Cheung et al., 2004; Ryoo et al., 2010), e-procurement (Kong et
al., 2004; Tai et al., 2010), Building Information Modeling (BIM)(Eastman et
al., 2010), etc. Table 3.3 below provides examples of the IT systems
applications within the construction project life cycle and value chain.

Page 60 of 332

Table 3.3 IT Application Areas in Construction Projects

Strategic
Planning

Primary
Activities

Application Areas

Reference

Expert system and


decision support system

Mohan, 1990; Ahmad, 1990;


Dawood, 1995; Touran, 1990; Artiba
and Aghezzaf, 1997; Fayek, 1998; Wu
et al., 2005; Bee-lan et al.; 2010

Bidding Strategy
Integrating simulation
with expert systems

Procurement

Engineering Design

Planning and Scheduling

Levitt et al., 1988; Moselhi and


Nicholas, 1990; Morad and Belivean,
1991; Aouad and Price, 1994;
Dawood, 1995b; Dawood and
Sriprasert, 2006; Perera and Imriyas,
2004
Succar et. Al., 2007; Kaner et al., 2008;
Eastman et al., 2010

BIM
Cost Estimation

Smith, 2002; Adnan et al., 2005; Gu et


al., 2011

Quality and Safety

Nobe et al., 1999

CAD systems

Choi and Ibbs, 1990; Sanvido and


Medeiros, 1990; Reinschmidt et al.,
1991; Gibson and Bell, 1992; Heath et
al., 1994; Mahoney and Tatum, 1994

Building Information
Modelling
Construction Material
Information
Material specifications

Succar et. Al., 2007; Kaner et al.,


2008; Eastman et al., 2010

Delivery and Expediting

E-sourcing and electronic


data interchange (EDI)
Web-based eprocurement

Page 61 of 332

Kong et al., 2004


Nicholas and Edwards, 2003;
Hassanein and Moselhi, 2005; Ryoo
et al., 2010
Talluri, et al., 2007; Keating, 2011
Oyegoke et al., 2009; Tai et al., 2010

Construction & Commissioning


Operation

Maintenance and

Project
Management

3.4

Bar-coding

Rasdorf and Herbert, 1990; Stukhart


and Cook, 1990; McCullouch and
Lueprasert, 1994

Radio frequency
identification (RFID)

Aksoy et al., 2004

CAD systems

Aound, Lee and Wu, 2005; Kang et


al., 2005; Howard, 2006; Moum, 2006;
Akinci, et al., 2008; Xuetao et al., 2009;
Russell et al., 2009; Benjaoran, and
Bhokha, 2010

Electronic Data
Interchange (EDI)

Gibson and Bell, 1990; OBrien and


Al-soufi, 1993

Maintenance History

Schell 2001; Jaselskis and ElMisalami 2003; Ergen et al., 2007

RFID Tags

Project Monitoring

McGartland and Hendericken, 1995;


Elazouni et al., 2010; Mahaney and
Lederer, 2010; De Marco, A.;
Briccarello and Rafele, 2009

Cost Estimation

Adnan et al., 2005

Data communication

OBrien and Al-soufi, 1994; Tai et al.,


2009; Eastman et al., 2010

The Components of the Model


Many researchers have asserted that the utilization of IT resources might
be able to create sustained competitive advantage for organisations,
however, early work in this area was relatively underdeveloped, both
empirically and theoretically (Jarvenpaa and Ives, 1990; Mater, Fuester
and Barney, 1995).
It was further argued that any performance advantage granted by IT is
short lived because such advantages are easily replicated by competing
organisations (Alter, 1998; Ballou and Slater, 1994, Carr, 2003). Others
argued that rivals will attempt to neutralize the competitive advantage of
the successful users by copying and possibly improving the IT use

Page 62 of 332

(Kettinger et al., 1994; Mata et al., 1995); hence ITenabled strategies may
not provide a platform for a sustainable competitive advantage.
Nevertheless, the theoretical argument for ITBV is that sustainability is
possible and can be attributed to certain IT resources and capabilities that
are difficult to imitate (Feeny and Ives, 1990). When an IT-enabled strategy
is combined with such resources and capabilities, organisations will be
able to gain a sustained competitive advantage through barriers to entry,
switching costs, and mobility barriers, high performance relative to its
peers (Porter, 1979; 1980; Mata et al., 1995; McFarlan, 1984; Sambamurthy,
2000).
The general hypothesis therefore, is that organisations can sustain
strategic IT innovation and differentiate business success by developing
superior IT capabilities (Sambamurthy, 2000). These IT resources include
managerial IT skills, Technical IT skills and IT infrastructure (Melville et
al., 2004; Piccoli and Ives, 2005).

3.5

The Research Question and Hypotheses


To

increase

the

understanding

of

IT

business

value

diffusion,

implementation status, areas of application, and the perceived impacts


therein in the delivery of value chain of engineering and construction
organisations; the research addressed the following question:
What are the outcomes of deploying and utilizing IT resources in
the delivery of engineering and construction projects value chains
on the measure of the performance metrics including cost,
schedule, profitability, safety and customer satisfaction.
In order to answer the research question a set of IT resources and other
organisational capabilities and resources are identified based on multiple
theoretical perspectives. Using these elements hypotheses were derived.
Combining the hypotheses with the concept of the value chain and
process view, a schematic conceptual model was developed as depicted in
Figure 3.4.

Page 63 of 332

The following sections describe the IT resources and other complementary


organisational resources.

3.5.1

IT Shared Infrastructure (ITSI)


IT shared infrastructure (ITSI) is the shared technology that provides
reliable shared services across an organization which forms the base
foundation of the organisations IT capability, and is coordinated
centrally, usually by the information group (Will and Broadbent, 2000;
Melville et al., 2004; Piccoli and Ives, 2005). As such, the ITSI provides the
foundation for the delivery of business applications and services
(Broadbent and Weill 1997). ITSI has been described as an important
organizational capability that can be an effective source of value
(Bharadwaj, 2000; Broadbent and Weill 1997, Ross et al., 2004;
Sambamurthy, 2000; Bhatt and Grover, 2005).
ITSI can provide organisations with the ability to share information across
different functions, innovate, and exploit business opportunities, and the
flexibility to respond to changes in business strategy (Weill et al., 2002).
However, the existence of open architectures and standardized enterprise
packages suggest that this capability might not be heterogeneously
distributed across organisations and / or the access to such infrastructure
is not restrictive (Carr, 2003). Therefore, despite some contrary evidence
ITSI is argued to be valuable but not a source of competitive advantage
(Bhatt and Grover, 2005).
H1: the technological components of ITI are readily available in the marketplace
therefore; ITSI may not have significant impact on the performance of
engineering and construction organisations.

3.5.2

IT Business Application (ITBA)


IT Business applications (ITBA) refer to any application that is important
to running of engineering and construction businesses; this may include
administration and decision support, engineering analysis, organisational
communication, design and project management computer software.
These computer applications are used to execute the work functions of the

Page 64 of 332

primary activities of the focal organisations value chain. They may be


deployed on standalone computers or as networked integrated systems
within the organisation. Due to their direct involvement in the
organisational business processes the following hypothesis was put
forward, and this is represented by H2 on the conceptual model diagram
in Figure 3.8.
H2: IT business applications (ITBA) will have positive impact on construction
organisation performance.

3.5.3

IT Human Skills (ITHS)


Another category of IT resource is the expertise and knowledge of the IT
personnel (Barney 1991), which is termed as IT human resources (Melville
et al., 2004). This denotes both technical and managerial knowledge (Ross
et al., 1996; Bharadwaj 2000; Dehning and Richardson 2002).
Technologies are inherently dissimilar, thus they create unique challenges
for organisations. Neverthless, organisations could developed unique sets
of IT capabilities over period of time, thorugh experience (McKenney et al.,
1995). Thus, positioning them in a better position than their rivals in using
and managing these technologies (Ross et al., 1996; Bharadwaj 2000;
Dehning and Stratopoulos 2003; Wade and Hulland 2004; Ross, 2004). IT
human resources that have received research attention include technical
skills, IT management skills, and relationship assets (Piccoli and Ives,
2005).
IT technical skills refer to the ability to design, develop and implement
effective information systems. As such, they include proficiency in system
analysis and design, infrastructure design and programming (Ross et al.,
1996). Technical IT Skills are typically mobile as it is not difficult for
competitors to hire away this value-creating resource from their
competitors at their market price (Mata et al., 1995), giving rise to the
following hypothesis.
IT Management Skills involve skills in managing IT projects, evaluating
technology options, conceiving, developing, and exploiting IT applications
Page 65 of 332

and managing changes. Such skills are developed over time through
accumulation of experience in a form of organisational learning. The
theoretical concepts of IT management skills lead directly to the following
hypothesis represented by H3 on the conceptual model diagram in Figure
3.8.
H3 Superior IT human capabilities (ITHS) will have a positive impact in
providing a source for engineering and construction organisations
competitive advantage

3.5.4

Complementary organisational resources


Although it is possible to apply IT resource for the improvement of
organisational performance, according to RBV, in order to have
sustainable competitive advantage it requires other complementary
organisation resources to be mobilized and be in alignment with the ITenable

strategies.

These

complementary

resources

include

the

organisational policies, rules and work practices, organisational structure,


workplace practices, and organisational culture conceptualised as
business work environment (BWE). This is represented by H4 on the
conceptual model diagram in Figure 3.8:
H4: Complementary organisational resources (BWE) will have positive impact in
creating ITBV in engineering and construction organisations
The elements of the four hypotheses above form the inputs into the
organisational value chain in the model as depicted in Figure 3.8. The IT
and organisational complementary resources constructs form the inputs to
the engineering and construction project value chain. The output
measures are represented by the project performance metrics, thus
establishing the productivity, efficiency and effectiveness of the IT on the
value chain leading to the creation of competitive advantage. The model
assumes the presence of IT investment within the focal organisations. The
measure of the IT investments and the resources in the operationalisation
of the model will be based on the level of application and diffusion in the
sampled organisations.

Page 66 of 332

Figure 3. 8 Conceptual ITBV Model Scheme for Construction Organisation


(Kassim et al., 2009a, 2010c)
Starting from the left-hand side of the model in Figure 3.8, IT
infrastructure (ITI) represents the IT resources as input factors to the
execution of work functions within the organisations value chain. The IT
resources are conceptualized in four dimensions: IT shared infrastructure
(ITSI), IT Human Skills (ITHS), IT Business Applications (ITBA)
applications, and business process (Bhatt, 2000). The measure of the IT
resources is conceptualised as level of utilization rather than as a
monetary value of the IT investments (Tallon and Kraemer, 2007). The
level of IT usage has widely been accepted as an important indicator of IT
success within organizations (Mahmood et al., 2001). The next input factor
is the organisational complementary resources represented by the
business work environment (BWE). Drawing from Porter (1998) value
chain concept primary and critical activities of the engineering and
construction organisations were proposed. Primary activities consist of
strategic planning, engineering design, procurement, construction and
start up and operation and maintenance represent the construction
business process. These primary activities were further broken down into
Page 67 of 332

work functions. This process was facilitated through the experiences of the
researcher in delivering variety of construction projects (Alarcon and
Mourgues, 2002), the literatures such as OConnor and Yang (2003);
OConnor and Yang (2004) and Yang et al. (2006; 2007) and constructions
organisations from different sectors that participated in a pilot study. The
performance measures are represented by six variables of schedule
performance (SCHD), cost performance (COST), customer satisfaction
(CUSTO), growth in contracts (CONTR), safety (SAFETY) and profits
(PROFI) mainly hinged on project performance. Variables such as contract
growth is included to highlight the extent of IT and business strategies
alignment. The selection of the variables was based on a multi-criteria
analysis of Analytical Hierarchy Process (AHP) (Saaty, 1990) and
attempted to ensure both owners and contractors perspectives were
covered.

3.6

Measuring ITBV
This section provides a detailed description of the technique used for the
quantification of the ITBV variables used for the subsequent data
collection and analysis.

3.7

Input Variables
The above elements of the hypotheses are operationalised as the
independent variables. The measure of the variables are conceptualised at
the level of utilization in conducting the construction business, rather than
their monetary value because of the difficulties in getting monetary value
of organisations IT investments (Kumar, 2004). Tallon and Kraemer (2007)
established that a significant positive correlation exists between objective
(performance measure) and perceptual measures of ITBV. The measure of
the dimensions of ITI and complementary resources are used as input
variables. The following are the descriptions of the inputs variables.

Page 68 of 332

3.7.1

IT Business Applications (ITBA)


Advanced computing technologies have the potential to empower project
managers and construction engineers to make quick decisions based on
accurate information that can be visualized, studied, optimized, and
quantified with greater accuracy (Salem and Mohanty, 2008).
Several researchers have investigated the impacts of different technologies
on project performance. The most detailed of these studies, OConnor and
Yang (2004), investigated the extent to which technologies contribute to
project success. Technology usage metrics analyzed in their research
include those at the project level, the phase level, the task automation
level, the integration link level and those for industry-wide high-tech and
industry wide low-tech work functions (Yang, 2007).
For the purposes of this research, automation and integration are defined
as the use of electronic systems to manipulate data or produce
deliverables in the course of executing construction project and the
sharing of information between project participants or melding of
information sourced from separate systems respectively (OConnor et al.,
1999; OConnor and Yang, 2004). Thus, the impact of the use of mechanical
equipment or technology in executing construction physical tasks such as
site preparations; installation, etc. is not part of the scope of this study.
Several studies have developed metrics for the assessment of technology
utilization. Issues discussed include the use of automation technologies for
specific project tasks, technology strategy, information technology and the
application of integration.
In line with OConnor et al. (1999); OConnor and Yang (2004); Yang et al.
(2006) and Yang (2007), metrics of measuring the adoption and use of
ITBA in the execution of identified work functions are developed.
The ITBA metrics evaluated are at the primary activity of the construction
value chain phase and the corresponding work functions for each of the
primary activity as in Table 3.1. The participant will consider projects

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executed over the period of last three years to assess the level of
deployment of the ITBA in executing their work functions. The use of the
average level of inputs over a three-year period was to address the time
lag between investment in IT and the accrual of benefits (Shafer and Byrd
2000).
For each primary activity phase the ITBA index (ITp) is calculated as an
average scope for all the work function under the phase (El-Mashaleh et
al., 2006; Yang, 2007):
3.1
Where:
ITp = automation and integration index (IA) for each primary activity of
the organisations value chain.
ITw = IA work functions score on the Likert scale from 1- 5 for each
primary activities of the organisations value chain
W = the total number of the work functions
An overall project ITBA automation index is computed as the average
score of IA across the six primary activities of the organisations value
chains. These score are at organisation level where projects executed over
a period of three years are to be considered. Therefore, ITBA index as of
the components of the IT resources for this research as an independent
input is calculated as follows:
3.2
Where:
ITBA = Organisation measure of IT business application automation and

integration,
= The number of primary activities in the organisations value chain,
which is 6 for this research
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3.7.2

IT Shared Infrastructure (ITSI)


There is little consensus on the dimension of ITSI or how it should me be
measured.

However,

conceptualisation

of

Man
IT

et

al.,

capability

(2008)

suggest

include

that

managerial

previous
capability

(Sambamurthy and Zmud, 1992; Ross, Bealth and Goodhue, 1996). The
lack of appropriate approaches and instruments for measuring ITSI may
have contributed to the scant efforts to empirically study the
characteristics and organizational roles of ITSI.
Kumar (2004) modelled the measures of ITSI using three streams of value
of reliability, the ability to operate with low downtime; flexibility, the ability
to quickly and economically adapt to changing business requirements;
and upgradability, the ability to quickly and economically adapt to or
deploy multiple, complex technologies as required.
ITSI is generally and often intertwined with organizational structure and
business processes thus; it can be either an enabler or a barrier for
planning

and

implementing

new

competitive

strategies

and

organizational changes (Broadbent et al., 1999). Nath (1988) developed a


scale to measure the IS managers' perspectives on the value of local area
networks (LANs). Star and Ruhleder (1996) characterize an infrastructure
in terms of seven dimensions: embeddedness, transparency, reach or
scope, links with conventions of practice, embodiment of standards, built
on an installed base, and becomes visible upon breakdown. Bhatt (2000)
adopted the following dimensions 1) extent of inter-organisation
infrastructure; 2) extent of infrastructure flexibility; and 3) extent of data
integration to measure organisations ITSI.
Based on content analysis the share technological is operationalised using
the extent of the following dimensions:
Corporate data can be seamlessly accessed from remote locations.
Customers and suppliers are connected with the organisation
Departments

can

share

data

and

applications

on

communication networks.
Network architecture can be modified minimum disruption
Page 71 of 332

the

Procedures and policies are used in managing networks.


Share data and applications
In addition to ITSI, Alshawi (2007) identified people, process, and work
environment as the required competencies for an organisation to derive
ITBV. The processes of engineering and construction organisations are
modelled in the form of the suggested value chain. The ITSI is
conceptualisation is described in sections above.

3.7.3

Human IT Skills (ITHS)


The organisational IT Human skills and competencies (ITHS) measure are
conceptualised in the following dimensions:
Designs future opportunities for the business
Manage resources to obtain optimal results
Responsible for application development
Align IT strategy with business strategy
Provide training for IT team
Prepare IT strategy for future business requirements

3.7.4

Complementary Resources (BWE)


Drawing from the concept of resource complementarities, certain
organizational resources and capabilities that relate to the work
environment are considered as part of the production factors that could
compliment the IT resources for organisation to gain competitive
advantage.
Alshawi (2007) suggested that work environment is considered to be the
main enabler in generating IT business value. Work environment is
conceived

as

encompassing

the

dimensions

of

organisational

complementary resources. The concept of complementarities is often used


to explain the productivity paradox and the wide variation observed
between IT usage and its business value (Thouin et al., 2008). The
complementary relationship between IT and other organisation resources
have led some to posit that the relationship between IT and business value
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may, in large part, be indirect and difficult to measure. The major


contribution of IT is that it complements existing organisation-level
resources to increase their value in a moderating fashion (Barua &
Mukhopadhyay, 2000).
Dimensions for measuring complementary resources include (Powell and
Dent-Micallef, 1997; Al-Mashiri and Zairi, 2000; Alshawi, 2007).
Leadership
Business work practices
Employee empowerment
Open communication
Project management competency
The constructs of the IT and non-IT resources as inputs along with the dimensions
for measuring them are summarised in Table 3.4.

Page 73 of 332

Table 3.4. IT Resources Constructs

Constructs
IT Shared
Infrastructure
(ITSI)
IT Business
Application

Dimension
Physical platform for
Sharing IT Services

Implementation Level

(ITBA)
IT Human Skills
(ITHS)
Complementary
Organisational
Resources

Indicators
Network Architecture Performance
Clients and Suppliers Networking
Remote Accessibility of Corporate
Data
Use of Standard Procedures and
Policies
Level of Deployment and
Integration of Computer
Applications in the Delivery of the
Work Functions

Evaluating Technology
Options

Alignment of IT Strategy with


Business Strategy
Extent of Application Development
Designs Future Opportunities for
the Business

Non- IT Organizational
Resources

Leadership
Employee empowerment
Open communication
Project management competency

Proficiency in System
Analysis and Design,
Programming

(BWE)

3.8

Output Variables
Some of the difficulties associated with the evaluation of the impact of
deployment IT resources on the organisational performance have been
identified in the literature review. The contemporary IT investment
evaluation approach has focused on quantitative financial assessment and
traditional appraisal methods such as Return on Investment (ROI), Net
Present Value (NPV) or Internal Rate of Return (IRR), (Chen et al., 2006;
Tallon and Kraemer, 2006). The popular financial measures used include
sale, return on assets and return on management (Hitt and Brynjolfsson,
1996; Bresnahan et al., 2002; Tallon and Kraemer, 2006). The major
problems with these techniques concern the difficulties involve in
quantifying intangible benefits and costs. To help ease this difficulty
Construct IT For Business (1998) proposes the use of a subjective scoring
mechanism to assess the impacts of improved business effectiveness.
Organizational

performance

measurement

in

construction

has

traditionally relied on efficiency, return on capital, and profitability, which


Page 74 of 332

have been criticized as narrow, reactive, and mostly financial (Bassioni et


al., 2004).
Lin and Shen, (2007) highlighted the deficiencies and limitations in
traditional performance measurement as recorded by other researchers: (1)
they are historical in nature (Dixon et al. 1990); (2) they give little
indication of the link between work carried out at present and
performance in the future (Kaplan 1983); (3) they encourage a focus on
short-term profits, not on long-term strategies (Kaplan 1986); (4) they
hinder innovation (Skinner 1986); and (5) they are internally rather than
externally focused, with little regard for competitors and customers
(Kaplan and Norton 199). Robinson et al., 2005 further argued that
traditional financial measures alone are not sufficient performance
measures for understanding a dynamic business environment, as it
encourages short-termism leading to a lack of strategic focus and failure to
provide data on quality (Kagioglou et al., 2001). Other metrics include the
Foundation for Quality Management (EFQM) excellence model, key
performance indicators (KPI), and the Balanced Scorecard. The business
process performance metrics used in prior IT business value research
include on-time shipping (McAfee 2002), customer satisfaction (Devaraj
and Kohli 2000), and inventory turnover (Barua et al., 1995).
However, with the construction industry being project-oriented in nature
(Wegelius-Lehtonen 2001; Bassioni et al., 2004), a focus on the aggregation
from project performance to organisational performance has been
recognized (Love and Holt 2000; Kagioglou et al., 2001). Construction
projects are typically evaluated in terms of cost, time, and quality (Ward et
al. 1991; Kagioglou et al., 2001; Bassioni et al., 2004). Therefore, schedule
performance, cost performance, customer satisfaction, safety performance,
growth in contracts and profit are adopted as the output dependent
variables (El-Mashaleh et al., 2006 and Kassim et al., 2009), which will sum
up to the organisation's performance.

Page 75 of 332

researchThe output dependent variables for the model are a measure of


the construction organisation performance metrics. The performance
measurement

in

engineering

and

construction

organisations

is

traditionally based on financial metrics alone, which is narrow and


reactive (Bassioni et al., 2004). Some of the financial measures aggregating
IT impacts into firm-level financial measures include: (1) sales (Lehr and
Lichtenberg, 1993; Bresnahan et al., 2002; Brynjolfsson and Hitt, 1996), (2)
value added (Hitt and Brynjolfsson, 1996; Dewan and Min, 1997), (3)
financial accounting ratios such as return on assets (Jeffrey, 2003; Kohli
and Devaraj, 2003; Tallon et al., 2000; Tallon and Kraemer, 2006).

3.8.1

Schedule Performance (SCHD)


On a project level of analysis the schedule performance measurement
technique is used to measure and give visibility to schedule variances
from plan. The technique is also known as the earned value analysis
(Pajares and Lpez-Paredes, 2011).
A schedule variance (SV) is calculated as the difference between Budgeted
Cost of Work Scheduled (BCWS), and Budgeted Cost of Work Performed
(BCWP), thus (Kharbanda et al., 1980; Humphreys, 1992; Arthur and
Charle, 1986; Sang-chul Kim, 2009; De Marco et al., 2010):
SV = BCWS-BCWP--------------------------------------------------------- 3.4
The schedule performance is measure via a schedule performance
indicator (SPI) defined as the ratio of Budgeted Cost of Work Performed
(BCWP) to Actual Cost of Work Performed (ACWP), thus:
SPI = BCWP/ ACWP ------------------------------------------------------ 3.5
If the Schedule Performance Indicator (SPI) has a value less than one, this
indicates that the budgeted costs for work scheduled to date exceed the
budgeted costs for the work performed to date. This does not necessarily
mean that the project is behind schedule but it does indicate that work is
not being performed as scheduled, thus warning of the potential for a
schedule overrun situation. If the SPI is decreasing over time, the situation

Page 76 of 332

is potentially worsening.
At organisational level schedule performance is measured by averaging
the individual projects performances over a period of time. This could be
expressed as a fraction, percentage or frequency at which the organisation
delivered projects within or above the original scheduled duration of
projects (OConnor and Yang, 2004; Yang et al., 2006; Yang, 2007).
Thus, on organisational level, schedule performance (SCHD) refers to the
measure of the projects schedules that over or under run as a percentage
of the initial estimated durations. The SCHD is measured as the
frequencies at which projects are delivered on/ahead of schedule in the
last 3 fiscal years within a focal organisation. An average is calculated of
the projects with schedule performances within or ahead of the original
estimated duration divided by the total projects delivered within the last
three fiscal years, thus:

3.6
3.8.2

Cost Performance (COST)


A similar expression and measures of cost performances is obtainable both
at project and organisational levels.
Thus, at organisational level, cost performance (COST) refers to the
measure of the projects costs that over or under run as a percentage of the
initial estimated budgets. The COST is measured as the frequencies at
which projects are delivered within or above budgets in the last 3 fiscal
years within the focal the organisation. An average is calculated of the
projects with cost performances within or ahead of the original estimated
budget divided by the total projects delivered within the last three fiscal
years, thus:

3.7

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3.8.3

Customer Satisfaction (CUSO)


Given that customer satisfaction is both individualistic and situational
makes the definition of the concept elusive (Oliver, 1981, 1997; Jianxi et al.,
2006; Forsythe, 2007). However, the importance of the concept was
highlighted in the literature. Both Latham and Egan Reports (Latham,
1994; Egan, 1998) identified the customer as being at the core of
construction process. It has been argued that customer satisfaction is a
necessary precondition for customer loyalty, which is, in turn, a key driver
of profit growth and performance (Reichheld 1993; Heskett et al., 1997).
Also customer satisfaction contributes towards obtaining competitive
advantage in the market place (Drucker, 1954; Cronin and Taylor, 1992;
Victor and Boyton, 1998; Forsythe, 2007); increase market share (Buzzel
and Gale, 1987), improve profitability (Business International, 1990),
increase repeat sales (Oliver and Linda, 1981) and increase word-of-mouth
recommendation (Vandermerwe, 1994); customer satisfaction is associated
with higher customer loyalty and enhanced reputation (Fornell, 1992;
Anderson and Sullivan, 1993; Wangnheim and Bayon, 2004).
Despite the elusive nature of the customer satisfaction concept, Churchill
and Surprenant (1982) define it as an outcome of purchase and use
resulting from the buyers' comparison of the rewards and costs of the
purchase in relation to the anticipated consequences. Others define
customer satisfaction as a post-consumption evaluative judgment
concerning a product or a service (Churchill and Surprenant, 1982;
Gundersen et al., 1996; Markovi et al., 2010). It is the result of an evaluative
process that contrasts pre-purchase expectations with perceptions of
performance during and after the consumption experience (Oliver, 1980;
Markovi et al., 2010).
In the construction industry, the measurement of client satisfaction is often
associated with performance and quality assessment in the context of
products or services received by the client (Parasuraman et al., 1985; 1988;
Soetanto and Proverbs, 2004).

Page 78 of 332

Several models are used to measure the customer satisfaction in the


construction industry including EFQM (2005) business excellence (Walker,
1995; Gable, 1996; Jianxi et al., 2006). Kaplan and Norton (1997) argued that
the three important performance drivers of customer satisfaction are price,
time, and quality.
Another approach for measuring customer satisfaction is the frequency of
repeat orders. A high frequency indicates that customers are satisfied with
the company. Moreover, since old customers, as a rule, are more profitable
than new ones, this key indicator also tells you something about your
profitability potential. The willingness of customers to place repeat orders
is further an indication of customer-perceived quality and whether or not
the company has found the right customers (Wangnheim and Bayon,
2004).

3.8.4

Safety Performance (SAFETY)


Safety management system aims at positively impacting on employees
attitudes and behaviours with regard to safety hazards in order to mitigate
their unsafe acts. Thus, awareness is created on occupational health and
safety (Beriha et al., 2011).
Hinze and Godfrey (2003) hilighted several types of safety performance
measures that can be utilized on construction projects; these include:
Occupational Safety and Health Administration (OSHA), recordable
incidence rates and experience modification rate (EMR) (Jaselisks et al.,
1996; Hinze and Godfrey, 2003; El-Mashaleh et al., 2009; Beriha et al., 2011).
OSHA recordable incidence rates are based on the US Occupational Safety
and Health Act (1970). EMR, on the other hand, is established by
independent rating bureaus. OSHA requires employers to record and
report accident information while EMR dictates the contractors premium
of the workers compensation insurance (El-Mashaleh et al., 2009).
Organisations have adopted different subjective approaches to measure
their safety performances. The measures were mainly based on either a
frequency of occurrence, which is based on the number of accidents, or
Page 79 of 332

both frequency and severity measure. (Hassanein and Hanna, 2008). A


low safety performance by an organization could have adverse effects on
the organisations competitiveness (Beriha et al., 2011).
Several studies related to the measure of construction organisations
safety performances were reported in the literature. The benchmarking of
the construction organisations safety performances were also reported
(El-Mashaleh et al., 2005; 2007; 2009). The road safety performance in the
construction process, benchmarking among contractors and proposing
composite index were undertaken using mainly DEA methodology by
(Hermans et al., 2008; Shen et al., 2009; Hermans et al., 2009).

3.8.5

Contract Growth (CONTR)


Another indicator in addition to profitability for measuring the
performances of engineering and construction organisations is the
measure of the growth in contract won (Kale and Arditi, 2002). The
approach is to determine annual increase in contract awarded to the
organisation over a given period of time.

3.8.6

Overall Profitability (PROFI)


Various profitability measures are often used for measuring the
competitiveness of firms. Return-on-sales reveals how much a company
earns in relation to its sales, while return-on-assets determines an
organisations ability to make use of its assets, and return-on-equity
indicates what return investors are getting for their investments.
The advantages of financial measures are the easiness of calculation and
that definitions are agreed worldwide (Tangen, 2003). However, despite
the wide use of profitability measures, their shortcomings have been well
documented (Bourne et al., 2000).
Among the criticism is that financial information is constantly lagging by
the least one reporting period and hence only shows the outcome of
already made decisions (Bassioni et al., 2004). Moreover, the narrow focus
on the bottom-line may pressure managers into short-term maximisation
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and consequently discourage longer-term beneficial improvements


(Crawford and Cox 1990). As a third piece of criticism, financial measures
do not accurately penalise overproduction or appreciate the cost of quality
(Bitichi, 1994).
The research captures how often an organization records net profit after
tax or an increase of the profit over the period of three years.
Table 3.5 summarised the inputs variables and their measurement
methods
Table 3.5 Performance Metrics that Compose Firm Performances
Metric
Schedule
Performance
Cost Performance

Measurement Method
Frequency of projects delivered on/ahead of schedule
Frequency of projects delivered on/under budget

Customer
Frequency of repeat business customers
Satisfaction
Safety Performance Annual improvement of safety records
Profit

Increase in Net profit after tax as a % of total sales

The dimensions for measuring the inputs and output variables for the
empirical test of the model are presented in Table 3.6 below.

Table 3.6. Inputs and Outputs Variables


Output Metric (
Input Metric ( x i )
Measure of shared Infrastructure ITSI
Measure of IT human skills (ITHS)
Measure of IT business applications (ITBA)
Complementary resources (BWE)

3.9

Schedule performance (SCHD)


Cost performance (COST)
Customer satisfaction (CUSO)
Safety performance (SAFETY)
Contract growth (CONTR)
Overall profitability (PROFI)

Chapter Summary
This chapter has presented the conceptualization and development of the
ITBV model for engineering and construction organisations. To mitigate
the shortcomings of the previous attempts in developing and measuring
the impact of IT on the organisational performance and to fill in the

Page 81 of 332

absence of such established model for the engineering and construction


organisation; a multiple theoretical approach was described.
The chapter described a unique approach of integrating the organisational
theories of process-based view, resources based view and micro-economic
view to derive both the input and out variables of the ITVB model. These
variables provide the parameters for another unique data analysis
approached of DEA as described in chapter 5.
Thus, this chapter further contributes to the body of knowledge towards
understanding the impact of IT on the performance of construction
organisations filling the gap in the current literature. The next chapter
explains the philosophy, methodology and approached used in deriving
the model, data collection and the empirical testing of the model.

Page 82 of 332

CHAPTER FOUR
RESEARCH PARADIGMS AND METHODOLOGY
4.0

Introduction
If philosophical positions determine research findings, then reality has
no input to and control over scientific research. Each and every one of
various incommensurable philosophical positions will determine its own
findings. No research findings can be neutrally assessed, criticized or
falsified. Besides being rather implausible, this view quickly leads to
epistemological relativism (Kai-Man Kwan et al., 2001:1164)
This chapter provides an overview of research philosophies leading to
establishment of the basis for the research stance. Thus, the chapter
explains the researchs paradigm views on what constitutes knowledge
and how it is created and developed (Saunders et al., 2003: 83). The views
facilitated the understanding of the multi-disciplinary positions and how
they interrelate (Basden, 2008) within the context of the research.
The chapter highlights the researchers understanding of the assumptions
of different paradigms and how they were deployed in the research
processes to bring good fit between paradigms and methods (Lincoln and
Guba, 1985; Kirkwood and Campbell-Hunt, 2007).
Thus, the chapter presents the methodology, methods and approaches
adopted in scoping, defining the aim and objectives, developing the
conceptual framework, data collection and analysis leading to the findings
presented in Chapter five.

4.1

Research Processes and Strategy


Research is viewed as a systematic and methodical process of inquiry and
investigation that increases knowledge and/or solves a particular problem
(Sekaran, 1992). The processes adopted towards achieving the purpose of
the research include reviewing and synthesising the current literature on
the related field of the research; developing a new concept to describe the

Page 83 of 332

area and subject of the research, validating and presented the findings in
the form of new knowledge (Sarantakos, 1993).
The different approaches adopted by researchers in answering their
research questions are referred to as research strategies. These include but
not limited to survey, case study, action research, ethnography and
experiment (Saunders et al., 2003; Oates, 2006).
While the overall strategies adopted for this research were survey
questionnaire and interview; the processes in undertaking the research
involved stages as depicted in Figure 4.1. The stages include reviewing the
existing literature as described in chapter two which provides the basis
and foundation for the research (Davis et al., 1989). The research aim and
objectives were established leading to defining the research question. In
order to provide a medium for answering the research question, a
conceptual model was derived using the theories and paradigms from the
literature. The model derivation was detailed in chapter three. The
remaining parts of the resaerach design including the strategy are
presented in the subsequent chapters. This chapter explain the processes
for determining the research methods appropriate for answering the
research question, the data collection approach and tools. The final
processes involved the choice of data analysis approach and tool;
interpretation and presentation of the findings with conclusion.

Page 84 of 332

Figure 4.1

4.2

Schematic Representation of Research Process

Research Philosophy
"Philosophy is at once the most sublime and the most trivial of human
pursuits..." William James - "The Present Dilemma in Philosophy"
Ontology is a philosophical stance concerned with what is known or what
constitutes social reality. The ontological stance of a research represents
the researchers view regarding what makes up social reality (Crotty,
2003). The two prominent ontological positions are positivism and
constructivism. Under the positivism paradigm knowledge is assumed to
be out there waiting to be discovered while constructivism views
knowledge as socially constructed by the interaction of the participants
within the environment. There was no agreed philosophical stance for
conducting research under engineering and construction management
related fields mainly due to the multi-disciplinary nature of the field, from

Page 85 of 332

sociology to economics and science each with a different ontological


stance. Indeed, there is limited declaration by researchers in the field of
construction management on their respective philosophical stances; the
determination of the paradigm views tend to be at the level of research
methods. The ontological argument for this research is described in this
chapter with a clear statement of the research stance.
On the other hand, epistemology is the other branch of philosophy of
knowledge that is concerned with how we come to know reality. The two
major positions under epistemology are positivism and interpretivism.
Positivism focuses on using natural science methods for gathering
knowledge. Positivists argued that such approach is needed for
quantitative measures required to test hypotheses that could further allow
possible generalization of research findings (Raftery et al., 1997). Thus,
positivism is a philosophical view mainly adopted in scientific research
requiring hypothesis testing. Interpretivism takes the opposite view; it
argues that cultural, historical and other issues that allow people to
interact are fundamental to knowledge creation.

4.2.1

Positivism
The positivism paradigm assumes implicitly or explicitly that reality can
be measured by viewing it through a one way, value-free mirror (Rana
and Perry, 2006). However, it has been criticised for its exclusion of the
discovery dimensions in inquiry and the under-determination of theory
(Deshpande, 1983; Guba and Lincoln, 1994). Despite positivism having
been viewed as a scientific paradigm (Buzzell 1963; Mills 1961; Lee 1965;
Robin 1970; Ramond 1974), it has been argued that positivism could be
used as framework for construction management research (Crook et al.
1996; 2008). The first phase of this research involved a comprehensive
literature review in the relevant fields which led to the development of a
conceptual model using multiple theoretical paradigms as a framework
and hypotheses were developed addressing the research objectives and
scope. Thus, at this level the research adopted a deductive approach
Page 86 of 332

(Loose, 1993) with positivism view because of the reliance on the current
body of knowledge to develop the research model and hypotheses
(Sutrisna, 2009).

4.2.2

Constructivism
Constructivism is one of the varying strands within interpretive paradigm.
Constructivism is a philosophical school of thought arguing that research
is fundamentally theory-dependent. According to constructivists, the
theoretical position held by researchers not only guides their basic
position, but also determines what gets construed as a research problem,
what theoretical procedures are used, and what constitutes observations
and evidence (Boyd, 1991: 202). Thus, constructivists challenge the notion
that research is conducted by impartial, detached, value-neutral subjects,
who seek to uncover clearly discernable objects or phenomena. Rather,
they view researchers as craftsmen, as toolmakers (Spivey, 1995: 314) who
are part of a network that creates knowledge and ultimately guides
practice (Mir and Watson, 2000). The paradigm argues that the world is
constructed by people and that these constructions should be the
driving forces investigated in social science research (Rana and Perry,
2006).
Seymour et al (1997) argued for using constructivist paradigm for
construction management research. Also it has been argued for the
potential of constructivism as a methodology for strategy research
(Spender, 1996; Scherer and Dowling, 1995). Thus, for the second phase of
the research a constructivist view was adopted. This phase involved
validation of the proposed conceptual model through an unstructured
interview and an openended survey questionnaire to validate the
proposed engineering and construction work function as described in
chapter 3. The choice of this approach at this phase of the research is
informed by the requirement to carry out a holistic in-depth investigation
of the complex phenomenon of IT business value of a construction

Page 87 of 332

organisation within the context it occurs (Benbasat et al., 1987; Feagin et al.,
1991; Yin 1994).

4.2.3 Realism
Realism is a philosophical position which posits that reality exists
independently of the researchers mind, that is, there is an external reality
(Bhaskar, 1978). This external reality consists of abstract things that are
born of peoples minds but exist independently of any one person, it is
largely autonomous, though created by us (Magee, 1985, pp 61).
Both

positivism

and

realism

have

been

subjected

to

various

epistemological challenges. Phenomenology, for example, emphasizes the


fundamental

place

of

consciousness,

interpretation,

meaning,

hermeneutics, communication, subjectivity and relativity with each of


these aspects suggesting both a foci of attention in research and an
imperative for methodology. In different ways, in most phenomenological
approaches,

prevailing

worldviews

or

ontological

positions

are

questioned. This necessitates researchers values, prejudices, beliefs and


attitudes being stated and interrogated, and their likely influence on the
research being appraised (Fawcett et al., 2004).

4.2.4 Pragmatism
Pragmatists advocate integrating methods within a single study (Creswell,
1995). Moreover, Sieber (1973) articulated that because both approaches
have inherent strengths and weaknesses, researchers should utilize the
strengths of both techniques in order to understand better social
phenomena. Indeed, pragmatists ascribe to the philosophy that the
research question should drive the method(s) used, believing that
epistemological purity does not get research done (Miles and Huberman,
1984 pp. 21). In any case, researchers who ascribe to epistemological purity
disregard the fact that research methodologies are merely tools that are
designed to aid our understanding of the world (Onwuegbuzie and Leech,
2005).

Page 88 of 332

The research utilizes quantitative and qualitative techniques within the


established framework, thus, pragmatically the research incorporates the
strengths of both approaches. This view allows for cognizant recognition
of the research techniques thus, facilitates adoption of research methods
with respect to their value that helps address the underlying research
questions, rather than with regard to some preconceived paradigm which
is hegemony in a given field of research.

4.3

Paradigm Incommensurability
Burrell and Morgan (1979) claimed that differences in ontology,
epistemology, and methodology as well as assumptions about human
nature

construct

insurmountable

barriers

between

paradigmatic

perspectives. Each paradigm portrays a specific perspective thereby


preventing combinations of concepts derived from individual paradigm.
As each paradigm defines a different domain in which theories can be
conceived, there is little or no possibility of effective communication
between their adherents (Majken and Mary, 1996). This leads to the
paradigm incommensurability which insisted that researchers must
choose the paradigm under which they do research from among the
alternatives on offer (Mingers, 2001). They must then commit themselves
to a single paradigm, although sequential movement over time is
permissible. Thus, the main reason for prescribing multimethod research
was the supposedly irreconcilable objectivist/subjectivist ontological and
epistemological dichotomies that exist between the empirical-analytic and
interpretive paradigms, respectively (Tashakkori and Teddlie 1998).
There are however several arguments within philosophy, social theory,
and

organization

studies

against

strong

view

of

paradigm

incommensurability (Majken and Mary, 1996). Thus, it is argued that the


characterization of paradigms as separate and mutually exclusive domains
may have been overstated (Gioia and Pitre 1990). Therefore, Majken and
Mary

(1996)

identified

two

metatheoretical

positions

for

doing

multiparadigm research: paradigm integration and paradigm crossing.


Page 89 of 332

Paradigm integration proposed that it is possible to assess and synthesize


a variety of contributions, thus ignoring the differences between
competing approaches and their paradigm (Willmott, 1993). The
arguments against paradigm incommensurability include the fact that
distinctions that are generally drawn between different paradigms are
fuzzy and questionable, and there is no one agreed-upon set of paradigms
(Smaling 1994). Secondly, it is not necessary to accept that research
methods are wholly internal to a single paradigm (Mingers and
Brocklesby 1997, Smaling 1994). Rather, it is quite possible to disconnect a
particular method from its normal paradigm and use it, consciously and
critically, within another setting. For example, the use of quantitative data
need not imply the acceptance of a positivist, objectivist epistemology.
Rather, such data should be interpreted in the light of relevant social
meanings, and their production as a social construction. Third, it is
claimed that the whole idea of paradigm incommensurability based upon
the objective-subjective duality is fundamentally flawed (Orlikowski and
Robey 1991, Weaver and Gioia 1994). Structuration theory has been used
to demonstrate that it is not possible to separate out objective and
subjective dimensions. Reality, according to Structuration theory, emerges
out of the dialectic interplay of forces of structure and meaning (Giddens,
1984). Finally, it is suggested that different paradigms provide different
perspectives into a reality that is more complex than theories can capture
(Booth 1979, Guba 1990, Smaling 1994). It is, therefore, quite wrong to
wholly accept the postulates of any one paradigm.
The focus of paradigm crossing is on how multiple paradigms might be
engaged by individual researchers. Under this assumption, the researcher
recognizes and confronts multiple paradigms, rather than ignoring them
as in the integrationist position, or refusing to confront them as in the
incommensurability position. Using this concept Majken and Mary (1996)
further identified sequential and parallel as two main strategies for
conducting multiparadigm research. Under sequential strategy paradigms

Page 90 of 332

are mutually complementary rather than exclusive. Paradigms operate as


complements by revealing sequential levels of understanding within an
integrated research project. Within organizational research, Lee (1991)
presented a sequential multiparadigm model, in which interpretive
methods are used prior to the application of functionalist methods, so that
the insights derived from interpretive studies serve as inputs to
functionalist research. Similarly, Gioia, Donnellon, and Sims (1989)
demonstrated that functionalist research can inform interpretive studies,
thereby inverting the more typical sequence from interpretivism to
functionalism. The sequential strategy allows one paradigm to inform
another; however, this influence only operates in one direction. Thus, the
sequential strategy constructs the relationship between paradigms as
linear and unidirectional, although it can move in either direction. A
second strategy is termed parallel, because different paradigms are all
applied on equal terms rather than sequentially. Hassard (1988, 1991)
provided an illustration of the parallel strategy in his study of the British
Fire Service, in which he applied a theory and methodology from each of
Burrell and Morgan's four paradigms.
The sequential strategy also assumes non-permeability of paradigm
boundaries; however, in this case, a specific form of cross-fertilization
occurs. Researchers using this strategy transpose the findings from studies
conducted in one paradigm into the theoretical frameworks offered by
another. This transposition allows the findings of one paradigm to be
recontextualized and reinterpreted in such a way that they inform the
research conducted within a different paradigm.

Page 91 of 332

Figure 4.2: Multiple Paradigm Approach (Crott, 2003; Kassim et al., 2010c)
Mingers (2001) argues in favour of paradigm pluralism in research by
suggesting that a research study is not usually a single, discrete event but
a process that typically proceeds through a number of phases; these
phases pose different tasks and problems for the researcher. Using this
argument the different phases of the research with the corresponding
paradigm views are illustrated in Figure 4.2. However, research methods
tend to be more useful in relation to some phases than others, so the
prospect of combining them has immediate appeal. The second argument
is that research is not a discrete event but a process that has phases or,
rather, different types of activities, which will predominate at different
times. Particular research methods are more useful for some functions
than others, and so a combination of approaches may be necessary to
provide a more comprehensive research outcome.

Page 92 of 332

4.4

Construction Management Research Paradigm


For many decades there has been a fervent debate over the choice of
paradigm to conduct research by several disciplines. Similar debates
within the construction management field have been raging too (Seymour
and Rooke, 1995; Raftery et al., 1997; Runeson, 1997; Seymour et al,. 1997;
Chau et al., 1998; Holt and Faniran, 2000). The proponents of
phenomenological inquiry insist that there is a need to apply a naturalistic
approach when investigating issues related to construction management
in order to understand the phenomena within its contextual setting. The
positivists however argue for quantitative measures to help test
hypotheses and possible generalization. Raftery et al. (1997) argue for a
case where multi-paradigmatic approach is embraced. Chau et al. (1998)
suggest pragmatic approach is likely to generate practical solution since
construction management is a practical subject. Peter et al., (2002) are of
the view that construction management research should be in an era of
methodological pluralism and paradigm diversity. Underlying the debate
on

the

choice

of

research

paradigm

is

the

argument

of

incommensurability of the positivist and interpretive paradigms (Burrell


and Morgan, 1979). However, Kirkwood and Campbell-Hunt (2007)
reported that multiple paradigms can be bridged while recognizing each
paradigm's different world views and assumptions in an epistemological
and methodological pluralism approach. Furthermore, research methods
can be detached from a paradigm and used critically within a context that
makes different assumptions (Minger 2001). Therefore, both qualitative
and quantitative orientations can be used at different stages of a research
as a form of triangulation (Denzin, 1989).

4.5

The Research Methodology


The term research methodology is used in two inter-related ways which
are often not very clearly separated. According to Crott (2003:5),
methodology is the strategy, plan of action, process or design lying
behind the choice and use of methods to the desired outcomes.
Page 93 of 332

While some researchers argue that the positivist and interpretive


paradigms are incommensurable (eg. Burrell and Morgan, 1979), others
suggest it is possible to bridge multiple paradigms, while recognizing each
paradigm's different world views and assumptions (eg. Gioia, Donnelion
and Sims Jnr, 1989; Gioia and Pitre, 1990; Kelemen and Hassard, 2003). A
multiple

paradigm

approach

is

also

sometimes

referred

to

as

epistemological and methodological pluralism (Curran and Blackburn,


2001; Grant and Perren, 2002), or paradigm plurality (Kelemen and
Hassard,

2003).

While

multiple

paradigm

approach

may

be

"provocative" (Lewis and Grimes, 1999 pp 672), it offers "the possibility of


creating fresh insights because they start from different ontological and
epistemological assumptions" (Gioia and Pitre, 1990 pp 591).
At this stage, it is important to note that a multiple paradigm approach
involves more than triangulation. Triangulation involves the use of
multiple methods of measurement to assemble information on a
phenomenon, with the aim of improving the validity of measurement.
However, if all measurements are interpreted from within a single
paradigm, the research is not considered to be multiple paradigmatic. A
multiple paradigm approach may be considered to be an expanded form
of triangulation (Gioia et al, 1989; Gioia and Pitre, 1990; Lewis and Grimes,
1999), from which to view a phenomenon from different methodological
viewpoints (Brewer and Hunter, 1989). In other words, different lenses are
used (Kelemen and Hassard, 2003), rather than just different research
methods.

Page 94 of 332

Figure 4.3: The Research Methodology (Kassim et al., 2010c)


The research processes involved different phases each posing different
tasks and problems. The first phase of the processes involved a
comprehensive literature review in the relevant fields, which led to the
development of a conceptual model using multiple theoretical concepts as
a framework and hypotheses were developed addressing the research
objectives and scope. Thus, at this level the research adopted a deductive
approach (Loose, 1993). The process relied on the current body of
knowledge and theories in developing the research model and
hypotheses, thus, by definition adopted positivism paradigm view
(Sutrisna, 2009). Applying Majken and Mary (1996) concept of sequential
strategy

for

conducting

multi-paradigm

research a

constructivist

paradigm with phenomenological epistemology was deployed in the


second phase of the research (Figure 4.3). This phase involved validation
of the proposed conceptual model and the engineering and construction
value chain through unstructured interviews in the form of case studies of
selected organisations as a follow up to responses of a pilot questionnaire.
The choice of case study strategy at this phase of the research is informed
by the requirement to carry out a holistic in-depth investigation of the
complex phenomenon of IT business value of a construction organisation
within the context it occurs (Yin 1994). The validated conceptual
Page 95 of 332

framework is then extended and modified through mathematical


modelling using Data Envelopment Analysis (DEA). The final phase
involved detailed data collection via online survey questionnaire designed
to include closed-ended items with numerical responses as well as openended items that could support discovery of new information. Thus, as
argued by Lewis & Grimes (1999), in the analyses of a common
phenomenon paradigm images need not operate at the extremes, but may
overlap and foster counterintuitive insights. Therefore, a sequential
overlap of multiple paradigms was deployed within the different phases
of the research.
However, since the overarching aim of the research is investigating the IT
impact on the organisations performance as socially constructed
interaction between employees and their environment, the epistemological
stance adopted for the research is phenomenological with constructivism
as its ontology.
The basic premise of the multi-method approach is that the particular
limitations of a given method will be compensated by the counterbalancing strengths of another (Fidel, 1993; Rohner, 1977). The use of
multiple methods will create the confidence that observed variance
between subjects is a product of subject attributes rather than of method
(Campbell and Fiske, 1959).

4.6

The Research Methods


Research method is the techniques or procedures deployed to gather and
analyse data to answer the research question or test hypotheses. The
choice and use of research methods is one that is secondary to that of
methodological paradigms, but it is essential that there is a good fit
between paradigms and methods.
Corresponding to the two respective ends of the positivist-constructivist
paradigm continuum are the quantitative-qualitative research techniques.
Furthermore, on the quantitative-qualitative paradigm continuum three

Page 96 of 332

schools of thoughts of purists, situationalists and pragmatists are


identified (Rossman and Wilson, 1985). The difference between these three
perspectives relates to the extent to which each believes that quantitative
and qualitative approaches co-exist and can be combined (Onwuegbuzie
and Leech, 2005).
The purists tend to focus on the differences between the quantitative and
qualitative philosophies rather than on their similarities. According to
purists, distinctions exist between quantitative and qualitative researchers
with respect to ontology, epistemology, axiology, rhetoric, logic,
generalizations and causal linkages (Bryman, 1984; Collins, 1984;
Tashakkori and Teddlie, 1998; Johnson and Onwuegbuzie, 2004;
Onwuegbuzie and Leech, 2005). Pragmatists on the other end of the
continuum do not see dichotomy between quantitative and qualitative
approaches (Newman and Benz, 1998). These proponents believe that
quantitative methods are not necessarily positivist, nor are qualitative
techniques necessarily interpretive (Sieber, 1973; Cook and Reichardt,
1979; Daft, 1983; Miller and Fredericks, 1991). Although phenomenological
approaches are often associated with qualitative orientations and
positivist positioning with quantitative techniques, this is by no means
always the case. The research used both qualitative and quantitative
orientations at different phases of the process as argued by Bryman (1992);
Brannen (1993) and Barbour (1999). Thus, it is recognised that it is possible
to detach research methods (and perhaps even methodologies) from a paradigm
and use them, critically and knowledgeably, within a context that makes different
assumptions (Minger, 2001:243).

4.7

Triangulation
Denzin (1978) distinguishes different types of triangulations (Cox and
Hassard, 2005):
a)

Data triangulation, where data is collected at different times or from


different sources. This is not applicable to this research despite the
fact that the data is collected from different organisations since they
Page 97 of 332

are all in the similar business and the collection was conducted
within the same time period of the research.
b)

Investigator triangulation, where different researchers or evaluators


independently collect data on the same phenomenon and compare
results. The evaluation of the data collected was done by a single
researcher in this case, thus this type of triangulation did not apply.

c)

Methodological triangulation, where multiple methods of data


collection are used. Data were collected through literature review,
unstructured interviews and questionnaire surveys. Therefore, the
research process adopted methodological triangulation.

d)

Theory triangulation, where different theories are used to interpret a


set of data. Many theories were adopted to form the framework for
the research, however, the analysis of the data was based on the nonparametric concept.

Furthermore, the research framework involved a combination of multidisciplinary

theories

and

concepts

including

information

technology/system, business strategy, and construction management


leading to interdisciplinary triangulation (Janesick, 1994). Therefore, part
of this research strategy is triangulation through the use of multiple
theories and use of qualitative and quantitative data generation.
Moreover, some elements of meta-triangulation have been incorporated
into the strategy by the sequential use of different paradigms throughout
the research phases.
The meta-triangulation is supported by the argument for a hybrid
approach for deploying multiple paradigms simultaneously (Blackwood et
al., 1997; Holt and Faniran, 2000; Peter et al., 2002) despite the heated
debate on the choice of ontological and epistemological stance for
conducting construction management research that tend to disagree
(Seymour and Rooke, 1995; Raftery et al., 1997; Runeson, 1997a; Seymour
et al,. 1997; Chau et al., 1998; Li and Love, 1998; Holt and Faniran, 2000).
Triangulation also helped to minimise the problems of bias and validity
Page 98 of 332

(Blaikie, 1991; Blaikie, 2000; Scandura and Williams, 2000; Cox and
Hassard, 2005).

4.8

The Data Collection Technique


Generally, research methodology comprises of research strategy, data
collection techniques and data analysis. The adopted data collection
strategy is the utilization of interviews and survey questionnaire in a form
of data generation triangulation. Multiple theories were used to develop a
conceptual ITBV model from which a set of hypotheses were derived as
presented in Chapter 3. This type of process lends itself to a deductive
research approach, thus, using the positivist paradigm. Data was
generated to validate the proposed model using experts opinions in the
industry. A pilot survey was also conducted and analysed in the process
of validating the model derived in Chapter 3. The final data was generated
using survey questionnaire. The next section explains the data collection
methods and the description of the questionnaire design.

4.9

The Survey Questionnaire Design


A survey questionnaire was designed to include closed-ended items with
numerical responses as well as open-ended items that could support
discovery of new information (Appendix A). Thus, as argued by Lewis &
Grimes (1999), analyses of a common phenomenon paradigm images need
not operate at the extremes but may overlap and foster counterintuitive
insights. The questions were designed to be relevant, easily understood,
and not challenge the respondents competency (El-Mashaleh, 2003). A
consent form is included inline with ethical approval guidelines of the
University. The consent form provides brief explanations of the research
theme, aim and objectives and anticipated benefits of the outcome of the
research to the participants. The consent form also highlighted the right of
participant to withdraw from the research project at any stage of the
project. Furthermore, the signed consent form declared that all research
findings to be published will protect of confidentiality and privacy of the
participants by not identifying the individuals or organisations.
Page 99 of 332

The questionnaire consisted of six sections: Section 1 assesses the strategic


grouping of the respondents organisations, and the profile of individuals
position within the organisations. Section 2 aims at evaluating the degree
of utilization of information technology business applications (ITBA) in
executing work functions within the organisations value chain. The extent
of utilization of the organisations information technology shared
infrastructure (ITSI) in delivering the business process is captured in
section 3. Section 4 evaluates the capabilities and competencies of
organisations IT human skills (ITHS). Section 5 identifies a composite
factor for the organisational complementary resources (BWE) as a measure
of unique work environments. Sections 1-5 represent the input variables.
The measure of the organisational performance is captured in section 6;
this measure represents the set of the output variables. The questionnaire
template is provided in Appendix A.
The measure is based on the 5-point Likert scale with the 1 representing
the manual execution of a task with no application of an electronic system
and at the other end of the scale a score of 5 indicates fully integrated used
application of computing packages. Levels 1, 2, 3, and 5 are associated
respectively with nil, lowest, medium low, medium high and
highest levels of technology utilization in executing work functions.

4.10

Mail versus Web Survey Modes


It was argued that for targeted respondents that have regular internet
access, web-based survey are a useful mode of conducting research
surveys (Sills and Song 2002). Using web-based surveys has potential
benefits of cost savings associated with eliminating printing and postage
(Cobanoglu et al., 2001). A web-based survey provides a link in an email,
which when clicked by respondents leads directly to a web page where
the questions are provided for completing. However, Tse-Hua and Xitao
(2008) in a meta-analysis showed that Web survey modes generally have
lower response rates than mail survey modes by about 10%. Therefore a
mixed mode strategy has been suggested as a means for exploiting the
Page 100 of 332

advantages of Web surveys and minimizing non-response (Schaefer and


Dillman 1998; Dillman 2000; Kaplowitz et al., 2004).
However, both the pilot and final survey questionnaires were mainly
distributed via email using a survy software called Survey Methods,
sending the prospective respondents a link. Due to time constraints, no
surface mail of the questionnaire was sent, only a consistent follow up via
the e-mails. The software provides for follow ups and reminders to those
participants yet to respond or who submitted partial responses.

4.11

Data Analysis
The most common data analysis techniques in production and operation
management literature seems to be descriptive statistics with such
measures

as

mean,

median,

standard

deviation,

and

frequency

distribution which provide a broad description of the data (Gupta et al.,


2006). Some of parametric approaches utilized in exploring relationships
between variables in management and performance literature include: Bivariate correlations, ANOVA, t-tests, chi-Square tests, linear regression
and structural equation modeling (Lefebvre et al., 1992; Ittner and
MacDuffie 1995; Gupta and Somers 1996; Crandall and Markland 1996;
Upton and McAfee 1998; Stewart and Chase 1999; Pagell and Handfield
2000; Hays and Hill 2001; Kathuria and Davis 2001; Klassen, 2001; Boyer
and Lewis 2002; Melnyk, Sroufe, and Calantone 2003; Klassen and Vachon
2003;Keizers, Bertrand, and Wessels 2003; Anand and Ward 2004; Lapre
and Scudder 2004; Gupta et al., 2006; Gonzlez, 2007; Sanders, 2007).
Other multi-criteria decision making techniques include analytic hierarchy
process (AHP), analytic network process (ANP), case-based reasoning
(CBR),

fuzzy

set

theory,

genetic

algorithm

(GA),

mathematical

programming, simple multi-attribute rating technique (SMART), and their


hybrids (Ho et al.,2010).
A Case-Based Reasoning approach uses past cases and experiences to find
a solution to current problems (Juan, et al., 2006). The activities in CBR

Page 101 of 332

techniques involve identify the current problem situation, find a past case
similar to the new one, use the case to suggest a solution to the current
problem, evaluate the proposed solution, and update the system by
learning from this experience (Jeng and Liang, 1995; Shin and Han, 2001).
Critics of CBR however, argued that it is an approach that accepts
anecdotal evidence as its main operating principle. Thus, without
statistically relevant data for backing and implicit generalization, there is
no guarantee that generalization derived from such approach could be
correct.
Another powerful tool for solving complex decision problems is the
analytic hierarchy process (AHP) methodology developed by Saaty (1980).
AHP is used to organize critical aspects of a problem into a hierarchical
structure similar to a family tree (Chin et al. 1999). It is extensively used in
Multi-Criteria Decision-Making (MCDM) methods. In this approach the
decision problem is structured hierarchically at different levels with each
level consisting of a finite number of decision elements. The upper level of
the hierarchy represents the overall goal, while the lower level consists of
all possible alternatives. One or more intermediate levels embody the
decision criteria and sub-criteria (Partovi 1994). However, the drawbacks
of this approach include the assumption that in the standard separated
analysis, inputs and outputs are considered to have equal weight (Mehmet
et al., 2007).
A prior assumption of functional relationships between input and output
variables is the main philosophy of most parametric data analysis
approaches. This tends to introduce errors as a result of such assumption
and specifications of the functional relationships (Sigala et al., 2004).
Unlike the parametric technique, DEA does not need a priori assumption
on the functional form characterizing the relationships between IT
investment or resources usage and organisation performance measures
(Zhu, 2002). Another major strength of the DEA approach is its relative
simplicity in requiring only the output and input measures without
Page 102 of 332

needing to include the prices. This allows the use of the measure of the IT
resource usage in place of a monetary value which is also difficult to
estimate IT payoffs. DEA is increasingly being adopted for researching the
productivity paradox (Dasgupta et al., 1999; Shafer and Byrd 2000; ElMashaleh et al., 2006).

4.12

Data Envelopment Analysis


Data

envelopment

analysis

(DEA)

is

non-parametric

linear

programming based technique for measuring the relative efficiency of a


set of similar units, usually referred to as decision making units (DMUs). It
was introduced by Charnes et al. (1978) based on Farrells pioneering
work. They generalized the single-output to single-input ratio definition of
efficiency to multiple inputs and outputs. In their original DEA model,
Charnes, Cooper and Rhodes (CCR model) proposed that the efficiency of
a DMU can be obtained as the maximum of a ratio of weighted outputs to
weighted inputs, subject to the condition that the same ratio for all DMUs
must be less than or equal to one.
The use of parametric techniques such as linear regression in modelling
ITBV has led to errors due to specification and assumption of linear direct
functional relationships between the variables (Sigala et al., 2004). In order
to mitigate this drawback a non-parametric technique called Data
Envelopment Analysis (DEA) is used in the research design to model the
ITBV for engineering and construction organisations.
Using DEA to model the ITBV eliminates the error of specification as a
result of a priori assumption on the functional relationships between IT
investment and organisation performance (Zhu, 2002). Also with DEA
there is no need to assign weights to the different inputs and outputs as
they are derived directly from the data and thereby avoids arbitrary and
subjective weightings. Furthermore, the measurement units of the
different inputs and outputs need not be congruent (El-Mashaleh, 2007).
Another major strength of the DEA approach is its relative simplicity in
requiring simply the output and input without needing to include cost
Page 103 of 332

associated with the IT investments, a data that is not readily available due
to its confidentiality nature. Therefore, the adoption of DEA allows the use
of measure of the IT resource usage in place of a monetary value of the IT
resources to evaluate the IT investment payoffs in engineering and
construction organisations.
There is evidence for deploying DEA to measure the organisational
performances in the literature. El-Mashaleh et al. (2005) used a conceptual
approach with DEA application to measure and compare construction
subcontractor productivity at the organisational level. The final results
helped in benchmarking and ranking the subcontractors performances.
Also El-Mashaleh et al. (2010) measured the relative efficiencies of
construction organisations in utilizing safety expenses as input factors to
minimize accident occurrences using DEA. The outcome identified best
performing organisations with which the inefficient organisations were
benchmarked. Other applications of DEA in construction management
include McCabe et al. (2005), Pilateris and McCabe (2003), Vinter et al.
(2006), Cheng et al. (2007), Chiang et al. (2006) and Xue et al. (2008). Thus,
researchers in construction management fields have quickly recognized
that DEA provides an excellent and easily used methodology for
modelling and evaluating enterprises operational performance including
the IT productivity paradox (Shafer and Byrd 2000; El-Mashaleh et al.,
2006).
Many different DEA models have been developed and deployed by
various researchers depending on the nature type of applications to solve.
Two basic models are CCR (Charnes, Cooper and Rhodes (1978)) and BCC
(Banker, Charnes and Cooper (1984)). However, there are numerous
models and the selection of an appropriate model depends on the nature
of production-technology. In general, these models differ in their
Orientation - Input-orientation, Output-orientation, Returns to Scale,
Constant Return to Scale (CRS), Variable Return to Scale (VRS), etc.

Page 104 of 332

4.13

DEA Versus Regression Modelling


The use of parametric techniques such as linear regression in modelling
and evaluation of ITBV would require specification and assumption of
linear direct functional relationships between the variables (Sigala et al.,
2004). Furthermore, a form of distribution defining the functional
relationship between IT investments as inputs and some performance
metrics as outputs has to be assumed. Based on the sets of inputs and
outputs a linear regression will predict an average behaviour in a straight
line, a non-parametric technique such as Data Envelopment Analysis
(DEA) will establish a best practice frontier while enveloping the whole
data as depicted in Figure 4.4.

Figure 4.4 Graphical representation of DEA versus Regression


(Kassim et al., 2010c)
Unlike the parametric technique, DEA does not need a priori assumption
on the functional relationships between IT investment and organisation
performance (Zhu, 2003). Also using DEA there is no need to assign
weights to the different inputs and outputs as they are derived directly
from the data and thereby avoids arbitrary and subjective weightings.
Furthermore, the measurement units of the different inputs and outputs
need not be congruent (El-Mashaleh, 2007). Another major strength of the
DEA approach is its relative simplicity in requiring simply the output and
Page 105 of 332

input without needing to include cost of IT investments. This allows


substituting the investment value with level of utilization of the IT
resources to evaluate the impact on organisations performance.

4.14

DEA Models
There are two basic DEA models named after the respective researchers
who first introduced them: the Charnes Cooper Rhodes (CCR) and the
Banker Charnes Cooper (BCC) models. The two models are normally
distinguished by the type of their envelopment surfaces and orientations.
The envelopment surfaces include the form depicting a constant-return-toscale (CRS) or variable return-to-scale (VRS) represented in the CCR and
the BCC models, respectively. An organisation is said to exhibit CRS if an
increase in inputs will result in a proportional increase in its outputs. The
CRS frontier surface is represented by a straight line that starts at the
origin and passes through the first organisation that it meets as it
approaches the observed population (Figure 4.5). The models orientation
is either input implying that an inefficient organisation may be made
efficient by reducing the proportions of its inputs but keeping the output
proportions constant or output indicating that an inefficient organisation
may be made efficient by increasing the proportions of its outputs while
keeping the input proportions constant (Zhu, 2003).

Figure 4.5 CRS Frontier Surface (Zhu, 2003)


The linear programming formulation of the CCR model assumes that
outputs increase proportionally when inputs are increased, i.e. constant
Page 106 of 332

returns to scale. However, it is possible that the outputs of a production


unit may vary with varying output sets. Banker et al., (1984) suggested a
formulation that captures this phenomenon of variable returns to scale in
DEA, which is referred to as the BCC model. Therefore, the VRS model
allows an increase in input values to result in a non-proportional increase
of output levels increasing returns to scale (IRS) occur below the point
where CRS and VRS meet, and decreasing returns to scale (DRS) (Figure
4.5).

Figure 4.6. VRS Frontier Surface (Zhu, 2003, Kassim et al., 2010c)
For example in Figure 4.6, frontier AB exhibits increasing return to scale
(IRS); at point B there is constant return to scale (CRS) and sections BC and
CD exhibit decreasing return to scale (DRS) Zhu (2003).

4.14.1

CCR Model
The CCR model evaluates both technical and scale efficiencies via the
optimal value of the ratio. The term 'envelopment' reflects the fact that
DEA measures efficiency within a production possibility set which
envelops all input-output correspondences.
The weights are specified as a mathematical programming problem:
S

max

r 1

r, j0

M
i 1

i , j0

xr

yi

Subject to:
Page 107 of 332

S
r 1

r , j0

M
i 1

i , j0

xr

0; r , i

(4.1)

yi

Where:
= relative efficiency of the j0th organisation;
i=
r

weight for the ith input;

= weight for the rth output;

M =number of inputs;
S = number of outputs;
N = number of DMUs (construction organisations);
j0 = index of the organisation being evaluated;
Xij = observed amount of the ith input for the jth organisation,
= non-Archimedean infinitesimal value
The solutions to equation (4.1) involve finding values of

and such that

the efficiency measure of the j0 DMU is maximised, subject to the


constraint that all efficiencies must be less than or equal to one. This could
have an infinite number of solutions; if ( *,
(

*,

*) is also optimal for

*) is optimal solution, then

>0. Furthermore, the fractional linear

programming formulation above assumes that a proportional increase in


inputs results in a proportionate increase in outputs referred to as constant
return to scale (CRS).
Equation 4.1 is a nonlinear, nonconvex functional program. Its objective
function maximizes the sum of the weighted output relative to the
weighted inputs for the

th
0

DMU. Thus, equation 4.1 can be written in

linear programming form (LP) as follows:


S

max

yrj

4.2a

r 1

Subject to:

Page 108 of 332

i ij

4.2b

i 1
S

and

r rj

i ij

r 1

4.2c

0, i, j

i 1

0; r , i

4.2d

Equation 4.2a maximizes the weighted output of the

th
0

DMU subject to

the constraint that weighted inputs equal one as in equation 4.2b. The
optimal vector weights *,

* represents that weights that will provide

DMU under consideration with the highest efficiency rating possible,


while maintaining feasibility for the remaining N-1 DMUs in a given N
sample groups. The values of * and * may vary for each organisation as
unit evaluated.
For every inefficient DMU, DEA identifies a set of corresponding efficient
units that can be utilized as benchmarks for improvement. The
benchmarks can be obtained from the dual problem shown in equation 4.3:
* = min

4.3a

Subject to:
N
j

xij

xi

j 1
S

j rj
j 1

yr

.........4.3b

........ 4.3c

4.3d

Where:
= efficiency score, and
j

= dual variables.

The model in equations 4.3a-d conforms to the assumption of strong


disposal and referred to as weak efficiency in economic and operations
research literatures, respectively (Cooper et al., 2004).
Page 109 of 332

DEA models can be distinguished by the objective of a model: inputoriented model or output-oriented model. The input-oriented model is to
minimize inputs with given outputs as in equation 4.3a; whereas the
output-oriented model is to maximize outputs with given inputs (Adler et
al, 2002, Seol et al.; 2008) such as equation 4.2 a-d.
Solving equations 4.3 a-d provides efficiency scores of the organisations
under consideration.
By setting

= 1 and

= 1 with

= l0 and all other lj = 0, a solution to

equations 4.3 will have real values and the solution implies

* 1. The

optimal solution, *, yields an efficiency score for a particular DMUj. The


process is repeated for each j, i.e. solve equations 4.3 a-d, with (X0, Y0) =
(Xk, Yk) where (Xk, Yk ) represent vectors with components, xik , yrk and,
similarly (X0, Y0) has components xok , yok . DMUs for which *< 1 are
inefficient, while DMUs for which * = 1 are boundary points.
Some boundary points may be weakly efficient because of nonzero
slacks; to avoid this the following linear program in which the slacks are
taken to their maximal values are considered.
The CCR model cannot discriminate efficiency of scale from pure technical
efficiency due to the CSR assumption (Seol et al., 2008). In order to solve
the linear-programming problem, three characteristics of the model must
be specified, they include: input-output orientation of the model; the
returns-to-scale; and the relative weights of the evaluation system. Borges
and Barros (2008) suggested that the choice of input-oriented or outputoriented DEA is based on the market conditions of the DMU. Thus, in
competitive markets, DMUs are output-oriented, with the assumption that
inputs are under the control of the DMU, which aims to maximize its
output subject to market demand. Therefore, an output-oriented DEA
model was adopted in analysing the performance of the construction
organisations.

Page 110 of 332

4.14.2

BCC Model
To take into account variable returns to scale (VRS) between inputs and
outputs, Banker et al. (1984) extended the CCR model. Banker, Charnes
and Cooper developed the BCC model (named after them) which assumes
that an increase in unit inputs production does not produce a proportional
change in its outputs or VRS.
The linear programming formulation of the CCR model, shown as
equation (4.3a), assumes that outputs increase proportionally when inputs
are increased, i.e. constant returns to scale. However, it is possible that the
outputs may increase at a decreasing rate as the inputs are increased, i.e.
decreasing returns to scale.
Banker et al. (1984) suggested a formulation that captures this
phenomenon of variable returns to scale in DEA, which is referred to as
the BCC model. The BCC model is represented by equations 4.3 a-d, which
is the dual formulation of equations 4.2 a-d with the added convexity
constraint.
Equations 4.4 a-e provide information on how inputs and outputs of
inefficient DMUs can be adjusted as indicated in their respective slacks in
order for them to be considered efficient.
M

max

i 1

Si

S
r 1

Sr

4.4a

Subject to:
N
j i

x ij

Si

y rj

Sr

N
j i

4.4b

y ro ,

4.4c

0 , i, j

j
N
j i

x io

4.4d
4.4e

1
Page 111 of 332

Where:
* represents the efficiency score of an organisation

si and sr are the input and output slacks respectively.


An organisation is efficient if and only if *=1 and si * = sr * = 0;

i, r ; an

organisation is weakly efficient if *=1 and si *

i, r

0 where

0 and/or sr *

0;

>

is non-Archimedean element. Equation (4.4e) is additional

constraints while calculating only technical or managerial efficiency.

4.14.3

DEA Models Extensions


Borges et al., (2008) report four other basic DEA models in the literature:
the additive model of Charnes et al. (1985), the multiplicative model of
Charnes et al., (1982), the Cone-Ratio DEA model of Charnes et al. (1990)
and the Assurance-Region DEA model of Thompson et al. (1986, 1990). The
latter two models include a priori information such as expert opinion,
opportunity costs, rate of transformation or rate of substitution used to
restrict the results to just one best DMU (Assurance-Region DEA model)
or to link DEA with multi-criteria analysis (Cone-Ratio DEA model).
By making the DEA model a little more complicated, the range of topics it
can explore is increased. Particularly interesting is the decomposition of
the technical efficiency score into components resulting from: the scale of
operations; surplus inputs which cannot be disposed of; and a residual or
pure technical efficiency. A further extension which is often important is
to allow for differences in operating environments; this involves trying to
adjust for factors which might be beyond managers control, and which
thus possibly give some organisations an artificial advantage or
disadvantage. Each of these issues is addressed in turn below.

4.15

Operationalising DEA Concept


To apply the DEA concept in analysing the data generated in this research;
the measure of input and output variables are substituted into BCC output
oriented DEA model equations 4.4 a-e.

Page 112 of 332

For establishing the mathematical model in equations 4.4a-e a number of


assumptions were made. Consider N number of engineering and
construction organisations referred to as DMUs each utilizing sets of IT
and complimentary organisational resources as input vector x
execute

projects

involving

engineering

design,

procurement

to

and

construction activities leading to the project performance outcome as


output

vector

including

measure

of

cost

and

schedule

performance, contract growth and profitability. The observed ordered


pair (x, y) is regarded as a feasible production plan; while the collection of
all feasible production plan forms production possible sets ( ) such that
x, y x can produce y . Using the output-oriented model the efficiency

of the j 0 construction organisation under consideration could be evaluated


by solving equations 4.4a-e. The solution maximizes the weighted output
of the j0 organisation subject to the constraint that weighted inputs equal
one. The optimal weights represents that weights that will provide the
organisation under consideration with the highest efficiency rating
possible while maintaining feasibility for the remaining N-1 organisations
in a given N sample groups. The values of the weights may vary for each
organisation as unit evaluated. The equation needs solving N times, once
for each organisation. The section below describes the steps followed in
solving the mathematical model as a form of algorithm.

4.16

DEA Algorithm for Computing ITBV


The following actions are the steps taken while undertaking evaluation of
comparative efficiency of the set of construction organisations using DEA
in line with Golany and Roll (1989) and Thanassoulis (2003):
(1) definition and selection of the organisations;
(2) identification of the input-output variables;
(3) construction of the production possible sets (PPS);
(4) establishment of the type of efficiency to be assessed;
(5) determination of organisations sample size;

Page 113 of 332

(6) determination of a DEA model;


(7) solving the linear program of the identified DEA model for all
organisations;
(8) presentation and analysis of the outcome.

4.16.1

Strategic Grouping
There are always differences in the way organisations are managed that
may lead to different decision making. Therefore, while the objectives of
DEA analysis include identifying the differences in the performances of
the organisations assessed, there is the requirement to have the
organisations to be homogenous (Farrell, 1957).
The homogeneity of the operating enterprise to be assessed using DEA
was ensured by conducting strategic group analysis of the identified
engineering and construction organisations. A strategic group consists of
those rival firms with similar competitive approaches and positions in the
market. The detailed concept of strategic group in the construction
industry was provided in section 2.6 of chapter two. Strategic groups
provide an intermediate frame of reference between viewing an industry
as a whole and considering each firm separately (Flavian and Polo, 1999;
Dikmen et al., 2009).

4.16.2

Organisations Sample Size


The next step is to determine the size of the comparison group (N). A large
population size of the organisations will tend to increase the probability of
capturing high performance organisations which would determine the
efficiency frontier. However, a rule of thumb is that the number of
sampled firms should be at least twice the sum of the number of inputs
and outputs variables (Ali et al., 1988; Bowlin, 1987).

4.16.3

Inputs and Outputs Variables


One of the fundamentals for the assessment of comparative efficiency by
DEA is the construction of the production possible set (PPS) containing all

Page 114 of 332

input-output level correspondences which are capable of being observed.


Correspondence of inputs and outputs in this context is based on a
relationship of exclusivity and exhaustiveness between the two sets of
variables (Thanassoulis, 2003).
The initial list of the variables to be considered for assessing organisational
performance should be as wide as possible. Every dimension, the changes
which may affect the organisations to be evaluated, should be included in
the initial list. The input variables should capture all resources and the
output variables all the outcomes having a bearing on the type of
efficiency being assessed. In addition, contextual factors impacting the
transformation of inputs to outputs should also be reflected which in our
case include complimentary organisational resources. The initial set of
potential input-output variables can be refined using a combination of
statistical test and/or sensitivity analysis (Boussofiane, et al., 1991;
Thanassoulis, 2003).

4.16.4

Solving a DEA Model


The linear program (LP) formulations are a function of a particular
organisation

about

which

we

need

to

determine

its

efficiency

classification. The procedure based on solving one LP for each of the


organisations using the entire data set is standard. This is presented as
follows (Ali, 1993; Dul 2008):
1

For

j = 1 to N

Initialize

j* j

Define

x0

Solve equation (4.4) for * s* and *

Increase

If j<1 go to 3

If j=N terminate

xj, y0

yj

j j+1 for j<N

This process is presented in a form of a flow chart in Figure 4.7


Page 115 of 332

Figure 4.7 DEA Algorithm (Kassim et al., 2010c)

4.16.5

Interpreting DEA Model


DEA is used to measure the technical efficiency of enterprises; the
transformation of inputs such as IT resources into outputs in a form of an
organisations performances which is compared to a best practice
organization.

Thus

DEA

was

applied

to

identify

construction

organisations that have efficiently utilized its IT resources, hence justify


the investments with better performance. The inefficient organization (s)
could be benchmarked and have role models that can guide them in

Page 116 of 332

learning how they can improve the implementation of IT resources in their


operations for competitive advantage (Jui-Chi, 2006).
Based on Pareto optimality the concept DEA defined an enterprise as
100% efficient when and only when (Wber et al., 2004):
1.

2.

None of its outputs can be increased without either


a.

increasing one or more of its inputs,

b.

decreasing some of its other outputs; and

None of its inputs can be decreased without either


a.

decreasing some of its outputs, or

b.

increasing some of its other inputs.

Thus an organisation is Pareto efficient if and only if it is not possible to


improve any input or output without worsening some other input or
output. (Cooper et al, 2006: 45).
DEA may be viewed from two perspectives: envelopment and multiplier
(Seiford and Thrall, 1990). In the envelopment form of DEA, for each DMU
taken in turn the linear combination of all DMU's is defined so that (Maital
and Vaninsky, 1999):

(i)

minimal inputs be achieved with outputs no less than existing


ones, or

(ii)

maximal outputs are obtained with inputs no more than actually


used.

The first approach is called the input minimization DEA model, and the
second, the output maximization.
DEA starts by building a relative ratio consisting of total weighted outputs
to total weighted inputs for each organisation in a given data set. The best
organisations in the data set form an efficient frontier and the degree of
the inefficiencies of the other units relative to the efficient frontier are then
determined using a linear programming algorithm (Wber et al., 2004).

Page 117 of 332

The capability and possible outcome of using DEA in evaluating the


performance of organisations include that DEA is (Chiang, 2006):
i.

capable of analytically identifying the relatively more effective


organizations from the less effective organizations;

ii.

capable of deriving a single summary measure of the relative


effectiveness of organizations, in terms of their utilization of
resources and environmental factors, to produce desired outcomes;

iii.

able to handle non-commensurate, conflicting multiple outcome


measures, multiple resource factors and multiple environmental
factors that lie outside the control of the organization being
evaluated, and not be dependent on a set of a priori weights or
prices for the resources utilized, the environmental factors, or the
outcome measures;

iv.

able to handle qualitative factors such as participant satisfaction,


the extent of information processing available, the degree of
competition, etc.;

v.

able to provide insights into which factors contribute to the relative


effectiveness ratings;

vi.

able to maintain evaluation equity. (Lewin and Minton, 1986).

Most importantly, DEA allows for identification of the best practices and
benchmarks for the poor performing units. The ability of DEA to identify
possible peers or role models as well as simple efficiency scores gives it an
edge over other measures such as total factor productivity indices.

4.17

Reliability and Validity


Reliability is about whether the evidence and the measures used are
consistent and stable (Remenyi et al., 1998). In other words, would another
team of researchers have reached the same results at another time, using
the same methods and techniques (Winter, 2000; Golafshani, 2003).

Page 118 of 332

The research design including data collection technique was aimed at


minimizing the risks of bias and ensures reliability and replicability of the
process.

4.17.1 Validity
"An account is valid or true if it represents accurately those features of the
phenomena, that it is intended to describe, explain or theorise"
Hammersley's (1987: p. 69).
Yin (1994) mentions three basic kinds of validity: construct, internal and
external. Construct validity is about establishing correct operational
measures for the concepts being studied. This was ensured through using
several sources of data. Also the process of data collection, questionnaires
were designed to minimise bias.
Validity addresses whether the research explains or measures what it set
to measure or explain. Thus, validity confirms appropriateness of the
research method adopted to answer

the research question According

Masons (1996:147) validity answer the question: "how well matched is


the logic of the method to the kinds of research questions you are asking
and the kind of social explanation you are intending to develop".
Internal validity aims at ensuring that the findings or results of the
research are related to and are caused by the phenomena under
investigation and not other unaccounted for influences (Winter, 2000). The
choice of research framework, the variables, and the data collection tool
were to ensure the internal validity of the process.

4.17.2 Reliability
Generally the concept of reliability is used for testing or evaluating
research that lends itself to objectivist epistemology and positivist
paradigm with quantities method. Thus, Stenback (2001) argues that
reliability has no relevance in qualitative research, therefore irrelevant
matter in the judgement of quality of qualitative research.

Page 119 of 332

On the other hand Patton (2001) insisted that both validity and reliability
are two factors qualitative researcher should be concerned about while
designing a study, analysing results and judging the quality of the study.
Thus, research reliability provides a measure of quality of data collected
and whether published result is replicable by another group of
researchers. Reliability addresses how accurate your research methods
and techniques produce data.
To ensure the reliability of the study adopted Methodological
triangulation, where multiple methods of data collection are used; Theory
triangulation, where different theories are used to interpret a set of data.
Many theories were adopted to form the framework for the research;
however, the analysis of the data was based on the non-parametric
concept. The idea behind triangulation is that the more agreement of
different data sources on a particular issue, the more reliable the
interpretation of the data.
The pilot study presented in next chapter provided the test of the
realibility of research design, and an opportunity to adjust were necessary.

4.18 Chapter Summary


This chapter addresses the research methodology, justifying the choice of
strategy and method adopted. These issues include philosophy,
philosophy branches, paradigm, paradigm types, research approach,
research strategy, research choices, time horizons, data collection
techniques,

testing/validation/evaluation,

etc.

The

chapter

also

distinguishes between research methodology and method. The chapter


presented methods adopted to ensure the validity and reliability of the
research process. Both the methodology and the research strategy were
outlined, linked to literature, and appropriately justified in line with
literature.

Page 120 of 332

CHAPTER FIVE
PILOT STUDY
5.0

Introduction
In this chapter, analysis of the primary data that was collected from a pilot
study is presented. The pilot study was designed to help test the methods
and procedures proposed for the research. The chapter presents the
outcome of the pilot study; therefore providing a guide on issues related
to the research design, conceptualization and an interpretation of findings
(Kezar, 2000; Nyatanga, 2005; Thabane et al., 2010).
The bulk of the data is coded from qualitative perception to quantitative
and was analysed using Frontier Analyst version 4.

5.1 Organisations General Information


A survey questionnaire was used to collect data on the set of variables
developed in chapter three. The analysis of the result provided an insight to
the validity and reliability of the research design.
Sixty organisations in the engineering and construction industry were
sampled and a total of 19 responded giving a 38% response rates.
The sectors within the construction industry targeted for the pilot study
include: (1) Civil Engineering and Building Contracting (2) Engineering,
Architectural and Construction Services (3) Facilities Management, Building
Maintenance and Repair (4) Construction and Project Management and (5)
Infrastructure Support Services and (6) Oil and Gas Facilities Engineering
Construction. The categorization are used to view sets of the organisations
as falling within a given strategic grouping.
About 10% of the surveyed organisations are engaged mainly in general
build civil construction activities, 32% are in consultancies including project
management; 26% are engaged in oil and gas sector; another 26% are
engaged in engineering and architectural services; 30% are involve with

Page 121 of 332

facilities management and the remaining 30% are into infrastructure support
services as shown in Figure 5.1.
Civil
engineering
& building
contracting
10%

Others (oil
and gas,
LNG,
Petrochem)
26%

Infrastructur
e support
services
3%

Construction
management
and project
management
32%

Engineering,
architectural
and
environment
al technical
services
26%

Facilities
management,
building
maintenance
and repair
3%

Figure 5.1 Grouping of the Sampled Organisations


Another cateria used for the grouping the organisation as their reported
average annual turnover. The spread of the annual turn over of the
responding organisations are as presented in Figure 5.2 follows: 14%
reported an annual sale between 5 million and 50million, another 1%
recorded annual earnings between 50million and 100million annual. 27%
reported earnings between 100million and 500million. The bulk of the
organisations (54%) reported earning between 500 million and 1billion.

Page 122 of 332

8
6
4
2
1 billion and above

500 to 1 billion

250 to 500million

100 to 250m

50 to 100million

25 to 50 million

5 to 25 million

Less than 5million

Figure 5.2 Distribution of Turnover


The raw data from the survey was captured using online survey tools, the
surveymethods, which was translated into Micorsoft Excel for further
analysis.
Using equation 3.1 the automation and integration indexes of each primary
activity of the organisations value chains were computed. The overall ITBA
indexes are then calculated using equation 3.3 and values recorded as in
Table 5.1.

Page 123 of 332

Table 5.1 Inputs/Outputs Data

ITBA

ITSI

ITHS

BWE

SCHD

COST

SAFETY

CUSTO

CONTR

PROFI

Outputs

DMUs

Inputs

A
B
C
D
E
F
G
H
I
J
K
L
M
N
O
P
Q
R
S

4.63
4.02
3.51
3.85
3.98
3.20
4.17
4.55
3.81
4.27
3.73
2.83
5.00
3.74
4.02
3.45
4.39
4.26
3.67

1.80
4.20
2.40
2.20
1.40
2.80
2.00
2.00
2.80
2.00
1.60
2.20
1.80
3.00
3.00
3.80
1.20
2.60
2.60

1.40
5.20
2.00
2.60
2.20
2.60
2.40
2.20
2.40
2.40
2.40
3.60
2.40
3.40
2.40
2.80
1.80
3.00
3.60

1.40
4.60
2.40
2.00
2.20
2.60
1.80
2.80
3.20
2.00
1.60
2.00
2.00
2.60
2.40
3.40
1.00
2.20
2.00

1.00
4.00
4.00
3.00
4.00
4.00
3.00
2.00
2.00
2.00
5.00
3.00
2.00
4.00
2.00
5.00
4.00
2.00
4.00

2.00
3.00
5.00
3.00
3.00
4.00
3.00
3.00
2.00
2.00
5.00
3.00
2.00
3.00
1.00
5.00
3.00
2.00
4.00

2.00
3.00
3.00
2.00
1.00
4.00
1.00
2.00
1.00
2.00
2.00
2.00
2.00
2.00
1.00
4.00
1.00
1.00
2.00

2.00
2.00
2.00
3.00
2.00
3.00
2.00
4.00
1.00
2.00
3.00
2.00
2.00
2.00
1.00
4.00
1.00
1.00
4.00

2.00
3.00
3.00
3.00
3.00
3.00
4.00
3.00
1.00
2.00
3.00
2.00
2.00
2.00
1.00
4.00
2.00
3.00
4.00

2.00
3.00
4.00
4.00
2.00
5.00
4.00
3.00
2.00
2.00
3.00
3.00
2.00
1.00
1.00
4.00
1.00
2.00
4.00

5.2

Analysis and Interpretation


The data in Table 5.1 was analysed using Frontier Analysts software.
The analysis adopted

DEA BCC,

output-oriented model with VRS

assumption. The framework of the analysis was the IT resources induced


competitiveness of the sampled organisations. Borges and Barros (2008)
suggested that the choice of input-oriented or output oriented DEA model
is based on the market conditions of the organisations under
investigation. Thus, in competitive markets, organisations are outputoriented, with the assumption that inputs are under their control, which
aims to maximize its output subject to market demand. Based on the
competitive nature of the organisations and the overall research design,
output-oriented DEA model was adopted in analysing the performance of
the sampled organisations. Furthermore, in order to accommodate the
differences in the scales of operations across the sampled engineering and
Page 124 of 332

construction organisations, the BCC model with variable return to scale


(VRS) was deployed.
The result returned thirteen organisations as being on the frontier, thus,
recording IT induced efficiency of 100% as depicted in Table 5.2 and
Figure 5.3.

Figure 5.3 Distribution of Scores


The high number of efficient organisations was mainly due to low
discriminatory power of the model as a result of high ratio of number
variables to number of sampled organisation. The rule of thumb N>SxM
(where N is the number of the sample organisations, M and S are the
number of input and output variables).

Page 125 of 332

Table 5.2 Efficiency Scores


Actual
Inputs

RTS

A
B
C
D
E
F
G
H
I
J
K
L
M
N
O
P
Q
R
S

100
100
100
100
100
100
100
100
47
76
100
100
86
80
41
100
100
75
100

0
0
0
0
0
0
0
0
1
-1
0
0
-1
1
1
0
0
1
0

Outputs

ITBA

ITSI

ITHS

BWE

SCHD

COST

4.6
4.0
3.5
3.9
4.0
3.2
4.2
4.6
3.8
4.3
3.7
2.8
5.0
3.7
4.0
3.5
4.4
4.3
3.7

1.8
4.2
2.4
2.2
1.4
2.8
2.0
2.0
2.8
2.0
1.6
2.2
1.8
3.0
3.0
3.8
1.2
2.6
2.6

1.4
2.0
2.0
2.6
2.2
2.6
2.4
2.2
2.4
2.4
2.4
3.6
2.4
3.4
2.4
2.8
1.8
3.0
3.6

1.4
4.6
2.4
2.0
2.2
2.6
1.8
2.8
3.2
2.0
1.6
2.0
2.0
2.6
2.4
3.4
1.0
2.2
2.0

1.0
4.0
4.0
3.0
4.0
4.0
3.0
2.0
2.0
2.0
5.0
3.0
2.0
4.0
2.0
5.0
4.0
2.0
4.0

2.0
3.0
5.0
3.0
3.0
4.0
3.0
3.0
2.0
2.0
5.0
3.0
2.0
3.0
1.0
5.0
3.0
2.0
4.0

SAFETY CUSTO CONTR

2.0
3.0
3.0
2.0
1.0
4.0
1.0
2.0
1.0
2.0
2.0
2.0
2.0
2.0
1.0
4.0
1.0
1.0
2.0

2.0
2.0
2.0
3.0
2.0
3.0
2.0
4.0
1.0
2.0
3.0
2.0
2.0
2.0
1.0
4.0
1.0
1.0
4.0

2.0
3.0
3.0
3.0
3.0
3.0
4.0
3.0
1.0
2.0
3.0
2.0
2.0
2.0
1.0
4.0
2.0
3.0
4.0

PROFI

2.0
3.0
4.0
4.0
2.0
5.0
4.0
3.0
2.0
2.0
3.0
3.0
2.0
1.0
1.0
4.0
1.0
2.0
4.0

Three organisations are in the range of 41-50% efficient, one is recorded in


the range of 81-90%. The detail reports on the efficiency scores, areas of
suggested improvements for inefficient organisations, reference set and
peers are provided in Appendixes B-1.1.

5.2.1

Input/Output Variable Correlation Analysis


One of the main aims of the pilot study was to validate the choice of the
variables as representative of the phenomenon under study. To achieve
this, a correlation analysis of all the variables was carried out. Thus, if a
variable has a strong positive correlation with another variable, it implies
both variables represent the same phenomenon. One of the variables then
should be eliminated, since it would suggest that they both represent the
same phenomenon. Further, optimizing the variables by eliminating any
variable that does not contribute to the study, will lead to increasing the
level of power of discrimination of the DEA model, and thus allow for more
accurate results. Similarly, a large negative correlation can indicate that the
values of one factor are associated with low values of another factor, and
provide additional insights about the relationships of those variables. All
the variables passed the test without showing significance correlation.
Page 126 of 332

Figures 5.4 through to 5.7 provides a sample plots showing variables


correlations.

Figure 5.4 ITBA-ITSI correlations across all sampled organisations

Figure 5.5 ITSI - PROFI correlations across all sampled organisations

Page 127 of 332

Figure 5.6 PROFI CUSTO correlations across all sampled organisations

Figure 5.7 SCHD CONTR correlation across all sampled organisations

Page 128 of 332

5.3

Parameters for Data Analysis


The parameters used for the analysis of the pilot study data in DEA include:
(1) potential improvements
(2) refernce set frequency analysis
(3) input/output contrubutions
(4) reference contribution analysis and
(5) efficiency plot analysis.
Figures 5.8 and 5.9 show the parameters as a screen shot an inefficient and
efficient organisations respectively. They are described in the following
sections.

Figure 5.8 Screen Shot of Inefficient Organisation

Page 129 of 332

Figure 5.9 Screen Short of Efficient Organisation

5.3.1

Potential improvements
The potential improvement record provides information about the
potential improvements which can be made to the input and output
variables and compares this information to its reference peers, providing
a benchmark to help determine which input variables are most affecting
outputs. The term is the same as slacks in the DEA literature.
A slack represents the under production of output or the over use of
input. It provides for the measure of the improvements needed to make
an inefficient organisation to become efficient. These improvements are
achieved through an increase/decrease of in input or output factors.
The values of slacks for each organisation are generated from the
solutions of equations 4.4 a-e, thus:
*

max

M
i 1

Si

S
r 1

Sr

Subject to:

Page 130 of 332

N
j i

x ij

Si

x io ;

N
j i

y rj

Sr

y ro ;

0 , i, j ;

N
j

j i

Where, * represents the efficiency score of an organisation and si and sr


are the input and output slacks respectively.
An organisation is efficient if and only if *=1 and si * = sr * = 0;

i, r ; an

organisation is weakly efficient if *=1 and si *

i, r

0 and/or sr *

0;

The organisation O potential improvement plot in figure 5.10 indicates


that it was not efficient since the values of the slacks si and sr are not
equal to zero. Therefore, certain production variables need to be adjusted
to improve the performance of O relative to its peers to remain
competitive in the same market.

Figure 5.10 Potential improvements graph for O

Page 131 of 332

Input
Output

Table 5.3. Potential improvements (Slacks) for O


Input /
Potential
Actual
Target
Output
Improvement
ITBA
4.02
4.02
0.0%
ITSI
3.00
2.02
-32.8%
ITHS
2.40
2.40
0.0%
BWE
2.40
2.00
-16.7%
SCHD
2.00
4.96
147.8%
COST
1.00
5.26
426.2%
SAFETY
1.00
2.48
147.8%
CUSTO
1.00
2.70
170.0%
CONTR
1.00
3.17
217.4%
PROFI
1.00
3.48
248.0%

Table 5.3 and Figure 5.10 gave the indications of how organisation O
utilised the input factors leading to the low performance. To improve its
performance organisation O needs to ensure efficient utilisation of some
of the input variables. From Table 5.3 organisation O was not using its
IT shared infrastructure facilities effectively. The slack of 32.8% indicated
the lost of efficiency in the utilisation of the infrastructure. Since the
dimension for measuring ITSI includes managerial capability, low
performance in the effective utilisation of ITSI provides knock on effect on
the business work environment (BWE). Some of the factors worth
considering for improvement within organisation O include the need
for open communication, project management competency and
general business work practices.
Output variable slacks ( sr ) for organisation O as presented in Table 5.3
are greater than zero. In order to improve the competitiveness of O
relative to its peers in the sample, the aggregate performance of the
projects outputs executed by O have to be improved in the same
percentages indicated in Table 5.3 For example the output slacks required
to be increased ranging from 148% for SCHD to 248% for PROFI.

Page 132 of 332

Table 5.4. Potential Improvements (Slacks) for P


Actual

Target

ITBA
ITSI
ITHS
BWE
SCHD
COST
SAFETY
CUSTO
CONTR
PROFI

3.45
3.80
2.80
3.40
5.00
5.00
4.00
4.00
4.00
4.00

3.45
3.80
2.80
3.40
5.00
5.00
4.00
4.00
4.00
4.00

Output

Input

Input / Output

Potential
Improvement
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%

From the solutions of equations (4 a-e) an organisation is considererd to


be efficient if and only if the efficiency score ( *) is 100% in addition to
both slacks been zero ( si * = sr * = 0;

i, r ); an example of such

organisation is P. The slacks for P are depicted in Table 5.4 and


graphically represented in Figure 5.11. On the other hand even when an
organisation scores 100% (

*=1), it is considered weakly efficient

provided either or both of the slacks are not equal to zero ( si *

sr *

0;

i, r

> 0) where is non-Archimedean element.

Figure 5.11 Potential improvements for P

Page 133 of 332

0 and/or

5.3.2

Reference Set Frequency Analysis


A reference set frequency is one of the Frontier Analyst reports which
provide information on how many times an efficient unit appears in an
inefficient units reference set. That is, how many times each efficient unit
is used in calculating the virtual efficient units for each inefficient unit.
The report indicates the most efficient organisations since, the higher the
frequency of inclusion in the reference sets of other organisations, the
more likely the efficient unit is an example of a best performer among the
sample tested.

5.3.3

Input / Output Contributions


Input-Output contributions shows in-depth information about how each
input/output variable was actually weighted. The report on the input /
output contribution provides an indication of variables used in
determining the efficiency of of an organisation ad those that were not
ignored.
For example in Figure 5.8, the organisation (O) used IT Human Skills
(ITHS) as the only contributing input factors efficiently while SCHD and
SAFETY are the output factors that contributed to its performance. All
other varibale

Figure 5.12 Input-Output Contributions for O


Page 134 of 332

5.3.4

Reference Contributions Analysis


A reference comparison analysis reveals the level of similarity between the
input and output variables in the organisation being analyzed, and those in
its reference set. Reference organisations are considered efficient and they
are directly compared against the inefficient organisations. The reference
contribution provides information on which members of an organisations
reference set have had the most influence to setting its targets for potential
improvements. This allows for identification of the key organisations to
compare its performance.

5.3.5

Efficiency Plot Analysis


The efficiency plot analysis shows the spread of unit efficiencies against all
input and output variables. This analysis can help identify if certain
characteristics, in general lead to efficiency or inefficiency.

5.4

Graphical Repsentation of the Hypotheses


A graphical analysis was conducted using a radar plot and ranking of the
parameters in the derived hypotheses to establish the level of significance
of the parameters, thus provide a non-statistical test of the hypotheses.
For the first hypothesis the parameter in the data required to establish
level of significance in order to prove the alternative hypothesis below is
ITSI:
H1:

the technological components of ITI are readily available in the


marketplace therefore, ITSI may not have significant impact on the
performance of engineering and construction organisations.

The second hypothesis requires the investigating the level of significance


of the ITBA input variable in the sample data to test the following
hypothesis:
H2:

IT business applications (ITBA) will have positive impact on


construction organisation performance.

The variable to use in testing the next hypothesis is ITHS:

Page 135 of 332

H3

Superior IT human capabilities (ITHS) will have positive impact in


providing a source for engineering and construction organisations
competitive advantage

For testing of the last hypothesis the variable to analyse is BWE:


H4:

Complementary organisational resources (BWE) will have positive


impact in creating ITBV in engineering and construction
organisations

The contributions of these variables on the changes in performances of the


organisations are provided in Table 5.5. Detailed results of the analysis
interms of the impact of each input variable on the performace of the
organisations are presented in Appendix B-.1.1.1 to B- 1.1.4

Page 136 of 332

Table 5.5 Impacts of Different Inputs

Each of the variables (ITBA, ITHS, ITSI, and BWE) was used as the sole
input while maintaining the same output variables to produce the efficiency
score of the organisations shown in Table 5.5. While it can be seen that
some of the parameters led to more efficient organisations compared to
other, it is difficult to establish their level of significance. This is because by
using a single variable in the analysis, zero weights are indirectly imposed
on the rest of the variables. Therefore, the process did not allow for the

Page 137 of 332

prior assumption of none contribution of the rest of the variable in the


performance of the organisations.
As indicated in the inputs/outputs contribution analysis, different
combinations of variables are used to establish the performance of each
organisation. This analysis is presented in Table 5.6.
Table 5.6 Inputs/Outputs Contribution for Efficient Organisations

From Table 5.6 it can be seen that based on the frequencies of the resources
utilization (ITSI, ITHS, ITBA, BWE) by the efficient organisations, the level
of significance of the variables are in the following descending order: BWE,
ITBA, ITHS and ITSI.
The most significant varables contributing to an organisations ITBV is
found to be complementary organistional resources (BWE). This is also in
agreement with the hypothesis put forward based on the literuature that
Complementary organisational resources (BWE) will have positive impact in
creating ITBV in engineering and construction organisations.
Furthermore, a radar plot is used to present the significance of the input
variables as depicted in Figures 5.13 and 5.14.

Page 138 of 332

ITSI
4.0
PROFI

3.5

ITHS

3.0

2.5

2.0
1.5

CONTR

ITBA

1.0

0.5

0.0

G
CUSTO

BWE

K
P
Q
SAFETY

SCHD

COST

Figure 5.13 Radar Chat of Inputs/Outputs Contributions


Radar chart (Chambers, et al., 1983: 158-162) is a useful way to display
multivariate data in the form of a two-dimensional chart with an
arbitrary number of variables. Each variable is represented as a starshaped figure with one ray for each variable. For a given variable, the
length of each ray is made proportional to the size of that variable.
ITSI
4.0

PROFI

3.5

ITHS

3.0

2.5
2.0
1.5

CONTR

ITBA

1.0
0.5
0.0

CUSTO

BWE

SAFETY

SCHD

COST

Figure 5.14 Radar Chat of Input/Output Contributions

Page 139 of 332

From the plots, it could be deduced that the dominant variable is ITBA,
BWE and ITHS. Furthermore, the most frequent variable as factor used
by the efficient organisations is the ITBA follows by the BWE.
From this observation, a non statistical analysis of the hypotheses, the
parameters ITBA, BWE, ITHS are found to have a significant impact on
the performance of the organisations. ITSI has no significant impact on
the performance of the organisations.

5.5

Chapter Summary
In this chapter the following contributions have been demonstrated:
Validation of the proposed engineering and construction value
chain and the work functions,
Established the effectiveness of the research methodology,
sampling and the internal validity of data collection techniques,
Established the validity of use of DEA in evaluating the survey
data.
Thus, the research from the first test of the pilot study indicates the
validity of the process and contributes to the body of knowledge in the
field of IT and strategic management.
The next chapter extends the validated processes to evaluate and
analyse a more comprehensive data and higher sample size. The higher
sample size is aimed at satisfying the DEA requirement for high
discriminatory power during analysis and minimize errors.

Page 140 of 332

CHAPTER SIX
DATA ANALYSIS AND RESULTS
6.0

Introduction
The DEA analysis of the data in pilot study reported in chapter 5 was
characterised by low discriminatory power of the model returning large
number of the sampled organisations as efficient mainly due low ratio of
the sample size to the number of the variables in the data used. Thus, a
wider survey was conducted and the results, analysis and conclusions are
presented in this chapter.
The additional data were collected using the same instrument of
questionnaire described in section 4.10 and deployed when conducting
the pilot study reported in chapter 5. Thus, input and output variables
were identified and measured based on 5-point likert scale. The sampled
organisations were categorized strategic groups as represented in Figure
6.1.
The bulk of the data is coded from qualitative perception to quantitative
values using survey software called Survey Methods. The software is an
online tool that allows designing of questionnaire and launching the same
via e-mails. Responses were collected and exported into Microsoft Excel,
Microsoft Words and Portable Document Format (PDF) for further
analysis. The compiled data was sorted and categorised into input /
output variables before analysed using Frontier Analyst version 4
software. The Frontier Analyst is a Windows based efficiency analysis
tool, which uses DEA technique to examine the relative performance of
organisations or units therein referred to as a decision making units
(DMU).

6.1

Data Sample Characteristics and DEA Protocols


A successful implementation of DEA to evaluate the relative efficiencies
of decision-making units (DMU) requires adhering to certain protocols

Page 141 of 332

and methodology related to data collection and analysis. Some of the keys
issues addressed in sampling the data are related to:
(1) Strategic grouping of the sample.
(2) Homogeneity of the sample;
(3) Variables size and;
(4) How the variables were measured among others (Dyson et al., 2001;
Ibrahim et al., 2011).

6.1.1

Strategic Grouping
Strategic group analysis is the first step in structural analysis of industries
to understand the strategies of all significant competitors (Porter 1980). It
is used to determine the different strategic positions of the rival
organisations, intensity of competitive rivalry within and between
industry groups, the profit potential of the various strategic groups in an
industry, and implications for the competitive position of the firm under
analysis. However, members of a strategic group, while pursuing similar
strategies, are not necessarily in competition with one another. For
example, due to the differences in locations, submarkets, etc., companies
in the same strategic group may not be direct competition.

Figure 6.1 Strategic Grouping of the Sampled Organisation

Page 142 of 332

Mode and scope of competition are the two strategic dimensions


proposed for strategic grouping (Porter, 1980). Mode of competition refers
to an organisations decisions on how to achieve competitive advantage,
whereas scope of competition refers to an organisations decisions on the
breadth of its operations. Thus, the performance differences between
firms can be explained by different competitive positions resulting from
different strategic choices.
Strategic group analysis is known to be more a descriptive rather than a
predictive tool. It is unlikely to offer much insight into why some
organisations in an industry perform better than others. However, it can
increase understanding about the structure of the industry, strategic
perspectives, and dynamics of the competitive environment (Grant 1995).
Kale and Arditi (2002) claimed that differences in construction companies
performances could be partly explained by their choices of mode and
scope of competition. It was found that construction companies that
outperform their rivals adopt a hybrid mode, rather than a single mode of
competition. However, no statistically significant finding was found on
the impact of scope on performance.
Claver et al. (2003) studied the linkage of strategic groups and
performance by examining the business strategies of Spanish contractors.
However, the empirical findings demonstrate that no significant
differences exist between the performances of organisations that belong to
different groups.
The sampled organisations were grouped into six strategic groups based
on the scope of competition and areas of specialisations as in Figure 6.1

6.1.2

Homogeneity of the sampled organisations


The organisations in the sampled data were selected to ensure
homogeneity in that they are providing comparable services with
common output for engineering and construction project delivery.
Another homogeneity factor satisfied by the sample characteristic is the

Page 143 of 332

fact that all targeted organisations is within same economic environment


of the UK. The organisations were further grouped based on strategic
group analysis for the construction organisation (Dikmen et al., 2009). The
potential existence of economies of scale was another form of nonhomogeneity of the organisations under consideration. To mitigate the
effect of the scale, a variable return to scale (VRT) model of DEA was used
in analysing the data (Banker et al., 1984).

6.1.3

Size of Input / Output Factors


One of the fundamentals for the assessment of comparative efficiency by
DEA is the construction of the production possible set (PPS) containing all
input-output level correspondences as defined by the research model.
Correspondence of inputs and outputs in this context is based on a
relationship of exclusivity and exhaustiveness between the two sets of
variables (Thanassoulis, 2003).
The initial list of the variables considered for assessing the organisational
performance was as wide as possible in the form of work functions within
each primary value chain activity. The input variables captured all IT
resources and the output variables all the outcomes having a bearing on
the type of efficiency being assessed. In addition, contextual factors
impacting the transformation of inputs to outputs should also be reflected
in our case these include complimentary organisational resources
(Boussofiane, et al., 1991; Thanassoulis, 2003). The variables quantified
satisfied the 'isotonicity' relations, which assumed that an increase in any
input should not result in a decrease in any output for a given
organisation.
Meeting the minimum requirements of the relationship between the
sample size and the number of input and output variables lead to a
reasonable level of discrimination of the DEA functions and results. While
it is feasible to apply DEA to a small sample size (Evanoff and Israilevich,
1991), the analysis loses discriminatory power where the sample size is
not greater than the product of number of inputs and number of outputs.
Page 144 of 332

This is termed as first rule of thumb (Ali et al., 1988; Bowlin, 1987), thus,
N>(S*M). A second rule of thumb is to select a sample size at least two
times the sum of the number of inputs and outputs N 2(S+M) (Dyson et
al., 2001). The data should be collected in a common time frame in order
to arrive at meaningful conclusion (Sherman and Gold, 1985; Avkiran,
2006).
The sample size was derived from 150-targeted organisations involved in
the business of engineering, architectural, construction and project
management in the UK. 55 responded with 6 uncompleted leaving a valid
sample size of 49 representing 32% response rate. There are 4 set of input
variables (M=4) (ITBA, ITSI, ITHS and BWE) derived by calculating the
average scores against each work functions of the primary value chain
activity using equation 1. The output variables are six in number (S=6)
including (SCHD, COST, SAFETY, CUSTP, CONTR and PROFI). This
implies that the sum of the number of the variables is 10 and their
products 24. With a sample size of N=49, the data satisfied the first and
second rules of thumb for a minimum requirement to ensure
discriminatory power from solving equation 4.

6.1.4

Measure of the Input / Output Variables


One major assumption on the measurement of the variables in DEA
analysis is that they should have equal intervals of the scale and equal
values (Shephard, 1970; Banker et al, 1984; Dyson et al., 2001). Thus, input
and output variables were measured using a 5point likert scale
questionnaire, hence, satisfying this assumption.

6.2

Data Analysis
Borges and Barros (2008) suggested that the choice of input-oriented or an
output-oriented DEA model is based on the market conditions of the
organisations under investigation. Since, in competitive markets,
organisations are output-oriented, with the assumption that inputs are
under their control, the aim of the organisation is to maximize its outputs
subject to market demand. Based on the competitive nature of the
Page 145 of 332

organisations and the overall research design, output-oriented DEA


model was adopted in analysing the performance of the sampled
organisations. Furthermore, in order to accommodate the differences in
the scales of operations across the sampled engineering and construction
organisations, the BCC model with variable return to scale (VRS) was
deployed.
The DEA model for ITBV of engineering and construction organisations
as represented in equation 4 is simulated and solved using Frontier
Analysts Software based on the data collected in Table 6.1.
Different analyses were provided through the Frontier Analyst software
product, which are organized in the following sections:
Summary Efficiency Scores Analysis
Total Potential Improvement Analysis
Reference Set Frequencies Analysis
Unit Potential Improvement and Comparison Analysis
Unit Reference Comparison Analysis
Input/output Variable Correlation Analysis
Efficiency Plot Analysis

Page 146 of 332

Table 6.1. Quantified Input/output Variables


DMUs
CO01
CO02
CO03
CO04
CO05
CO06
CO07
CO08
CO09
CO10
CO11
CO12
CO13
CO14
CO15
CO16
CO17
CO18
CO19
CO20
CO21
CO22
CO23
CO24
CO25
CO26
CO27
CO28
CO29
CO30
CO31
CO32
CO33
CO34
CO35
CO36
CO37
CO38
CO39
CO40
CO41
CO42
CO43
CO44
CO45
CO46
CO47
CO48
CO49

Inputs (Xi)
ITBA
4.55
3.29
4.28
4.45
3.90
3.81
3.83
2.83
5.00
3.31
2.58
3.11
4.63
3.60
4.39
3.74
3.52
4.10
3.85
4.27
3.67
3.11
4.39
3.59
4.47
3.73
3.75
3.74
2.00
3.42
3.75
4.86
3.84
4.63
5.00
4.92
4.93
4.26
2.45
3.51
4.52
3.72
3.35
3.98
3.20
4.02
3.45
4.17
4.02

ITSI
2.00
2.40
2.00
1.80
3.00
2.80
1.80
2.20
1.00
1.80
2.60
2.40
1.20
2.20
1.20
3.00
2.60
1.60
2.20
2.00
2.60
1.40
1.80
3.00
2.00
1.60
2.40
2.00
5.00
1.80
2.20
1.40
1.80
1.80
1.80
1.00
1.00
2.60
3.40
2.40
2.20
2.40
1.80
1.40
2.80
4.20
3.80
2.00
3.00

ITHS
1.83
2.50
1.50
1.33
2.17
2.00
2.17
3.00
1.00
1.33
1.50
2.17
1.17
2.00
1.50
2.83
2.33
2.00
2.17
2.00
3.00
2.33
2.17
2.33
1.83
2.00
2.67
2.33
5.00
1.83
2.00
1.00
1.67
1.17
2.00
1.00
1.00
2.50
3.67
1.67
2.83
2.00
2.83
1.83
2.17
4.33
2.33
2.00
2.00

Outputs (Yj)
BWE
2.80
3.00
1.00
2.00
2.00
3.20
1.60
2.00
1.00
2.60
2.40
2.40
2.00
2.20
1.00
2.60
2.40
2.40
2.00
2.00
2.00
3.00
2.00
4.20
1.80
1.60
2.80
2.40
3.80
2.00
1.60
1.40
1.60
1.40
2.00
1.00
1.60
2.20
4.00
2.40
2.00
2.00
2.40
2.20
2.60
4.60
3.40
1.80
2.40

SCHD
2.00
5.00
1.00
4.00
4.00
2.00
2.00
3.00
2.00
2.00
2.00
3.00
1.00
3.00
4.00
4.00
4.00
3.00
3.00
2.00
4.00
3.00
2.00
5.00
2.00
5.00
3.00
4.00
5.00
1.00
2.00
1.00
1.00
1.00
2.00
1.00
2.00
2.00
3.00
4.00
3.00
2.00
2.00
4.00
4.00
4.00
5.00
3.00
2.00

COST
3.00
4.00
2.00
4.00
4.00
2.00
2.00
3.00
2.00
1.00
2.00
3.00
2.00
3.00
3.00
3.00
4.00
4.00
3.00
2.00
4.00
3.00
4.00
4.00
2.00
5.00
2.00
4.00
5.00
1.00
2.00
3.00
1.00
2.00
2.00
1.00
2.00
2.00
4.00
5.00
3.00
2.00
1.00
3.00
4.00
3.00
5.00
3.00
1.00

Page 147 of 332

SAFETY
2.00
3.00
1.00
2.00
1.00
1.00
1.00
2.00
1.00
4.00
3.00
2.00
2.00
3.00
1.00
2.00
4.00
1.00
2.00
2.00
2.00
3.00
2.00
4.00
2.00
2.00
2.00
3.00
2.00
1.00
2.00
2.00
1.00
2.00
2.00
1.00
2.00
1.00
5.00
3.00
3.00
2.00
1.00
1.00
4.00
3.00
4.00
1.00
1.00

CUSTO
4.00
3.00
2.00
3.00
3.00
1.00
1.00
2.00
1.00
2.00
1.00
2.00
1.00
2.00
1.00
2.00
3.00
1.00
3.00
2.00
4.00
3.00
3.00
2.00
2.00
3.00
2.00
3.00
3.00
2.00
2.00
2.00
1.00
2.00
2.00
1.00
2.00
1.00
3.00
2.00
3.00
1.00
2.00
2.00
3.00
2.00
4.00
2.00
1.00

CONTR
3.00
4.00
2.00
2.00
5.00
1.00
2.00
2.00
1.00
2.00
1.00
3.00
2.00
4.00
2.00
2.00
4.00
2.00
3.00
2.00
4.00
3.00
4.00
4.00
3.00
3.00
4.00
3.00
4.00
2.00
2.00
2.00
1.00
2.00
2.00
1.00
4.00
3.00
5.00
3.00
3.00
1.00
3.00
3.00
3.00
3.00
4.00
4.00
1.00

PROFI
3.00
3.00
1.00
2.00
4.00
2.00
2.00
3.00
2.00
2.00
1.00
3.00
2.00
4.00
1.00
1.00
3.00
2.00
4.00
2.00
4.00
2.00
2.00
4.00
3.00
3.00
4.00
4.00
4.00
1.00
2.00
2.00
1.00
2.00
2.00
1.00
1.00
2.00
4.00
4.00
3.00
1.00
1.00
2.00
5.00
3.00
4.00
4.00
1.00

6.3

Result and Discussion

Table 6.2 presents the relative efficiency scores of the organisation, which,
generally indicated that the utilization of IT resources has resulted in values in
the form of efficiency gained.
Table 6.2. Efficiency Scores and Slacks
DMU

CO01
CO02
CO03
CO04
CO05
CO06
CO07
CO08
CO09
CO10
CO11
CO12
CO13
CO14
CO15
CO16
CO17
CO18
CO19
CO20
CO21
CO22
CO23
CO24
CO25
CO26
CO27
CO28
CO29
CO30
CO31
CO32
CO33
CO34
CO35
CO36
CO37
CO38
CO39
CO40
CO41
CO42

Efficiency
Scores %

100.00
100.00
100.00
100.00
100.00
46.67
65.19
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
80.00
100.00
80.00
100.00
69.04
100.00
100.00
100.00
100.00
90.57
100.00
97.14
100.00
100.00
79.78
97.65
100.00
48.21
100.00
71.74
100.00
100.00
62.75
100.00
100.00
100.00
64.65

RTS

(1.00)
1.00
(1.00)
(1.00)
(1.00)
1.00
(1.00)
(1.00)
(1.00)
1.00
(1.00)
(1.00)
(1.00)
(1.00)
(1.00)
1.00
(1.00)
(1.00)
1.00
1.00
(1.00)
(1.00)
1.00
1.00
(1.00)
1.00
1.00
1.00
(1.00)
(1.00)
(1.00)
(1.00)
(1.00)
(1.00)
1.00
(1.00)
(1.00)
1.00
1.00
(1.00)
1.00
(1.00)

Slacks
ITBA

ITSI

ITHS

BWE

SCHD

COST

SAFETY

CUSTO

CONTR

PROFI

0.08
0.03
0.07
0.12
0.11
0.28
0.05
0.18
-

0.03
0.04
0.03
0.04
0.02
0.02

0.04
0.13
0.08
0.04
0.01
0.09
0.13
-

0.07
0.17
0.12
0.02
-

0.30
0.25
0.27
0.23
0.02
0.52
0.21
0.16
0.27
0.06
0.30
-

0.06
0.30
0.25
0.26
0.30
0.26
0.49
0.28
0.20
0.22
0.08
0.30
0.02

0.29
0.06
0.12
0.15
0.27
-

0.11
0.32
0.26
0.44
0.04
0.07
0.09
0.08
0.30
0.25

0.23
0.21
0.10
0.06
0.10
0.07
0.03
0.10
0.33

0.46
0.10
0.24
0.03
0.15

Page 148 of 332

CO43
CO44
CO45
CO46
CO47
CO48
CO49

90.60
99.16
100.00
80.00
100.00
100.00
40.91

(1.00)
(1.00)
(1.00)
1.00
1.00
(1.00)
1.00

0.11
0.06

0.08
0.18

0.10
0.01
0.40
-

0.11
0.26
0.08

0.36
-

0.60
0.17
0.25
0.49

0.33
0.19
0.05
-

0.19
0.12
0.38
0.19

0.05
0.13

Using all the input factors, thirty-two organisations were recorded having
efficiency scores of 100% ( *=1) and zero slacks ( si * = sr * = 0; i, r );
making them Pareto efficient. The rest of the organisations scored less
than 100% efficiencies ( *<1) and they recorded none zero slacks,
therefore, are not relatively efficient (Figure 6.2).

Figure 6.2 Distribution of efficiency scores

6.3.1

Reference Set Frequency Analysis


A reference set frequency is one of the Frontier Analyst reports which
provide information on how many times an efficient unit appears in an
inefficient units reference set. That is, how many times each efficient unit
is used in calculating the virtual efficient units for each inefficient unit.
The reference set frequency analysis is shown in Figure 6.3.

Page 149 of 332

0.35
0.03
0.05
0.13

The graph indicates the most efficient organisations since the higher the
frequency of inclusion in the reference sets of other organisations the
more likely the efficient unit is an example of a best performer among the
sample tested. For example, Figure 6.3 shows that organisation CO26 is the
most frequently occurring reference set with frequency of 14.
Organisation CO45, CO17 and CO10 are second in ranking in terms of
efficient utilization of IT resources using their unique complementary
resources recording a frequency of referrers by similar organisations as
peers 6 times. Organisation CO41 has no referral indicating its noncompetitiveness among its peers. It records the efficiency score 79.78% as
indicated in Table 6.5 based all inputs.

Figure 6.3 Reference Set Frequencies

Page 150 of 332

6.3.2

Input / Output contributions


Input-output contributions show in-depth information about how each
input/output variable was actually weighted.
There is judicial utilization of the input variables by CO26 to be the
efficient organisation in the set. However, customer satisfaction (CUSTO)
was the only contributing output factor to its performance as depicted in
Figure 6.4.

Figure 6.4 Input / Output contributions of CO26

6.3.3

Potential improvements
A detailed analysis of each organisation provides information for the
required effort to improve the efficiency rating of each inefficient
organisation. The potential improvement analysis provides information
about improvements which can be made to the input and output variables
and compares this information to its reference peers, providing a
benchmark to help determine which input variables are most affecting
outputs.
By examining the potential improvements suggested by the DEA for one
of the least efficient organisations in the sample it is evident that the
Page 151 of 332

organisation with lowest performance is CO49 with 40.91% and CO41 with
zero reference.
Amongst the organisations with 100% efficiency scores, CO41 recorded
zero reference as shown in Figure 6.3. This implies that the organisation is
not competitive within the set. In order for the organisation CO41 to
improve its competitiveness among its peers, the analysis provided in
Table 6.3 and Figure 6.4 provide guidance.

Output

Input

Table 6.3. Inputs / Outputs Slacks for CO41


Input / Output

Actual

Target

Potential
Improvement

ITBA
ITSI
ITHS
BWE
SCHD
COST
SAFETY
CUSTO
CONTR
PROFI

4.52
2.20
2.83
2.00
3.00
3.00
3.00
3.00
3.00
3.00

3.62
2.10
2.17
2.00
4.50
4.50
3.00
3.00
3.50
3.00

-19.7%
-4.5%
-23.5%
0.0%
50.0%
50.0%
0.0%
0.0%
16.7%
0.0%

Table 6.3 provides a mathematical interpretation of the reasons for the low
performance of the organisation CO41. The negative figures of ITBA and
ITHS imply there is inefficient utilization of such resources to produce
maximum competitive outputs.

Page 152 of 332

Figure 6.5 Potential improvements graph for CO41


The DEA model used (equation 4) assumes maximization of outputs
while keeping inputs constant. In this respect organisation CO41 has over
utilized some of its inputs relative to other organisations for a maximum
performance. Mathematically these are indicated by the slack (potential
improvement) values in Table 6.3. A slack provides for the measure of the
improvements needed to make an inefficient organisation to become
efficient.
So for CO41 to become competitive relative to its peers there is needed to
utilize some of its inputs factors more efficiently. For example the
efficiency of utilization of ITBA to has to be increased by 19.7%. ITBA is
measure of degree of computer application usage and integration in
executing different task within the value chain of construction
organisation. The negative value recorded against CO41 implies that other
organisation produces higher value of outputs with lower value on IT
integration. This level of inefficient utilization of input factors by CO41
compare to its peers are recorded as negative percentages in table 6.3 and
depicted graphically in Figure 6.5.

Page 153 of 332

The positive values for the input factors gave an indication the percentage
increased required for CO41 to be efficient and competitive within its
peers.
Another example is for CO49 to be efficient it has to more than double
some of its output factors such as the COST, CONTR and PROFI. This
implies that the utilization of IT input factors which are also related to the
IT investment since the resources have to be there to be utilized did not
translate into improve productivity as compared with its peers such as
organisation CO26.

Output

Input

Table 6.4 Inputs / Outputs Slacks of CO49


Input /
Output
ITBA
ITSI
ITHS
BWE
SCHD
COST
SAFETY
CUSTO
CONTR
PROFI

Actual

Target

4.02
3.00
2.00
2.40
2.00
1.00
1.00
1.00
1.00
1.00

3.78
1.93
2.00
2.22
4.89
4.67
2.44
2.78
3.11
3.11

Figure 6.6. Potential improvements graph for CO49


Page 154 of 332

Potential
Improvement
-6.1%
-35.6%
0.0%
-7.4%
144.4%
366.7%
144.4%
177.8%
211.1%
211.1%

Mathematically, as depicted in Figure 6.6 and Table 6.4, some of the inputs
factors such as ITBA, ITSI and BWE could be reduced in order for CO49 to
perform at the same level of the efficient peers. However, physically such
mathematical interpretation may not make sense. For example, the
suggestion to reduce utilization of ITBA will not reduce the cost of the
original investment. The negative input factors for CO49 implies that the
efficient organisations are utilizing their IT resources in more productive
manner than CO49.

6.4

Summary of the Chapter

The chapter presents descriptive statistics of the participating organisations


in terms of business types and ownership, size, annual turnover, job
function of the questionnaire respondents and number or projects delivered
over the last three years before the survey, which helped in attempting to
place the organisations in strategic groups.
The chapter also presents detailed results of the outcome of the evaluations
of the data collected using DEA program. Both mathematical and physical
interpretations of the results were presented. These analyses and
interpretations led to the conclusions on the findings and contributions of
the research as presented in the next chapter.

Page 155 of 332

CHAPTER SEVEN
CONCLUSION AND RESEARCH CONTRIBUTION
7.0

Conclusion
Previous studies on IT business value have not been able to conclusively
establish a strong relationship between IT investments and the
performance of construction organisations.
The literature review in the fields of ITBV, strategic management and
construction management has indicated that the equivocal results of the
previous studies could be attributed to the difficulties in modeling and
measurement of the return of IT investment, lack of structured
theoretical constructs, data availability and choice of dependent variables
among others.
The current research was designed with the overarching aim of
investigating the impact of IT-enabled strategies on the competitiveness
of engineering and construction organisations so as to provide a model
that mitigates some of the drawbacks identified in the literature.
This research adopted multiple theoretical concepts of process-based;
resource-based and microeconomic-views and developed a conceptual
model of ITBV (Kassim et al., 2009a). Then an extension of this model was
derived using the non-parametric technique of Data Envelopment
Analysis (Kassim et al., 2009b).
The model provides a methodology for evaluating the impact of
utilization of IT resources on the productivity of engineering and
construction processes. Using the DEA concept, the model computes
using empirical data a surface (frontier) that envelops the most efficient
organisations. The efficient frontier can be used for benchmarking
organisations' performances and thus, provides a measure for their ITinduced competitive advantage.
Page 156 of 332

The Empirical results the model provide information on how inefficient


organisations can improve their performances by adjusting their input
and output factors such that they become Pareto-efficient.
This information is obtained by comparing the values of their input and
output variables with the exemplars in the strategic groups which are
determined to be Pareto efficient.
For practical purposes the model developed could be used to benchmark
the IT-induced productivity of construction organisations by identifying:
Levels of all input / output variables contributions in determining
the performance of each organisation
The measure of improvements needed to make any of the input /
output variables of an inefficient organisations in relation to its
peers to become competitive
The most competitive organisation with the timeline of
measurement of the performance by returning high level of
referencing by its peers.
Thus, this approach has mitigated the difficulties associated with
previous studies such as, lack of theoretical framework in modeling
ITBV, the prior assumption required or the relationship between IT
investment and firm performance, and the arbitrary and subjective
assignment of weight factors.
This is the first time data envelopment analysis has been used for
quantitative evaluation of IT business value
In the research design the overarching ontological stance was
constructivism; the research investigated how IT impacts on the
organisations performance by socially constructing models through the
perception of the employees of the organisations in their respective
environments.
As the first stage for empirical test of the ITBV conceptual model, a pilot
study was conducted which established the validity of:
Page 157 of 332

A process oriented model of ITBV for evaluating impact of IT


resources on the performances of engineering and construction
organisations.
The use of non parametric technique of data envelopment analysis
within

framework

for

benchmarking

the

construction

organizations IT-induced performance.


Thus, the research from the first test of the pilot study indicates the
validity of the process and contributes to the body of knowledge in the
field of IT and strategic management.
The analysis of the data from the pilot study was characterised by low
discriminatory power of the DEA function, returning large number of the
sampled organisations as efficient mainly as result of low ratio of the
sample size to the number of the variables (N<(S*M)). Thus, a wider
survey with larger sampled data in propotion to the number of the
variables was conducted. The data satisfied the first and second rules of
thumb for a minimum requirement to ensure discriminatory power from
solving DEA function in equation 4 of chapter four. The results, analysis
and conclusions are presented in this chapter.

7.1

Research Overview
The research was designed as an attempt to increase the understanding of
the impact of utilization of IT in the execution of engineering and
construction organizations value chains and their performances.
A detailed literature review on how the utilization of IT resources impacts
on performance engineering and construction organisations suggested
that IT-enabled strategies could be used to gain competitive advantage.
Thus, IT resources used as factor of production tend offer strategic
advantage to organisations through efficient and cost effective delivery of
the organisations value chain. However, there were limited empirically
validated of such suggestions. Some of the previous empirical studies
were carried out through imprecise and unstructured theoretical

Page 158 of 332

constructs that seem to lead to equivocal results. The inconsistencies


results known as IT productivity paradox on the impact of IT on
organisation performance were ascribed to the difficulties associated with
modelling the relationship between the IT investment and the
organisational performance; techniques for measurements of the return of
the IT investment; the mode of data collection and sampling; the industry
type, and the choice of dependent variables as some of the major reasons
(Brynjolfsson, 1993; Kohli and Devaraj, 2003; Oh and Pinsonneault, 2007).
The research was designed in three-phase methodologically triangulated
process. The first phase involved the development of a conceptual model
using hybrid of Porters (1980; 1985) competitive advantage and
competitive strategy models with organisation resource-based view and
core competence approach (Barney, 1991). This phase was complemented
by a comprehensive literature review in the field of IT business value,
construction management and strategic management; identification and
operationalization of IT resources on the construction project value chain;
establishing and defining project performance metrics.
The first phase relied on the current body of knowledge and theories in
developing the research model and hypotheses, thus, by definition
adopted positivism paradigm view (Sutrisna, 2009).
The second phase involved the validation of the proposed conceptual
model and the engineering and construction value chain through
responses of a pilot questionnaire. Using non parametric approach of Data
Envelopment Analysis (DEA), the model was empirically tested where the
performances of the construction organization based on the identified and
operationalized IT resources as inputs were measured
Applying Majken and Mary (1996) concept of sequential strategy for
conducting multi-paradigm research a constructivist paradigm with
phenomenological epistemology was deployed in the second phase of the
research

Page 159 of 332

The final phase involved detailed data collection via online survey
questionnaire designed to include closed-ended items with numerical
responses as well as open-ended items that could support discovery of
new information. Thus, as argued by Lewis & Grimes (1999), in the
analyses of a common phenomenon paradigm images need not operate at
the extremes, but may overlap and foster counterintuitive insights.
Therefore, a sequential overlap of multiple paradigms was deployed
within the different phases of the research.

7.2

Research Findings
After detailed literature review in the field of information technology,
organisation

performance,

construction

management,

strategic

management, engineering and construction value chain, theory of


competitive advantage, economic theory of production, resource based
theory and the concept of information technology business value among
others, .the research set out a focus research question with the aim of
understanding the possible impact of IT-enabled business strategy on the
performance of engineering and construction organizations in United
Kingdom, Thus:
"What are the possible impacts of deploying and utilizing IT
resources in the presence of other complementary organisational
resources on the performances of engineering and construction
organisations in United Kingdom?"
This led to driving set of hypotheses and a conceptual model used to test
empirically the set aim and objectives of the research
The research has successfully achieved the set aim through establishing
and testing a model using multi-theoretical framework adopting a
sequential strategy for conducting multi-paradigm research.
The findings from the empirical tests showed evidence of consistent
positive impact of utilizing IT resources in achieving competitive
advantage in the production process of engineering and construction

Page 160 of 332

organisation

when

deployed

in

the

presence

of

other

unique

complementary organisational resources. The findings agreed with


general postulation of RBV theory as discussed in sections 2.4, 2.10, 2.11
and 3.5.4. Therefore, the empirical results support the paradigm that ITenabled strategy could improve organizational performance and create
sustainable competitive advantage mainly in the presence of other
complementary organizational resources that are unique and immobile.
Consequently the research findings returned a positive outcome on the
hypothesis H4:
H4:

Complementary organisational resources (BWE) will have


positive impact in creating ITBV in engineering and
construction organisations

However, using individual IT-resources as identified in each hypothesis


tend to record different level of impact on the performances of the
organizations. Using ITSI, ITBA and ITHS as the only individual input
factors separately, the number of efficient organisations reduced
considerably in each case (see Table 6.5). Also the record of the reference
set frequency for each scenario changed, presenting a different set of
organizations with high reference set frequency records. Thus, while ITSI,
ITBA and ITHS do provide positive impact on the performances of the
engineering and construction organizations, they do not provide a
sustainable competitive advantage to the respective organization by when
deployed as the only factor of production. Nevertheless, the research
findings have validated the hypotheses H1, H2 and H3 thus:
H1:

the technological components of ITI are readily available in the


marketplace therefore; ITSI may not have significant impact on
the performance of engineering and construction organisations.

H2:

IT business applications (ITBA) will have positive impact on


construction organisation performance.

H3

Superior IT human capabilities (ITHS) will have a positive


impact in providing a source for engineering and construction
organisations competitive advantage

Page 161 of 332

7.3

Research Contributions
This research makes significant contributions to field of IT business value
in construction organisations research and practice. Some of these
contributions include:
The development of an IT business conceptual model that addresses
the limitations of the existing IT investments evaluation frameworks.
The model was based on multi-theoretical framework addressing the
unique nature of the construction organisation value chains.
Furthermore the empirically tested model addresses the errors
introduced

in

using

parametric

approach

to

establish

the

relationships between investments in IT as factors of production and


the measure of the organisational performances through prior
assumption of a function by using non parametric approach of DEA.
From the empirical results it has been shown that the model could be
used to benchmark and establish the relative competitive advantages
of the engineering and construction organisations within strategic
groupings of the construction industry.
As a tool to the construction organisations executive, the model
could be used to provide support to managers in decision making on
IT investments, utilization of the IT resources and how combination
of strategic IT resources with other organizational resources could
provide sources of sustained competitive advantage in their
organisations.
The empirical evidence established that IT provides business value
in undertaking the engineering and construction business processes
leading to significant impact on the organisations performances in
the areas of project delivery, customer relationship and overall profit
growth.

7.4

Research Limitations
The performances of engineering and construction organisations are
partly attributed to their choices of mode and scope of completion (Kale ,
Page 162 of 332

163 and Arditi, 2002). The analysis of results presented in this thesis did
not take into account this provision that could lead to detail
categorization of the sample organisation thorough strategic group
analysis.
Another limitation of the research is related to DEA as the tool deployed
in data analysis. DEA is a deterministic rather than a statistical technique
and, therefore, is sensitive to measurement error (Rodgers and Assaf,
2006; Odeck, 2007). A wrong estimation of an organisations inputs or
output due to error in perception of the respondents of the research
questionnaire can significantly distorts the shape of the frontier and
reduces the efficiency score of other organizations included in the sample.
Furthermore, since DEA is a nonparametric technique, statistical
hypothesis tests are difficult to undertake (Trick, 1998), thus, the
conclusions based on the non statistic hypothesis has limitations in
interpretations.

7.5

Future Research
Since DEA provides for categorization of sample, future research shall
include the grouping of the engineering and construction organisations
according to their mode and scope of business activities to enhance
better understanding of the competitive impact of utilization of IT
resources by different construction organisations strategic groupings.
This

will

provide

specific

guidance

to

management

of

such

organisations in making IT investment decisions to be in compliance


with their strategies and scale of operations to remain competitive.
Future study shall include the use of Stochastic Frontier Analysis (SFA)
on the sample data to help eliminate the DEA limitation of sensitive to
measurement errors and limits random deviations from the efficiency
frontier. Thus, allowing for additional evidence on the true structure of
the efficiency frontier (Odeck, 2007).

Page 163 of 332

Furthermore a DEA-based Malmquist productivity index may be required to


evaluate the performance changes of the organisation over period of time to
establish sustain competitive advantage as a result of deployment of IT
resources in the execution of the construction processes. DEA-based
Malmquist productivity index measures the productivity and by extention
organisational performance changes overtime.

Page 164 of 332

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Page 228 of 332

APPENDIX A 1.1: COVER LETTER


The purpose of this 20-minute survey is to investigate the
relationship between Information Technology (IT) investment
and

the

performance

of

engineering

and

construction

organisations in UK.
The

questionnaire

is

designed

to

assess

the

impact

of

Information Technology (IT) on the performance of your


organisation. The level of IT adoption is assessed by the extent
of incorporation of technologies such as computer software and
hardware in different tasks used to execute projects. The
organisation performance is assessed through measurement of
schedule,

cost,

safety,

customer

satisfaction

of

executed

projects and contract growth for the last three years.


The anticipated benefits for your participation include
Benchmarking engineering and construction organizations
IT-induced performance
continuous improvement in the deployment of IT resources
in engineering and construction organisation
providing a platform for investigating engineering and
construction organisation IT readiness
To this end please find enclosed research questionnaires for
your kind response. Any personally identifiable information will
be kept strictly confidential and all the data will be used only for
research purposes. The outcome of the research will be used in
a dissertation for the degree of Doctor of Philosophy by
University of Salford, UK. Your cooperation is highly important to
the success of the project. A consent form is also attached
explaining our undertaking to protecting your confidentiality and
confirming your consent to participate.

Page 229 of 332

APPENDIX A 1.2: RESEARCH PARTICIPANT CONSENT FORM

UNIVERSITY OF SALFORD
If you are happy to take part in the research described below we would be
grateful if you could sign the attached consent form
Background Information
Project Title:
I.T SoCA - Information Technology as Source of Competitive
Advantage in Construction Industry

Researchers name:
Supervisors name:

Yahuza Hassan Kassim


Dr. Jason Underwood

Objectives for the research: This survey is being conducted by Yahuza Kassim of
Salford of University to help derive and test IT-business model for construction
organisations that could be use for IT capacity planning, assessment of IT readiness and
measure of continuous improvement of IT-enable strategy in construction firms.
Details of participation: Participants will be sought from approximately 150 (working on
approximately a 30% success return) large UK construction organisations which will be
identified through established industry contacts/experts that are currently engaged in
the area of construction IT and also have an interested in the focus of this study. The
survey consists of 40 questions and will take 20 minutes to complete.

I have received information about this research project.


The research project has been explained to me and I fully understand the
purpose and my involvement in it.
I understand that I may withdraw from the research project at any stage.
I understand that I may not directly benefit from taking part in the
project.
I understand that while information gained during the study may be
published, I will not be identified and my personal results will remain
confidential.
I understand that I may be audio taped - during an interview. The tapes
will be destroyed once they are summarised and at completion of the
project.
Legal Rights and Signatures: I,. consent to participate in IT in
Construction research conducted by Yahuza Kassim. I have understood the nature of the
project and wish to participate. I am not waiving any of my legal rights by signing this
form. My signature below indicates my consent.
Signature and Date_____________________________

If you have questions about the research in general or about your role in the study, please feel free
to contact Mr. Yahuza Kassim either by telephone +44 (0) 7892 897330 or by e-mail
([email protected] ). This research has been reviewed and conforms to the standards
of the Salford of University Research Governance and Ethics Sub- Committee (RGEC).

Page 230 of 332

APPENDIX A 1.3: SURVEY QUESTIONNAIRE


Section 1: General Information: The following questions seek to assess the
general characteristics of your organisation
1 Please select the business sector in which your organisation operates
Civil engineering & building contracting
Engineering, architectural and environmental technical services
Facilities management, building maintenance and repair
Construction management and project management
Infrastructure support services
Please indicate the range of your turnover ()
Less than 5million
100million
above

100 to 250m

5 to 25 million

25 to 50 million

50

to

250 to 500million

500 to 1 billion

1 billion and

3. A) Please identify your position within the overall organization


Executive

Middle management

Professional employee (without supervisory responsibility)


3 (b) Is this an IT related position
Yes

No

4. How many permanent employees do you have?


< 10 people
11 50 people
people
> 250 people

51 100 people

101

200

5. What is the nature of your company ownership?


Locally/Nationally owned
Foreign/Internationally owned
between national/international
Subsidiary

Mixed/JV

Others:____________________________________________________________
_
6. How many projects did you deliver in the last three years?
1 10 Projects
Projects

11 20 Projects

Page 231 of 332

21 30 Projects

>

30

Section 2 Technology Usage Measure


The following section assesses the degree of Technology predominantly usage in
different tasks used to execute projects in your organization. Please, select the
appropriate number in the column to indicate the extent to which you consider the
statement applies to your organization.
1. Dont Know
2. Not Applicable 3. No Use of Computer application
4. Uses Stand alone computer application
5.
Uses
Network
Integrated Computer Application
1. Strategic Planning
Conduct Market research

Carry out Bidding process

Prepare Contract strategy

Develop bid package

Review potential bidders

Develop manpower plan

Develop Design Basis

Engineering design deliverables

Estimation

Project planning and schedule

Execution plan

Interface management

Quality and safety issues

Development of specifications

Material and equipments requisition

Issue Inquiry

Bid Evaluation

Delivery and Expediting

Inspection

Site document control

Safety Management

Test packages control

System turnover handover control

Fabrication status control

Materials inventory

Management of site request for information

Construction human labour management

2. Engineering Design and Analysis

3. Procurement Process

4. Construction & Commissioning

Page 232 of 332

5. Operations and Maintenance


Training simulation for operation
5

Use as-built information in personnel training

Track and analyze the maintenance history

Develop maintenance plans

Monitor equipment performance

Track request for maintenance or modifications

Update as-built drawings

Monitor facility energy usage

Monitor environmental impact

Project schedule preparation

Project cost estimate

Track project progress

Document Management

Change Management

Progress reporting

Invoicing process

6. Project Management and Support

Section 3: Measure of Shared IT Infrastructure


Please select the option that best describes your agreement on the extent to which
your organisation utilises Shared IT Infrastructure ranging between 1 to 5, where 1
= not at all; 3 = moderate extent; and 5 = very large extent.
Departments can share data and
applications on the networks

Clients and suppliers are connected with


the organisation-supply chain

Network architecture can be modified


minimum disruption
Procedures and policies are used in network
usage

Corporate data can be seamlessly accessed


from remote locations

Page 233 of 332

Section 4: Measure of Human IT Skills


Please select the option that best describes your agreement on the extent to which
the Functions of IT head/CIO as a measure of your Human IT skills ranging
between 1 and 5: where 1 = not at all; 3 = moderate extent; and 5 = very large
extent.
Designs future technologies opportunities for the business
Prepare IT strategy for future business requirements

Align IT strategy with business strategy

Manage resources to obtain optimal results

-in-house for application development

Provide training for IT team

Section 5: Measure of Business Work Environment


Please select the option that best describes the strength of the following
competencies in your organisation work environment ranging between 1 to 5,
where 1 = not at all; 3 = moderate extent; and 5 = very large extent.
Leadership

Employee empowerment

Open communication

Project management competency

Section 6 Measure of Firm Performance


Please answer the following questions regarding projects performances in your
organisation.
For projects closed in the last 3 fiscal years, how often were these projects delivered;
ranging 1 to 5, where: 1=Seldom, 2=Sometimes, 3=Often, 4=Usually,
5=Consistently
On or ahead of schedule (Schedule Performance)
On or under budget (Cost Performance)

1
1

Annual improvement of safety (Safety Performance)


Repeat business (Customer Satisfaction)

Annual Increase in Contract Award (Contract Growth)


1

Annual Increase in Net Profit

Page 234 of 332

2
2

2
2

APPENDIX B 1.1.: FRONTIER ANALYST REPORT


PILOT STUDY
44.44%

A
Potential Improvements
Actual
Target
2.00
4.50
4.63
3.35
2.00
4.50
1.00
4.00

Variable
COST
ITBA
PROFI
SCHD

80.00%

80.00%
Variable
COST
ITBA
PROFI
SCHD

Potential Improvement
66.67 %
-12.44 %
25.00 %
25.00 %

Peers: 0
References: 3
Potential Improvements
Actual
Target
5.00
5.00
3.51
3.51
4.00
4.00
4.00
4.00

Variable
COST
ITBA
PROFI
SCHD

Potential Improvement
125.00 %
-27.54 %
125.00 %
300.00 %

Peers: 2
References: 0
Potential Improvements
Actual
Target
3.00
5.00
4.02
3.52
3.00
3.75
4.00
5.00

Variable
COST
ITBA
PROFI
SCHD

100.00%

Peers: 2
References: 0

Potential Improvement
0.00 %
0.00 %
0.00 %
0.00 %

Peers: 1
References: 0
Potential Improvements
Actual
Target
3.00
4.00
3.85
3.20
4.00
5.00
3.00
4.00

Page 235 of 332

Potential Improvement
33.33 %
-16.88 %
25.00 %
33.33 %

80.00%

E
Potential Improvements ( )
Actual
Target
3.00
5.00
3.98
3.73
2.00
3.00
4.00
5.00

Variable
COST
ITBA
PROFI
SCHD

100.00%

66.67%
Variable
COST
ITBA
PROFI
SCHD

Potential Improvement
0.00 %
0.00 %
0.00 %
0.00 %

Peers: 1
References: 0
Potential Improvements ( )
Actual
Target
3.00
4.00
4.17
3.20
4.00
5.00
3.00
4.00

Variable
COST
ITBA
PROFI
SCHD

Potential Improvement
66.67 %
-6.28 %
50.00 %
25.00 %

Peers: 0
References: 10
Potential Improvements ( )
Actual
Target
4.00
4.00
3.20
3.20
5.00
5.00
4.00
4.00

Variable
COST
ITBA
PROFI
SCHD

80.00%

Peers: 1
References: 0

Potential Improvement
33.33 %
-23.26 %
25.00 %
33.33 %

Peers: 2
References: 0
Potential Improvements ( )
Actual
Target
3.00
4.50
4.55
3.35
3.00
4.50
2.00
4.00

Page 236 of 332

Potential Improvement
50.00 %
-26.26 %
50.00 %
100.00 %

44.44%

I
Potential Improvements ( )
Actual
Target
2.00
4.50
3.81
3.33
2.00
4.50
2.00
4.50

Variable
COST
ITBA
PROFI
SCHD

44.44%

100.00%
Variable
COST
ITBA
PROFI
SCHD

Potential Improvement
125.00 %
-22.13 %
125.00 %
125.00 %

Peers: 0
References: 5
Potential Improvements ( )
Actual
Target
5.00
5.00
3.73
3.73
3.00
3.00
5.00
5.00

Variable
COST
ITBA
PROFI
SCHD

Potential Improvement
125.00 %
-12.73 %
125.00 %
125.00 %

Peers: 2
References: 0
Potential Improvements ( )
Actual
Target
2.00
4.50
4.27
3.33
2.00
4.50
2.00
4.50

Variable
COST
ITBA
PROFI
SCHD

100.00%

Peers: 2
References: 0

Potential Improvement
0.00 %
0.00 %
0.00 %
0.00 %

Peers: 0
References: 1
Potential Improvements ( )
Actual
Target
3.00
3.00
2.83
2.83
3.00
3.00
3.00
3.00

Page 237 of 332

Potential Improvement
0.00 %
0.00 %
0.00 %
0.00 %

44.44%

M
Potential Improvements ( )
Actual
Target
2.00
4.50
5.00
3.33
2.00
4.50
2.00
4.50

Variable
COST
ITBA
PROFI
SCHD

80.00%

Variable
COST
ITBA
PROFI
SCHD

Peers: 1
References: 0

Potential Improvements
Variable
COST
ITBA
PROFI
SCHD

100.00%

Potential Improvement
125.00 %
-33.50 %
125.00 %
125.00 %

Potential Improvements ( )
Actual
TargetPotential Improvement
3.00
5.00
66.67 %
3.74
3.45
-7.75 %
1.00
4.00
300.00 %
4.00
5.00
25.00 %

Variable
COST
ITBA
PROFI
SCHD

40.00%

Peers: 2
References: 0

Peers: 1
References: 0
Actual
1.00
4.02
1.00
2.00

Target
5.00
3.73
3.00
5.00

Potential Improvement
400.00 %
-7.21 %
200.00 %
150.00 %

Peers: 0
References: 8
Potential Improvements ( )
Actual
Target
5.00
5.00
3.45
3.45
4.00
4.00
5.00
5.00

Page 238 of 332

Potential Improvement
0.00 %
0.00 %
0.00 %
0.00 %

80.00%

Q
Potential Improvements ( )
Actual
Target
3.00
5.00
4.39
3.73
1.00
3.00
4.00
5.00

Variable
COST
ITBA
PROFI
SCHD

44.44%

Variable
COST
ITBA
PROFI
SCHD

Potential Improvement
66.67 %
-15.03 %
200.00 %
25.00 %

Peers: 2
References: 0
Potential Improvements ( )
Actual
Target
2.00
4.50
4.26
3.33
2.00
4.50
2.00
4.50

Variable
COST
ITBA
PROFI
SCHD

88.89%

Peers: 1
References: 0

Potential Improvement
125.00 %
-21.95 %
125.00 %
125.00 %

Peers: 2
References: 0
Potential Improvements ( )
Actual
Target
4.00
4.50
3.67
3.33
4.00
4.50
4.00
4.50

Page 239 of 332

Potential Improvement
12.50 %
-9.40 %
12.50 %
12.50 %

APPENDIX B1.1.2:

FRONTIER ANALYST REPORT

Model: BCC OUTPUT ORIENTED WITH VARIABLE RETURN TO SCALE


100.00%

CO01
Peers: 0
References: 1

Variable
BWE
CONTR
COST
CUSTO
ITBA
ITHS
ITSI
PROFI
SAFETY
SCHD

Potential Improvements
Actual
Target
2.80
2.80
3.00
3.00
3.00
3.00
4.00
4.00
4.55
4.55
1.83
1.83
2.00
2.00
3.00
3.00
2.00
2.00
2.00
2.00

Potential Improvement
0.00 %
0.00 %
0.00 %
0.00 %
0.00 %
0.00 %
0.00 %
0.00 %
0.00 %
0.00 %

Peer Contributions
CO01
CO01
CO01
CO01
CO01
CO01
CO01
CO01
CO01
CO01
BWE
ITBA
ITHS
ITSI
CONTR
COST
CUSTO
PROFI
SAFETY
SCHD

BWE
CONTR
COST
CUSTO
ITBA
ITHS
ITSI
PROFI
SAFETY
SCHD
Input / Output Contributions
1.86 %
0.00 %
98.14 %
0.00 %
19.46 %
0.00 %
41.98 %
38.56 %
0.00 %
0.00 %
Peers

CO01

Page 240 of 332

100.00 %
100.00 %
100.00 %
100.00 %
100.00 %
100.00 %
100.00 %
100.00 %
100.00 %
100.00 %
Input
Input
Input
Input
Output
Output
Output
Output
Output
Output

100.00%
Variable
BWE
CONTR
COST
CUSTO
ITBA
ITHS
ITSI
PROFI
SAFETY
SCHD

CO02

Peers: 0
References: 3
Potential Improvements
Actual
Target
3.00
3.00
4.00
4.00
4.00
4.00
3.00
3.00
3.29
3.29
2.50
2.50
2.40
2.40
3.00
3.00
3.00
3.00
5.00
5.00

Potential Improvement
0.00 %
0.00 %
0.00 %
0.00 %
0.00 %
0.00 %
0.00 %
0.00 %
0.00 %
0.00 %

Peer Contributions
CO02
CO02
CO02
CO02
CO02
CO02
CO02
CO02
CO02
CO02

BWE
CONTR
COST
CUSTO
ITBA
ITHS
ITSI
PROFI
SAFETY
SCHD

100.00 %
100.00 %
100.00 %
100.00 %
100.00 %
100.00 %
100.00 %
100.00 %
100.00 %
100.00 %

Input / Output Contributions


BWE
ITBA
ITHS
ITSI
CONTR
COST
CUSTO
PROFI
SAFETY
SCHD

12.53 %
67.85 %
0.00 %
19.62 %
0.00 %
0.00 %
0.00 %
0.00 %
25.75 %
74.25 %
Peers

CO02

Page 241 of 332

Input
Input
Input
Input
Output
Output
Output
Output
Output
Output

100.00%
Variable
BWE
CONTR
COST
CUSTO
ITBA
ITHS
ITSI
PROFI
SAFETY
SCHD

CO03

Peers: 0
References: 5
Potential Improvements
Actual
Target
1.00
1.00
2.00
2.00
2.00
2.00
2.00
2.00
4.28
4.28
1.50
1.50
2.00
2.00
1.00
1.00
1.00
1.00
1.00
1.00

Potential Improvement
0.00 %
0.00 %
0.00 %
0.00 %
0.00 %
0.00 %
0.00 %
0.00 %
0.00 %
0.00 %

Peer Contributions
CO03
CO03
CO03
CO03
CO03
CO03
CO03
CO03
CO03
CO03

BWE
CONTR
COST
CUSTO
ITBA
ITHS
ITSI
PROFI
SAFETY
SCHD

100.00 %
100.00 %
100.00 %
100.00 %
100.00 %
100.00 %
100.00 %
100.00 %
100.00 %
100.00 %

Input / Output Contributions


BWE
ITBA
ITHS
ITSI
CONTR
COST
CUSTO
PROFI
SAFETY
SCHD

58.14 %
0.00 %
41.86 %
0.00 %
0.00 %
0.00 %
85.71 %
0.00 %
0.00 %
14.29 %
Peers

CO03

Page 242 of 332

Input
Input
Input
Input
Output
Output
Output
Output
Output
Output

100.00%
Variable
BWE
CONTR
COST
CUSTO
ITBA
ITHS
ITSI
PROFI
SAFETY
SCHD

CO04

Peers: 0
References: 3
Potential Improvements
Actual
Target
2.00
2.00
2.00
2.00
4.00
4.00
3.00
3.00
4.45
4.45
1.33
1.33
1.80
1.80
2.00
2.00
2.00
2.00
4.00
4.00

Potential Improvement
0.00 %
0.00 %
0.00 %
0.00 %
0.00 %
0.00 %
0.00 %
0.00 %
0.00 %
0.00 %

Peer Contributions
CO04
CO04
CO04
CO04
CO04
CO04
CO04
CO04
CO04
CO04

BWE
CONTR
COST
CUSTO
ITBA
ITHS
ITSI
PROFI
SAFETY
SCHD

100.00 %
100.00 %
100.00 %
100.00 %
100.00 %
100.00 %
100.00 %
100.00 %
100.00 %
100.00 %

Input / Output Contributions


BWE
ITBA
ITHS
ITSI
CONTR
COST
CUSTO
PROFI
SAFETY
SCHD

65.89 %
0.00 %
34.11 %
0.00 %
0.00 %
0.00 %
75.44 %
0.00 %
1.17 %
23.39 %

Peers
CO04

Page 243 of 332

Input
Input
Input
Input
Output
Output
Output
Output
Output
Output

100.00%
Variable
BWE
CONTR
COST
CUSTO
ITBA
ITHS
ITSI
PROFI
SAFETY
SCHD

CO05

Peers: 0
References: 3
Potential Improvements
Actual
Target
2.00
2.00
5.00
5.00
4.00
4.00
3.00
3.00
3.90
3.90
2.17
2.17
3.00
3.00
4.00
4.00
1.00
1.00
4.00
4.00

Potential Improvement
0.00 %
0.00 %
0.00 %
0.00 %
0.00 %
0.00 %
0.00 %
0.00 %
0.00 %
0.00 %

Peer Contributions
CO05
CO05
CO05
CO05
CO05
CO05
CO05
CO05
CO05
CO05

BWE
CONTR
COST
CUSTO
ITBA
ITHS
ITSI
PROFI
SAFETY
SCHD

100.00 %
100.00 %
100.00 %
100.00 %
100.00 %
100.00 %
100.00 %
100.00 %
100.00 %
100.00 %

Input / Output Contributions


BWE
ITBA
ITHS
ITSI
CONTR
COST
CUSTO
PROFI
SAFETY
SCHD

0.00 %
0.00 %
0.00 %
100.00 %
100.00 %
0.00 %
0.00 %
0.00 %
0.00 %
0.00 %

Peers
CO05

Page 244 of 332

Input
Input
Input
Input
Output
Output
Output
Output
Output
Output

46.67%
Variable
BWE
CONTR
COST
CUSTO
ITBA
ITHS
ITSI
PROFI
SAFETY
SCHD

CO06

Peers: 3
References: 0
Potential Improvements
Actual
Target
3.20
2.97
1.00
3.29
2.00
4.43
1.00
2.29
3.81
3.45
2.00
2.00
2.80
2.69
2.00
4.29
1.00
3.57
2.00
4.29

Potential Improvement
-7.14 %
228.57 %
121.43 %
128.57 %
-9.47 %
0.00 %
-4.08 %
114.29 %
257.14 %
114.29 %

Peer Contributions
CO24
CO24
CO24
CO24
CO24
CO24
CO24
CO24
CO24
CO24
CO40
CO40
CO40
CO40
CO40
CO40
CO40
CO40
CO40
CO40
CO45
CO45
CO45
CO45
CO45
CO45
CO45
CO45
CO45
CO45

BWE
CONTR
COST
CUSTO
ITBA
ITHS
ITSI
PROFI
SAFETY
SCHD
BWE
CONTR
COST
CUSTO
ITBA
ITHS
ITSI
PROFI
SAFETY
SCHD
BWE
CONTR
COST
CUSTO
ITBA
ITHS
ITSI
PROFI
SAFETY
SCHD

40.38 %
34.78 %
25.81 %
25.00 %
29.77 %
33.33 %
31.91 %
26.67 %
32.00 %
33.33 %
34.62 %
39.13 %
48.39 %
37.50 %
43.70 %
35.71 %
38.30 %
40.00 %
36.00 %
40.00 %
25.00 %
26.09 %
25.81 %
37.50 %
26.53 %
30.95 %
29.79 %
33.33 %
32.00 %
26.67 %

Input / Output Contributions


BWE
ITBA
ITHS
ITSI
CONTR
COST

0.00 %
0.00 %
100.00 %
0.00 %
0.00 %
0.00 %
Page 245 of 332

Input
Input
Input
Input
Output
Output

CUSTO
PROFI
SAFETY
SCHD

0.00 %
42.86 %
0.00 %
57.14 %

Output
Output
Output
Output

Peers
CO24
CO40
CO45
65.19%
Variable
BWE
CONTR
COST
CUSTO
ITBA
ITHS
ITSI
PROFI
SAFETY
SCHD

CO07

Peers: 4
References: 0
Potential Improvements
Actual
Target
1.60
1.60
2.00
3.07
2.00
4.59
1.00
2.80
3.83
3.83
2.17
1.97
1.80
1.65
2.00
3.07
1.00
1.82
2.00
4.57

Potential Improvement
0.00 %
53.40 %
129.58 %
179.58 %
0.00 %
-9.26 %
-8.34 %
53.40 %
81.85 %
128.45 %

Peer Contributions
CO03
CO03
CO03
CO03
CO03
CO03
CO03
CO03
CO03
CO03
CO09
CO09
CO09
CO09
CO09
CO09
CO09
CO09
CO09
CO09
CO26
CO26
CO26
CO26
CO26
CO26
CO26
CO26

BWE
CONTR
COST
CUSTO
ITBA
ITHS
ITSI
PROFI
SAFETY
SCHD
BWE
CONTR
COST
CUSTO
ITBA
ITHS
ITSI
PROFI
SAFETY
SCHD
BWE
CONTR
COST
CUSTO
ITBA
ITHS
ITSI
PROFI
Page 246 of 332

1.42 %
1.48 %
0.99 %
1.62 %
2.53 %
1.73 %
2.75 %
0.74 %
1.25 %
0.50 %
1.42 %
0.74 %
0.99 %
0.81 %
2.96 %
1.15 %
1.38 %
1.48 %
1.25 %
0.99 %
81.85 %
80.03 %
89.13 %
87.83 %
79.69 %
83.27 %
79.37 %
80.03 %

CO26
CO26
CO48
CO48
CO48
CO48
CO48
CO48
CO48
CO48
CO48
CO48

SAFETY
SCHD
BWE
CONTR
COST
CUSTO
ITBA
ITHS
ITSI
PROFI
SAFETY
SCHD

90.02 %
89.57 %
15.31 %
17.75 %
8.89 %
9.74 %
14.82 %
13.85 %
16.50 %
17.75 %
7.49 %
8.94 %

Input / Output Contributions


BWE
ITBA
ITHS
ITSI
CONTR
COST
CUSTO
PROFI
SAFETY
SCHD

68.63 %
31.37 %
0.00 %
0.00 %
25.62 %
0.00 %
0.00 %
74.38 %
0.00 %
0.00 %
Peers

CO03
CO09
CO26
CO48

Page 247 of 332

Input
Input
Input
Input
Output
Output
Output
Output
Output
Output

100.00%
Variable
BWE
CONTR
COST
CUSTO
ITBA
ITHS
ITSI
PROFI
SAFETY
SCHD

CO08

Peers: 0
References: 1
Potential Improvements
Actual
Target
2.00
2.00
2.00
2.00
3.00
3.00
2.00
2.00
2.83
2.83
3.00
3.00
2.20
2.20
3.00
3.00
2.00
2.00
3.00
3.00

Potential Improvement
0.00 %
0.00 %
0.00 %
0.00 %
0.00 %
0.00 %
0.00 %
0.00 %
0.00 %
0.00 %

Peer Contributions
CO08
CO08
CO08
CO08
CO08
CO08
CO08
CO08
CO08
CO08

BWE
CONTR
COST
CUSTO
ITBA
ITHS
ITSI
PROFI
SAFETY
SCHD

100.00 %
100.00 %
100.00 %
100.00 %
100.00 %
100.00 %
100.00 %
100.00 %
100.00 %
100.00 %

Input / Output Contributions


BWE
ITBA
ITHS
ITSI
CONTR
COST
CUSTO
PROFI
SAFETY
SCHD

18.69 %
45.37 %
0.00 %
35.94 %
0.00 %
0.00 %
100.00 %
0.00 %
0.00 %
0.00 %
Peers

CO08

Page 248 of 332

Input
Input
Input
Input
Output
Output
Output
Output
Output
Output

100.00%
Variable
BWE
CONTR
COST
CUSTO
ITBA
ITHS
ITSI
PROFI
SAFETY
SCHD

CO09

Peers: 0
References: 3
Potential Improvements
Actual
Target
1.00
1.00
1.00
1.00
2.00
2.00
1.00
1.00
5.00
5.00
1.00
1.00
1.00
1.00
2.00
2.00
1.00
1.00
2.00
2.00

Potential Improvement
0.00 %
0.00 %
0.00 %
0.00 %
0.00 %
0.00 %
0.00 %
0.00 %
0.00 %
0.00 %

Peer Contributions
CO09
CO09
CO09
CO09
CO09
CO09
CO09
CO09
CO09
CO09

BWE
CONTR
COST
CUSTO
ITBA
ITHS
ITSI
PROFI
SAFETY
SCHD

100.00 %
100.00 %
100.00 %
100.00 %
100.00 %
100.00 %
100.00 %
100.00 %
100.00 %
100.00 %

Input / Output Contributions


BWE
ITBA
ITHS
ITSI
CONTR
COST
CUSTO
PROFI
SAFETY
SCHD

100.00 %
0.00 %
0.00 %
0.00 %
0.00 %
0.00 %
0.00 %
0.00 %
100.00 %
0.00 %
Peers

CO09

Page 249 of 332

Input
Input
Input
Input
Output
Output
Output
Output
Output
Output

100.00%
Variable
BWE
CONTR
COST
CUSTO
ITBA
ITHS
ITSI
PROFI
SAFETY
SCHD

CO10

Peers: 0
References: 6
Potential Improvements
Actual
Target
2.60
2.60
2.00
2.00
1.00
1.00
2.00
2.00
3.31
3.31
1.33
1.33
1.80
1.80
2.00
2.00
4.00
4.00
2.00
2.00

Potential Improvement
0.00 %
0.00 %
0.00 %
0.00 %
0.00 %
0.00 %
0.00 %
0.00 %
0.00 %
0.00 %

Peer Contributions
CO10
CO10
CO10
CO10
CO10
CO10
CO10
CO10
CO10
CO10

BWE
CONTR
COST
CUSTO
ITBA
ITHS
ITSI
PROFI
SAFETY
SCHD

100.00 %
100.00 %
100.00 %
100.00 %
100.00 %
100.00 %
100.00 %
100.00 %
100.00 %
100.00 %

Input / Output Contributions


BWE
ITBA
ITHS
ITSI
CONTR
COST
CUSTO
PROFI
SAFETY
SCHD

0.00 %
35.46 %
64.54 %
0.00 %
0.00 %
100.00 %
0.00 %
0.00 %
0.00 %
0.00 %
Peers

CO10

Page 250 of 332

Input
Input
Input
Input
Output
Output
Output
Output
Output
Output

100.00%
Variable
BWE
CONTR
COST
CUSTO
ITBA
ITHS
ITSI
PROFI
SAFETY
SCHD

CO11

Peers: 0
References: 5
Potential Improvements
Actual
Target
2.40
2.40
1.00
1.00
2.00
2.00
1.00
1.00
2.58
2.58
1.50
1.50
2.60
2.60
1.00
1.00
3.00
3.00
2.00
2.00

Potential Improvement
0.00 %
0.00 %
0.00 %
0.00 %
0.00 %
0.00 %
0.00 %
0.00 %
0.00 %
0.00 %

Peer Contributions
CO11
CO11
CO11
CO11
CO11
CO11
CO11
CO11
CO11
CO11

BWE
CONTR
COST
CUSTO
ITBA
ITHS
ITSI
PROFI
SAFETY
SCHD

100.00 %
100.00 %
100.00 %
100.00 %
100.00 %
100.00 %
100.00 %
100.00 %
100.00 %
100.00 %

Input / Output Contributions


BWE
ITBA
ITHS
ITSI
CONTR
COST
CUSTO
PROFI
SAFETY
SCHD

0.00 %
86.89 %
13.11 %
0.00 %
100.00 %
0.00 %
0.00 %
0.00 %
0.00 %
0.00 %
Peers

CO11

Page 251 of 332

Input
Input
Input
Input
Output
Output
Output
Output
Output
Output

100.00%
Variable
BWE
CONTR
COST
CUSTO
ITBA
ITHS
ITSI
PROFI
SAFETY
SCHD

CO12

Peers: 0
References: 1
Potential Improvements
Actual
Target
2.40
2.40
3.00
3.00
3.00
3.00
2.00
2.00
3.11
3.11
2.17
2.17
2.40
2.40
3.00
3.00
2.00
2.00
3.00
3.00

Potential Improvement
0.00 %
0.00 %
0.00 %
0.00 %
0.00 %
0.00 %
0.00 %
0.00 %
0.00 %
0.00 %

Peer Contributions
CO12
CO12
CO12
CO12
CO12
CO12
CO12
CO12
CO12
CO12

BWE
CONTR
COST
CUSTO
ITBA
ITHS
ITSI
PROFI
SAFETY
SCHD

100.00 %
100.00 %
100.00 %
100.00 %
100.00 %
100.00 %
100.00 %
100.00 %
100.00 %
100.00 %

Input / Output Contributions


BWE
ITBA
ITHS
ITSI
CONTR
COST
CUSTO
PROFI
SAFETY
SCHD

19.08 %
58.14 %
9.40 %
13.38 %
99.73 %
0.00 %
0.27 %
0.00 %
0.00 %
0.00 %
Peers

CO12

Page 252 of 332

Input
Input
Input
Input
Output
Output
Output
Output
Output
Output

100.00%
Variable
BWE
CONTR
COST
CUSTO
ITBA
ITHS
ITSI
PROFI
SAFETY
SCHD

CO13

Peers: 0
References: 1
Potential Improvements
Actual
Target
2.00
2.00
2.00
2.00
2.00
2.00
1.00
1.00
4.63
4.63
1.17
1.17
1.20
1.20
2.00
2.00
2.00
2.00
1.00
1.00

Potential Improvement
0.00 %
0.00 %
0.00 %
0.00 %
0.00 %
0.00 %
0.00 %
0.00 %
0.00 %
0.00 %

Peer Contributions
CO13
CO13
CO13
CO13
CO13
CO13
CO13
CO13
CO13
CO13

BWE
CONTR
COST
CUSTO
ITBA
ITHS
ITSI
PROFI
SAFETY
SCHD

100.00 %
100.00 %
100.00 %
100.00 %
100.00 %
100.00 %
100.00 %
100.00 %
100.00 %
100.00 %

Input / Output Contributions


BWE
ITBA
ITHS
ITSI
CONTR
COST
CUSTO
PROFI
SAFETY
SCHD

19.23 %
0.00 %
0.00 %
80.77 %
0.00 %
0.00 %
0.00 %
42.86 %
57.14 %
0.00 %
Peers

CO13

Page 253 of 332

Input
Input
Input
Input
Output
Output
Output
Output
Output
Output

100.00%
Variable
BWE
CONTR
COST
CUSTO
ITBA
ITHS
ITSI
PROFI
SAFETY
SCHD

CO14

Peers: 0
References: 3
Potential Improvements
Actual
Target
2.20
2.20
4.00
4.00
3.00
3.00
2.00
2.00
3.60
3.60
2.00
2.00
2.20
2.20
4.00
4.00
3.00
3.00
3.00
3.00

Potential Improvement
0.00 %
0.00 %
0.00 %
0.00 %
0.00 %
0.00 %
0.00 %
0.00 %
0.00 %
0.00 %

Peer Contributions
CO14
CO14
CO14
CO14
CO14
CO14
CO14
CO14
CO14
CO14

BWE
CONTR
COST
CUSTO
ITBA
ITHS
ITSI
PROFI
SAFETY
SCHD

100.00 %
100.00 %
100.00 %
100.00 %
100.00 %
100.00 %
100.00 %
100.00 %
100.00 %
100.00 %

Input / Output Contributions


BWE
ITBA
ITHS
ITSI
CONTR
COST
CUSTO
PROFI
SAFETY
SCHD

0.00 %
36.76 %
0.00 %
63.24 %
27.04 %
0.00 %
0.00 %
72.96 %
0.00 %
0.00 %
Peers

CO14

Page 254 of 332

Input
Input
Input
Input
Output
Output
Output
Output
Output
Output

100.00%
Variable
BWE
CONTR
COST
CUSTO
ITBA
ITHS
ITSI
PROFI
SAFETY
SCHD

CO15

Peers: 0
References: 3
Potential Improvements
Actual
Target
1.00
1.00
2.00
2.00
3.00
3.00
1.00
1.00
4.39
4.39
1.50
1.50
1.20
1.20
1.00
1.00
1.00
1.00
4.00
4.00

Potential Improvement
0.00 %
0.00 %
0.00 %
0.00 %
0.00 %
0.00 %
0.00 %
0.00 %
0.00 %
0.00 %

Peer Contributions
CO15
CO15
CO15
CO15
CO15
CO15
CO15
CO15
CO15
CO15

BWE
CONTR
COST
CUSTO
ITBA
ITHS
ITSI
PROFI
SAFETY
SCHD

100.00 %
100.00 %
100.00 %
100.00 %
100.00 %
100.00 %
100.00 %
100.00 %
100.00 %
100.00 %

Input / Output Contributions


BWE
ITBA
ITHS
ITSI
CONTR
COST
CUSTO
PROFI
SAFETY
SCHD

100.00 %
0.00 %
0.00 %
0.00 %
0.00 %
0.00 %
0.00 %
0.00 %
0.00 %
100.00 %
Peers

CO15

Page 255 of 332

Input
Input
Input
Input
Output
Output
Output
Output
Output
Output

80.00%
Variable
BWE
CONTR
COST
CUSTO
ITBA
ITHS
ITSI
PROFI
SAFETY
SCHD

CO16

Peers: 2
References: 0
Potential Improvements
Actual
Target
2.60
2.60
2.00
3.71
3.00
4.29
2.00
3.00
3.74
3.42
2.83
2.36
3.00
2.17
1.00
3.00
2.00
2.71
4.00
5.00

Potential Improvement
0.00 %
85.71 %
42.86 %
50.00 %
-8.55 %
-16.81 %
-27.62 %
200.00 %
35.71 %
25.00 %

Peer Contributions
CO02
CO02
CO02
CO02
CO02
CO02
CO02
CO02
CO02
CO02
CO26
CO26
CO26
CO26
CO26
CO26
CO26
CO26
CO26
CO26

BWE
CONTR
COST
CUSTO
ITBA
ITHS
ITSI
PROFI
SAFETY
SCHD
BWE
CONTR
COST
CUSTO
ITBA
ITHS
ITSI
PROFI
SAFETY
SCHD

82.42 %
76.92 %
66.67 %
71.43 %
68.83 %
75.76 %
78.95 %
71.43 %
78.95 %
71.43 %
17.58 %
23.08 %
33.33 %
28.57 %
31.17 %
24.24 %
21.05 %
28.57 %
21.05 %
28.57 %

Input / Output Contributions


BWE
ITBA
ITHS
ITSI
CONTR
COST
CUSTO
PROFI
SAFETY
SCHD

2.55 %
38.04 %
28.85 %
30.55 %
0.00 %
0.00 %
0.00 %
0.00 %
0.00 %
100.00 %
Peers

CO02
CO26

Page 256 of 332

Input
Input
Input
Input
Output
Output
Output
Output
Output
Output

100.00%
Variable
BWE
CONTR
COST
CUSTO
ITBA
ITHS
ITSI
PROFI
SAFETY
SCHD

CO17

Peers: 0
References: 6
Potential Improvements
Actual
Target
2.40
2.40
4.00
4.00
4.00
4.00
3.00
3.00
3.52
3.52
2.33
2.33
2.60
2.60
3.00
3.00
4.00
4.00
4.00
4.00

Potential Improvement
0.00 %
0.00 %
0.00 %
0.00 %
0.00 %
0.00 %
0.00 %
0.00 %
0.00 %
0.00 %

Peer Contributions
CO17
CO17
CO17
CO17
CO17
CO17
CO17
CO17
CO17
CO17

BWE
CONTR
COST
CUSTO
ITBA
ITHS
ITSI
PROFI
SAFETY
SCHD

100.00 %
100.00 %
100.00 %
100.00 %
100.00 %
100.00 %
100.00 %
100.00 %
100.00 %
100.00 %

Input / Output Contributions


BWE
ITBA
ITHS
ITSI
CONTR
COST
CUSTO
PROFI
SAFETY
SCHD

57.46 %
42.54 %
0.00 %
0.00 %
13.61 %
0.00 %
0.00 %
0.00 %
86.39 %
0.00 %
Peers

CO17

Page 257 of 332

Input
Input
Input
Input
Output
Output
Output
Output
Output
Output

80.00%
Variable
BWE
CONTR
COST
CUSTO
ITBA
ITHS
ITSI
PROFI
SAFETY
SCHD

CO18

Peers: 1
References: 0
Potential Improvements
Actual
Target
2.40
1.60
2.00
3.00
4.00
5.00
1.00
3.00
4.10
3.73
2.00
2.00
1.60
1.60
2.00
3.00
1.00
2.00
3.00
5.00

Potential Improvement
-33.33 %
50.00 %
25.00 %
200.00 %
-9.06 %
0.00 %
0.00 %
50.00 %
100.00 %
66.67 %

Peer Contributions
CO26
CO26
CO26
CO26
CO26
CO26
CO26
CO26
CO26
CO26

BWE
CONTR
COST
CUSTO
ITBA
ITHS
ITSI
PROFI
SAFETY
SCHD

100.00 %
100.00 %
100.00 %
100.00 %
100.00 %
100.00 %
100.00 %
100.00 %
100.00 %
100.00 %

Input / Output Contributions


BWE
ITBA
ITHS
ITSI
CONTR
COST
CUSTO
PROFI
SAFETY
SCHD

29.96 %
47.07 %
22.97 %
0.00 %
0.00 %
100.00 %
0.00 %
0.00 %
0.00 %
0.00 %
Peers

CO26

Page 258 of 332

Input
Input
Input
Input
Output
Output
Output
Output
Output
Output

100.00%
Variable
BWE
CONTR
COST
CUSTO
ITBA
ITHS
ITSI
PROFI
SAFETY
SCHD

CO19

Peers: 0
References: 1
Potential Improvements
Actual
Target
2.00
2.00
3.00
3.00
3.00
3.00
3.00
3.00
3.85
3.85
2.17
2.17
2.20
2.20
4.00
4.00
2.00
2.00
3.00
3.00

Potential Improvement
0.00 %
0.00 %
0.00 %
0.00 %
0.00 %
0.00 %
0.00 %
0.00 %
0.00 %
0.00 %

Peer Contributions
CO19
CO19
CO19
CO19
CO19
CO19
CO19
CO19
CO19
CO19

BWE
CONTR
COST
CUSTO
ITBA
ITHS
ITSI
PROFI
SAFETY
SCHD

100.00 %
100.00 %
100.00 %
100.00 %
100.00 %
100.00 %
100.00 %
100.00 %
100.00 %
100.00 %

Input / Output Contributions


BWE
ITBA
ITHS
ITSI
CONTR
COST
CUSTO
PROFI
SAFETY
SCHD

84.34 %
0.00 %
15.66 %
0.00 %
0.00 %
0.00 %
18.52 %
74.07 %
7.41 %
0.00 %
Peers

CO19

Page 259 of 332

Input
Input
Input
Input
Output
Output
Output
Output
Output
Output

69.04%
Variable
BWE
CONTR
COST
CUSTO
ITBA
ITHS
ITSI
PROFI
SAFETY
SCHD

CO20

Peers: 6
References: 0
Potential Improvements
Actual
Target
2.00
2.00
2.00
3.18
2.00
4.21
2.00
2.90
4.27
3.68
2.00
2.00
2.00
2.00
2.00
2.90
2.00
2.90
2.00
4.23

Potential Improvement
0.00 %
58.76 %
110.31 %
44.85 %
-13.82 %
0.00 %
0.00 %
44.85 %
44.85 %
111.60 %

Peer Contributions
CO04
CO04
CO04
CO04
CO04
CO04
CO04
CO04
CO04
CO04
CO10
CO10
CO10
CO10
CO10
CO10
CO10
CO10
CO10
CO10
CO17
CO17
CO17
CO17
CO17
CO17
CO17
CO17
CO17
CO17
CO26
CO26
CO26
CO26
CO26
CO26
CO26
CO26
CO26

BWE
CONTR
COST
CUSTO
ITBA
ITHS
ITSI
PROFI
SAFETY
SCHD
BWE
CONTR
COST
CUSTO
ITBA
ITHS
ITSI
PROFI
SAFETY
SCHD
BWE
CONTR
COST
CUSTO
ITBA
ITHS
ITSI
PROFI
SAFETY
SCHD
BWE
CONTR
COST
CUSTO
ITBA
ITHS
ITSI
PROFI
SAFETY
Page 260 of 332

6.19 %
3.90 %
5.88 %
6.41 %
7.48 %
4.12 %
5.57 %
4.27 %
4.27 %
5.85 %
10.05 %
4.87 %
1.84 %
5.34 %
6.94 %
5.15 %
6.96 %
5.34 %
10.68 %
3.65 %
40.82 %
42.86 %
32.35 %
35.23 %
32.53 %
39.69 %
44.23 %
35.23 %
46.98 %
32.16 %
37.11 %
43.83 %
55.15 %
48.04 %
46.96 %
46.39 %
37.11 %
48.04 %
32.03 %

CO26
CO32
CO32
CO32
CO32
CO32
CO32
CO32
CO32
CO32
CO32
CO45
CO45
CO45
CO45
CO45
CO45
CO45
CO45
CO45
CO45

SCHD
BWE
CONTR
COST
CUSTO
ITBA
ITHS
ITSI
PROFI
SAFETY
SCHD
BWE
CONTR
COST
CUSTO
ITBA
ITHS
ITSI
PROFI
SAFETY
SCHD

54.81 %
1.80 %
1.62 %
1.84 %
1.78 %
3.40 %
1.29 %
1.80 %
1.78 %
1.78 %
0.61 %
4.02 %
2.92 %
2.94 %
3.20 %
2.69 %
3.35 %
4.33 %
5.34 %
4.27 %
2.92 %

Input / Output Contributions


BWE
ITBA
ITHS
ITSI
CONTR
COST
CUSTO
PROFI
SAFETY
SCHD

38.46 %
0.00 %
35.90 %
25.64 %
0.00 %
0.00 %
54.64 %
4.12 %
41.24 %
0.00 %
Peers

CO04
CO10
CO17
CO26
CO32
CO45

Page 261 of 332

Input
Input
Input
Input
Output
Output
Output
Output
Output
Output

100.00%
Variable
BWE
CONTR
COST
CUSTO
ITBA
ITHS
ITSI
PROFI
SAFETY
SCHD

CO21

Peers: 0
References: 1
Potential Improvements
Actual
Target
2.00
2.00
4.00
4.00
4.00
4.00
4.00
4.00
3.67
3.67
3.00
3.00
2.60
2.60
4.00
4.00
2.00
2.00
4.00
4.00

Potential Improvement
0.00 %
0.00 %
0.00 %
0.00 %
0.00 %
0.00 %
0.00 %
0.00 %
0.00 %
0.00 %

Peer Contributions
CO21
CO21
CO21
CO21
CO21
CO21
CO21
CO21
CO21
CO21

BWE
CONTR
COST
CUSTO
ITBA
ITHS
ITSI
PROFI
SAFETY
SCHD

100.00 %
100.00 %
100.00 %
100.00 %
100.00 %
100.00 %
100.00 %
100.00 %
100.00 %
100.00 %

Input / Output Contributions


BWE
ITBA
ITHS
ITSI
CONTR
COST
CUSTO
PROFI
SAFETY
SCHD

100.00 %
0.00 %
0.00 %
0.00 %
0.00 %
0.00 %
100.00 %
0.00 %
0.00 %
0.00 %
Peers

CO21

Page 262 of 332

Input
Input
Input
Input
Output
Output
Output
Output
Output
Output

100.00%
Variable
BWE
CONTR
COST
CUSTO
ITBA
ITHS
ITSI
PROFI
SAFETY
SCHD

CO22

Peers: 0
References: 5
Potential Improvements
Actual
Target
3.00
3.00
3.00
3.00
3.00
3.00
3.00
3.00
3.11
3.11
2.33
2.33
1.40
1.40
2.00
2.00
3.00
3.00
3.00
3.00

Potential Improvement
0.00 %
0.00 %
0.00 %
0.00 %
0.00 %
0.00 %
0.00 %
0.00 %
0.00 %
0.00 %

Peer Contributions
CO22
CO22
CO22
CO22
CO22
CO22
CO22
CO22
CO22
CO22

BWE
CONTR
COST
CUSTO
ITBA
ITHS
ITSI
PROFI
SAFETY
SCHD

100.00 %
100.00 %
100.00 %
100.00 %
100.00 %
100.00 %
100.00 %
100.00 %
100.00 %
100.00 %

Input / Output Contributions


BWE
ITBA
ITHS
ITSI
CONTR
COST
CUSTO
PROFI
SAFETY
SCHD

60.00 %
0.00 %
0.00 %
40.00 %
0.00 %
0.00 %
61.39 %
0.00 %
38.61 %
0.00 %
Peers

CO22

Page 263 of 332

Input
Input
Input
Input
Output
Output
Output
Output
Output
Output

100.00%
Variable
BWE
CONTR
COST
CUSTO
ITBA
ITHS
ITSI
PROFI
SAFETY
SCHD

CO23

Peers: 0
References: 1
Potential Improvements
Actual
Target
2.00
2.00
4.00
4.00
4.00
4.00
3.00
3.00
4.39
4.39
2.17
2.17
1.80
1.80
2.00
2.00
2.00
2.00
2.00
2.00

Potential Improvement
0.00 %
0.00 %
0.00 %
0.00 %
0.00 %
0.00 %
0.00 %
0.00 %
0.00 %
0.00 %

Peer Contributions
CO23
CO23
CO23
CO23
CO23
CO23
CO23
CO23
CO23
CO23

BWE
CONTR
COST
CUSTO
ITBA
ITHS
ITSI
PROFI
SAFETY
SCHD

100.00 %
100.00 %
100.00 %
100.00 %
100.00 %
100.00 %
100.00 %
100.00 %
100.00 %
100.00 %

Input / Output Contributions


BWE
ITBA
ITHS
ITSI
CONTR
COST
CUSTO
PROFI
SAFETY
SCHD

79.55 %
0.00 %
0.00 %
20.45 %
55.42 %
16.87 %
14.46 %
0.00 %
13.25 %
0.00 %
Peers

CO23

Page 264 of 332

Input
Input
Input
Input
Output
Output
Output
Output
Output
Output

100.00%
Variable
BWE
CONTR
COST
CUSTO
ITBA
ITHS
ITSI
PROFI
SAFETY
SCHD

CO24

Peers: 0
References: 4
Potential Improvements
Actual
Target
4.20
4.20
4.00
4.00
4.00
4.00
2.00
2.00
3.59
3.59
2.33
2.33
3.00
3.00
4.00
4.00
4.00
4.00
5.00
5.00

Potential Improvement
0.00 %
0.00 %
0.00 %
0.00 %
0.00 %
0.00 %
0.00 %
0.00 %
0.00 %
0.00 %

Peer Contributions
CO24
CO24
CO24
CO24
CO24
CO24
CO24
CO24
CO24
CO24

BWE
CONTR
COST
CUSTO
ITBA
ITHS
ITSI
PROFI
SAFETY
SCHD

100.00 %
100.00 %
100.00 %
100.00 %
100.00 %
100.00 %
100.00 %
100.00 %
100.00 %
100.00 %

Input / Output Contributions


BWE
ITBA
ITHS
ITSI
CONTR
COST
CUSTO
PROFI
SAFETY
SCHD

55.98 %
44.02 %
0.00 %
0.00 %
0.00 %
0.00 %
0.00 %
0.00 %
0.00 %
100.00 %
Peers

CO24

Page 265 of 332

Input
Input
Input
Input
Output
Output
Output
Output
Output
Output

90.57%
Variable
BWE
CONTR
COST
CUSTO
ITBA
ITHS
ITSI
PROFI
SAFETY
SCHD

CO25

Peers: 6
References: 0
Potential Improvements
Actual
Target
1.80
1.80
3.00
3.31
2.00
3.49
2.00
2.21
4.47
3.93
1.83
1.83
2.00
1.80
3.00
3.31
2.00
2.21
2.00
3.45

Potential Improvement
0.00 %
10.42 %
74.48 %
10.42 %
-12.25 %
0.00 %
-10.10 %
10.42 %
10.42 %
72.40 %

Peer Contributions
CO09
CO09
CO09
CO09
CO09
CO09
CO09
CO09
CO09
CO09
CO14
CO14
CO14
CO14
CO14
CO14
CO14
CO14
CO14
CO14
CO26
CO26
CO26
CO26
CO26
CO26
CO26
CO26
CO26
CO26
CO32
CO32
CO32
CO32
CO32
CO32
CO32
CO32
CO32

BWE
CONTR
COST
CUSTO
ITBA
ITHS
ITSI
PROFI
SAFETY
SCHD
BWE
CONTR
COST
CUSTO
ITBA
ITHS
ITSI
PROFI
SAFETY
SCHD
BWE
CONTR
COST
CUSTO
ITBA
ITHS
ITSI
PROFI
SAFETY
SCHD
BWE
CONTR
COST
CUSTO
ITBA
ITHS
ITSI
PROFI
SAFETY
Page 266 of 332

6.08 %
3.30 %
6.27 %
4.95 %
13.93 %
5.97 %
6.08 %
6.60 %
4.95 %
6.34 %
50.93 %
50.31 %
35.82 %
37.74 %
38.24 %
45.45 %
50.98 %
50.31 %
56.60 %
36.25 %
28.24 %
28.77 %
45.52 %
43.16 %
30.16 %
34.66 %
28.27 %
28.77 %
28.77 %
46.07 %
1.62 %
1.26 %
1.79 %
1.89 %
2.58 %
1.14 %
1.62 %
1.26 %
1.89 %

CO32
CO37
CO37
CO37
CO37
CO37
CO37
CO37
CO37
CO37
CO37
CO48
CO48
CO48
CO48
CO48
CO48
CO48
CO48
CO48
CO48

SCHD
BWE
CONTR
COST
CUSTO
ITBA
ITHS
ITSI
PROFI
SAFETY
SCHD
BWE
CONTR
COST
CUSTO
ITBA
ITHS
ITSI
PROFI
SAFETY
SCHD

0.60 %
3.24 %
4.40 %
2.09 %
3.30 %
4.58 %
1.99 %
2.03 %
1.10 %
3.30 %
2.11 %
9.90 %
11.95 %
8.51 %
8.96 %
10.50 %
10.80 %
11.01 %
11.95 %
4.48 %
8.61 %

Input / Output Contributions


BWE
ITBA
ITHS
ITSI
CONTR
COST
CUSTO
PROFI
SAFETY
SCHD

83.08 %
0.00 %
16.92 %
0.00 %
37.50 %
0.00 %
0.00 %
37.50 %
25.00 %
0.00 %
Peers

CO09
CO14
CO26
CO32
CO37
CO48

Page 267 of 332

Input
Input
Input
Input
Output
Output
Output
Output
Output
Output

100.00%
Variable
BWE
CONTR
COST
CUSTO
ITBA
ITHS
ITSI
PROFI
SAFETY
SCHD

CO26

Peers: 0
References: 14
Potential Improvements
Actual
Target
1.60
1.60
3.00
3.00
5.00
5.00
3.00
3.00
3.73
3.73
2.00
2.00
1.60
1.60
3.00
3.00
2.00
2.00
5.00
5.00

Potential Improvement
0.00 %
0.00 %
0.00 %
0.00 %
0.00 %
0.00 %
0.00 %
0.00 %
0.00 %
0.00 %

Peer Contributions
CO26
CO26
CO26
CO26
CO26
CO26
CO26
CO26
CO26
CO26

BWE
CONTR
COST
CUSTO
ITBA
ITHS
ITSI
PROFI
SAFETY
SCHD

100.00 %
100.00 %
100.00 %
100.00 %
100.00 %
100.00 %
100.00 %
100.00 %
100.00 %
100.00 %

Input / Output Contributions


BWE
ITBA
ITHS
ITSI
CONTR
COST
CUSTO
PROFI
SAFETY
SCHD

13.06 %
60.30 %
6.24 %
20.40 %
0.00 %
0.00 %
100.00 %
0.00 %
0.00 %
0.00 %
Peers

CO26

Page 268 of 332

Input
Input
Input
Input
Output
Output
Output
Output
Output
Output

97.14%
Variable
BWE
CONTR
COST
CUSTO
ITBA
ITHS
ITSI
PROFI
SAFETY
SCHD

CO27

Peers: 4
References: 0
Potential Improvements
Actual
Target
2.80
2.29
4.00
4.12
2.00
3.35
2.00
2.35
3.75
3.73
2.67
2.32
2.40
2.40
4.00
4.12
2.00
2.06
3.00
3.18

Potential Improvement
-18.07 %
2.94 %
67.65 %
17.65 %
-0.31 %
-12.87 %
0.00 %
2.94 %
2.94 %
5.88 %

Peer Contributions
CO05
CO05
CO05
CO05
CO05
CO05
CO05
CO05
CO05
CO05
CO39
CO39
CO39
CO39
CO39
CO39
CO39
CO39
CO39
CO39
CO45
CO45
CO45
CO45
CO45
CO45
CO45
CO45
CO45
CO45
CO48
CO48
CO48
CO48
CO48
CO48
CO48
CO48
CO48

BWE
CONTR
COST
CUSTO
ITBA
ITHS
ITSI
PROFI
SAFETY
SCHD
BWE
CONTR
COST
CUSTO
ITBA
ITHS
ITSI
PROFI
SAFETY
SCHD
BWE
CONTR
COST
CUSTO
ITBA
ITHS
ITSI
PROFI
SAFETY
SCHD
BWE
CONTR
COST
CUSTO
ITBA
ITHS
ITSI
PROFI
SAFETY
Page 269 of 332

5.13 %
7.14 %
7.02 %
7.50 %
6.14 %
5.49 %
7.35 %
5.71 %
2.86 %
7.41 %
30.77 %
21.43 %
21.05 %
22.50 %
11.58 %
27.85 %
25.00 %
17.14 %
42.86 %
16.67 %
13.33 %
8.57 %
14.04 %
15.00 %
10.08 %
10.97 %
13.73 %
14.29 %
22.86 %
14.81 %
50.77 %
62.86 %
57.89 %
55.00 %
72.20 %
55.70 %
53.92 %
62.86 %
31.43 %

CO48

SCHD

61.11 %

Input / Output Contributions


BWE
ITBA
ITHS
ITSI
CONTR
COST
CUSTO
PROFI
SAFETY
SCHD

0.00 %
0.00 %
0.00 %
100.00 %
39.22 %
0.00 %
0.00 %
58.82 %
1.96 %
0.00 %
Peers

CO05
CO39
CO45
CO48

Page 270 of 332

Input
Input
Input
Input
Output
Output
Output
Output
Output
Output

100.00%
Variable
BWE
CONTR
COST
CUSTO
ITBA
ITHS
ITSI
PROFI
SAFETY
SCHD

CO28

Peers: 0
References: 2
Potential Improvements
Actual
Target
2.40
2.40
3.00
3.00
4.00
4.00
3.00
3.00
3.74
3.74
2.33
2.33
2.00
2.00
4.00
4.00
3.00
3.00
4.00
4.00

Potential Improvement
0.00 %
0.00 %
0.00 %
0.00 %
0.00 %
0.00 %
0.00 %
0.00 %
0.00 %
0.00 %

Peer Contributions
CO28
CO28
CO28
CO28
CO28
CO28
CO28
CO28
CO28
CO28

BWE
CONTR
COST
CUSTO
ITBA
ITHS
ITSI
PROFI
SAFETY
SCHD

100.00 %
100.00 %
100.00 %
100.00 %
100.00 %
100.00 %
100.00 %
100.00 %
100.00 %
100.00 %

Input / Output Contributions


BWE
ITBA
ITHS
ITSI
CONTR
COST
CUSTO
PROFI
SAFETY
SCHD

44.44 %
0.00 %
0.00 %
55.56 %
0.00 %
0.00 %
3.10 %
40.00 %
56.90 %
0.00 %
Peers

CO28

Page 271 of 332

Input
Input
Input
Input
Output
Output
Output
Output
Output
Output

100.00%
Variable
BWE
CONTR
COST
CUSTO
ITBA
ITHS
ITSI
PROFI
SAFETY
SCHD

CO29

Peers: 0
References: 1
Potential Improvements
Actual
Target
3.80
3.80
4.00
4.00
5.00
5.00
3.00
3.00
2.00
2.00
5.00
5.00
5.00
5.00
4.00
4.00
2.00
2.00
5.00
5.00

Potential Improvement
0.00 %
0.00 %
0.00 %
0.00 %
0.00 %
0.00 %
0.00 %
0.00 %
0.00 %
0.00 %

Peer Contributions
CO29
CO29
CO29
CO29
CO29
CO29
CO29
CO29
CO29
CO29

BWE
CONTR
COST
CUSTO
ITBA
ITHS
ITSI
PROFI
SAFETY
SCHD

100.00 %
100.00 %
100.00 %
100.00 %
100.00 %
100.00 %
100.00 %
100.00 %
100.00 %
100.00 %

Input / Output Contributions


BWE
ITBA
ITHS
ITSI
CONTR
COST
CUSTO
PROFI
SAFETY
SCHD

48.57 %
51.43 %
0.00 %
0.00 %
0.00 %
0.00 %
100.00 %
0.00 %
0.00 %
0.00 %
Peers

CO29

Page 272 of 332

Input
Input
Input
Input
Output
Output
Output
Output
Output
Output

79.78%
Variable
BWE
CONTR
COST
CUSTO
ITBA
ITHS
ITSI
PROFI
SAFETY
SCHD

CO30

Peers: 5
References: 0
Potential Improvements
Actual
Target
2.00
2.00
2.00
2.51
1.00
3.71
2.00
2.51
3.42
3.42
1.83
1.83
1.80
1.80
1.00
2.47
1.00
2.58
1.00
3.87

Potential Improvement
0.00 %
25.35 %
270.97 %
25.35 %
0.00 %
0.00 %
0.00 %
146.65 %
158.17 %
287.20 %

Peer Contributions
CO10
CO10
CO10
CO10
CO10
CO10
CO10
CO10
CO10
CO10
CO11
CO11
CO11
CO11
CO11
CO11
CO11
CO11
CO11
CO11
CO22
CO22
CO22
CO22
CO22
CO22
CO22
CO22
CO22
CO22
CO26
CO26
CO26
CO26
CO26
CO26
CO26
CO26
CO26

BWE
CONTR
COST
CUSTO
ITBA
ITHS
ITSI
PROFI
SAFETY
SCHD
BWE
CONTR
COST
CUSTO
ITBA
ITHS
ITSI
PROFI
SAFETY
SCHD
BWE
CONTR
COST
CUSTO
ITBA
ITHS
ITSI
PROFI
SAFETY
SCHD
BWE
CONTR
COST
CUSTO
ITBA
ITHS
ITSI
PROFI
SAFETY
Page 273 of 332

21.09 %
12.94 %
4.37 %
12.94 %
15.68 %
11.80 %
16.22 %
13.16 %
25.14 %
8.38 %
19.85 %
6.60 %
8.92 %
6.60 %
12.47 %
13.53 %
23.89 %
6.71 %
19.22 %
8.54 %
9.92 %
7.92 %
5.35 %
7.92 %
6.02 %
8.42 %
5.15 %
5.36 %
7.69 %
5.13 %
47.47 %
71.01 %
79.98 %
71.01 %
64.63 %
64.73 %
52.75 %
72.17 %
45.97 %

CO26
CO45
CO45
CO45
CO45
CO45
CO45
CO45
CO45
CO45
CO45

SCHD
BWE
CONTR
COST
CUSTO
ITBA
ITHS
ITSI
PROFI
SAFETY
SCHD

76.63 %
1.67 %
1.54 %
1.38 %
1.54 %
1.20 %
1.52 %
2.00 %
2.60 %
1.99 %
1.33 %

Input / Output Contributions


BWE
ITBA
ITHS
ITSI
CONTR
COST
CUSTO
PROFI
SAFETY
SCHD

10.42 %
62.54 %
23.59 %
3.45 %
0.00 %
0.00 %
100.00 %
0.00 %
0.00 %
0.00 %
Peers

CO10
CO11
CO22
CO26
CO45

Page 274 of 332

Input
Input
Input
Input
Output
Output
Output
Output
Output
Output

97.65%
Variable
BWE
CONTR
COST
CUSTO
ITBA
ITHS
ITSI
PROFI
SAFETY
SCHD

CO31

Peers: 4
References: 0
Potential Improvements
Actual
Target
1.60
1.60
2.00
2.53
2.00
3.44
2.00
2.40
3.75
3.75
2.00
1.81
2.20
2.00
2.00
2.05
2.00
2.05
2.00
3.09

Potential Improvement
0.00 %
26.66 %
71.84 %
19.88 %
0.00 %
-9.64 %
-9.01 %
2.41 %
2.41 %
54.37 %

Peer Contributions
CO03
CO03
CO03
CO03
CO03
CO03
CO03
CO03
CO03
CO03
CO11
CO11
CO11
CO11
CO11
CO11
CO11
CO11
CO11
CO11
CO17
CO17
CO17
CO17
CO17
CO17
CO17
CO17
CO17
CO17
CO26
CO26
CO26
CO26
CO26
CO26
CO26
CO26
CO26

BWE
CONTR
COST
CUSTO
ITBA
ITHS
ITSI
PROFI
SAFETY
SCHD
BWE
CONTR
COST
CUSTO
ITBA
ITHS
ITSI
PROFI
SAFETY
SCHD
BWE
CONTR
COST
CUSTO
ITBA
ITHS
ITSI
PROFI
SAFETY
SCHD
BWE
CONTR
COST
CUSTO
ITBA
ITHS
ITSI
PROFI
SAFETY
Page 275 of 332

21.84 %
27.59 %
20.33 %
29.15 %
39.88 %
29.00 %
34.91 %
17.06 %
17.06 %
11.32 %
18.98 %
4.99 %
7.36 %
5.28 %
8.71 %
10.50 %
16.43 %
6.18 %
18.53 %
8.20 %
20.33 %
21.40 %
15.77 %
16.96 %
12.74 %
17.50 %
17.60 %
19.85 %
26.47 %
17.56 %
38.86 %
46.02 %
56.53 %
48.62 %
38.66 %
43.00 %
31.06 %
56.91 %
37.94 %

CO26

SCHD

62.93 %

Input / Output Contributions


BWE
ITBA
ITHS
ITSI
CONTR
COST
CUSTO
PROFI
SAFETY
SCHD

51.48 %
48.52 %
0.00 %
0.00 %
0.00 %
0.00 %
0.00 %
2.80 %
97.20 %
0.00 %
Peers

CO03
CO11
CO17
CO26

Page 276 of 332

Input
Input
Input
Input
Output
Output
Output
Output
Output
Output

100.00%
Variable
BWE
CONTR
COST
CUSTO
ITBA
ITHS
ITSI
PROFI
SAFETY
SCHD

CO32

Peers: 0
References: 3
Potential Improvements
Actual
Target
1.40
1.40
2.00
2.00
3.00
3.00
2.00
2.00
4.86
4.86
1.00
1.00
1.40
1.40
2.00
2.00
2.00
2.00
1.00
1.00

Potential Improvement
0.00 %
0.00 %
0.00 %
0.00 %
0.00 %
0.00 %
0.00 %
0.00 %
0.00 %
0.00 %

Peer Contributions
CO32
CO32
CO32
CO32
CO32
CO32
CO32
CO32
CO32
CO32

BWE
CONTR
COST
CUSTO
ITBA
ITHS
ITSI
PROFI
SAFETY
SCHD

100.00 %
100.00 %
100.00 %
100.00 %
100.00 %
100.00 %
100.00 %
100.00 %
100.00 %
100.00 %

Input / Output Contributions


BWE
ITBA
ITHS
ITSI
CONTR
COST
CUSTO
PROFI
SAFETY
SCHD

61.25 %
0.00 %
12.50 %
26.25 %
0.00 %
0.00 %
100.00 %
0.00 %
0.00 %
0.00 %
Peers

CO32

Page 277 of 332

Input
Input
Input
Input
Output
Output
Output
Output
Output
Output

48.21%
Variable
BWE
CONTR
COST
CUSTO
ITBA
ITHS
ITSI
PROFI
SAFETY
SCHD

CO33

Peers: 6
References: 0
Potential Improvements
Actual
Target
1.60
1.60
1.00
2.41
1.00
3.05
1.00
2.41
3.84
3.84
1.67
1.67
1.80
1.80
1.00
2.07
1.00
2.07
1.00
2.87

Potential Improvement
0.00 %
140.70 %
204.99 %
140.70 %
0.00 %
0.00 %
0.00 %
107.43 %
107.43 %
187.46 %

Peer Contributions
CO03
CO03
CO03
CO03
CO03
CO03
CO03
CO03
CO03
CO03
CO10
CO10
CO10
CO10
CO10
CO10
CO10
CO10
CO10
CO10
CO11
CO11
CO11
CO11
CO11
CO11
CO11
CO11
CO11
CO11
CO26
CO26
CO26
CO26
CO26
CO26
CO26
CO26
CO26

BWE
CONTR
COST
CUSTO
ITBA
ITHS
ITSI
PROFI
SAFETY
SCHD
BWE
CONTR
COST
CUSTO
ITBA
ITHS
ITSI
PROFI
SAFETY
SCHD
BWE
CONTR
COST
CUSTO
ITBA
ITHS
ITSI
PROFI
SAFETY
SCHD
BWE
CONTR
COST
CUSTO
ITBA
ITHS
ITSI
PROFI
SAFETY
Page 278 of 332

21.45 %
28.52 %
22.51 %
28.52 %
38.17 %
30.89 %
38.14 %
16.55 %
16.55 %
11.94 %
32.19 %
16.46 %
6.50 %
16.46 %
17.04 %
15.85 %
19.81 %
19.10 %
38.20 %
13.78 %
1.61 %
0.45 %
0.71 %
0.45 %
0.72 %
0.97 %
1.55 %
0.52 %
1.56 %
0.75 %
41.25 %
51.41 %
67.62 %
51.41 %
39.99 %
49.50 %
36.67 %
59.66 %
39.77 %

CO26
CO34
CO34
CO34
CO34
CO34
CO34
CO34
CO34
CO34
CO34
CO45
CO45
CO45
CO45
CO45
CO45
CO45
CO45
CO45
CO45

SCHD
BWE
CONTR
COST
CUSTO
ITBA
ITHS
ITSI
PROFI
SAFETY
SCHD
BWE
CONTR
COST
CUSTO
ITBA
ITHS
ITSI
PROFI
SAFETY
SCHD

71.75 %
2.64 %
2.51 %
1.98 %
2.51 %
3.63 %
2.11 %
3.02 %
2.91 %
2.91 %
1.05 %
0.85 %
0.65 %
0.69 %
0.65 %
0.44 %
0.68 %
0.82 %
1.27 %
1.01 %
0.73 %

Input / Output Contributions


BWE
ITBA
ITHS
ITSI
CONTR
COST
CUSTO
PROFI
SAFETY
SCHD

41.25 %
42.72 %
14.63 %
1.40 %
0.00 %
0.00 %
0.00 %
20.60 %
79.40 %
0.00 %
Peers

CO03
CO10
CO11
CO26
CO34
CO45

Page 279 of 332

Input
Input
Input
Input
Output
Output
Output
Output
Output
Output

100.00%
Variable
BWE
CONTR
COST
CUSTO
ITBA
ITHS
ITSI
PROFI
SAFETY
SCHD

CO34

Peers: 0
References: 2
Potential Improvements
Actual
Target
1.40
1.40
2.00
2.00
2.00
2.00
2.00
2.00
4.63
4.63
1.17
1.17
1.80
1.80
2.00
2.00
2.00
2.00
1.00
1.00

Potential Improvement
0.00 %
0.00 %
0.00 %
0.00 %
0.00 %
0.00 %
0.00 %
0.00 %
0.00 %
0.00 %

Peer Contributions
CO34
CO34
CO34
CO34
CO34
CO34
CO34
CO34
CO34
CO34

BWE
CONTR
COST
CUSTO
ITBA
ITHS
ITSI
PROFI
SAFETY
SCHD

100.00 %
100.00 %
100.00 %
100.00 %
100.00 %
100.00 %
100.00 %
100.00 %
100.00 %
100.00 %

Input / Output Contributions


BWE
ITBA
ITHS
ITSI
CONTR
COST
CUSTO
PROFI
SAFETY
SCHD

100.00 %
0.00 %
0.00 %
0.00 %
0.00 %
0.00 %
0.00 %
0.00 %
100.00 %
0.00 %
Peers

CO34

Page 280 of 332

Input
Input
Input
Input
Output
Output
Output
Output
Output
Output

71.74%
Variable
BWE
CONTR
COST
CUSTO
ITBA
ITHS
ITSI
PROFI
SAFETY
SCHD

CO35

Peers: 5
References: 0
Potential Improvements
Actual
Target
2.00
2.00
2.00
2.94
2.00
3.91
2.00
2.79
5.00
3.59
2.00
1.93
1.80
1.80
2.00
2.79
2.00
2.79
2.00
4.12

Potential Improvement
0.00 %
46.97 %
95.45 %
39.39 %
-28.23 %
-3.54 %
0.00 %
39.39 %
39.39 %
106.06 %

Peer Contributions
CO10
CO10
CO10
CO10
CO10
CO10
CO10
CO10
CO10
CO10
CO17
CO17
CO17
CO17
CO17
CO17
CO17
CO17
CO17
CO17
CO22
CO22
CO22
CO22
CO22
CO22
CO22
CO22
CO22
CO22
CO26
CO26
CO26
CO26
CO26
CO26
CO26
CO26
CO26

BWE
CONTR
COST
CUSTO
ITBA
ITHS
ITSI
PROFI
SAFETY
SCHD
BWE
CONTR
COST
CUSTO
ITBA
ITHS
ITSI
PROFI
SAFETY
SCHD
BWE
CONTR
COST
CUSTO
ITBA
ITHS
ITSI
PROFI
SAFETY
SCHD
BWE
CONTR
COST
CUSTO
ITBA
ITHS
ITSI
PROFI
SAFETY
Page 281 of 332

27.58 %
14.43 %
5.43 %
15.22 %
19.55 %
14.66 %
21.21 %
15.22 %
30.43 %
10.29 %
18.18 %
20.62 %
15.50 %
16.30 %
14.87 %
18.32 %
21.89 %
16.30 %
21.74 %
14.71 %
4.55 %
3.09 %
2.33 %
3.26 %
2.63 %
3.66 %
2.36 %
2.17 %
3.26 %
2.21 %
46.06 %
58.76 %
73.64 %
61.96 %
59.80 %
59.69 %
51.18 %
61.96 %
41.30 %

CO26
CO28
CO28
CO28
CO28
CO28
CO28
CO28
CO28
CO28
CO28

SCHD
BWE
CONTR
COST
CUSTO
ITBA
ITHS
ITSI
PROFI
SAFETY
SCHD

69.85 %
3.64 %
3.09 %
3.10 %
3.26 %
3.16 %
3.66 %
3.37 %
4.35 %
3.26 %
2.94 %

Input / Output Contributions


BWE
ITBA
ITHS
ITSI
CONTR
COST
CUSTO
PROFI
SAFETY
SCHD

38.83 %
0.00 %
0.00 %
61.17 %
0.00 %
0.00 %
39.39 %
9.09 %
51.52 %
0.00 %
Peers

CO10
CO17
CO22
CO26
CO28

Page 282 of 332

Input
Input
Input
Input
Output
Output
Output
Output
Output
Output

100.00%
Variable
BWE
CONTR
COST
CUSTO
ITBA
ITHS
ITSI
PROFI
SAFETY
SCHD

CO36

Peers: 0
References: 1
Potential Improvements
Actual
Target
1.00
1.00
1.00
1.00
1.00
1.00
1.00
1.00
4.92
4.92
1.00
1.00
1.00
1.00
1.00
1.00
1.00
1.00
1.00
1.00

Potential Improvement
0.00 %
0.00 %
0.00 %
0.00 %
0.00 %
0.00 %
0.00 %
0.00 %
0.00 %
0.00 %

Peer Contributions
CO36
CO36
CO36
CO36
CO36
CO36
CO36
CO36
CO36
CO36

BWE
CONTR
COST
CUSTO
ITBA
ITHS
ITSI
PROFI
SAFETY
SCHD

100.00 %
100.00 %
100.00 %
100.00 %
100.00 %
100.00 %
100.00 %
100.00 %
100.00 %
100.00 %

Input / Output Contributions


BWE
ITBA
ITHS
ITSI
CONTR
COST
CUSTO
PROFI
SAFETY
SCHD

55.56 %
0.00 %
44.44 %
0.00 %
0.00 %
0.00 %
100.00 %
0.00 %
0.00 %
0.00 %
Peers

CO36

Page 283 of 332

Input
Input
Input
Input
Output
Output
Output
Output
Output
Output

100.00%
Variable
BWE
CONTR
COST
CUSTO
ITBA
ITHS
ITSI
PROFI
SAFETY
SCHD

CO37

Peers: 0
References: 4
Potential Improvements
Actual
Target
1.60
1.60
4.00
4.00
2.00
2.00
2.00
2.00
4.93
4.93
1.00
1.00
1.00
1.00
1.00
1.00
2.00
2.00
2.00
2.00

Potential Improvement
0.00 %
0.00 %
0.00 %
0.00 %
0.00 %
0.00 %
0.00 %
0.00 %
0.00 %
0.00 %

Peer Contributions
CO37
CO37
CO37
CO37
CO37
CO37
CO37
CO37
CO37
CO37

BWE
CONTR
COST
CUSTO
ITBA
ITHS
ITSI
PROFI
SAFETY
SCHD

100.00 %
100.00 %
100.00 %
100.00 %
100.00 %
100.00 %
100.00 %
100.00 %
100.00 %
100.00 %

Input / Output Contributions


BWE
ITBA
ITHS
ITSI
CONTR
COST
CUSTO
PROFI
SAFETY
SCHD

0.00 %
0.00 %
0.00 %
100.00 %
57.14 %
0.00 %
0.00 %
42.86 %
0.00 %
0.00 %
Peers

CO37

Page 284 of 332

Input
Input
Input
Input
Output
Output
Output
Output
Output
Output

62.75%
Variable
BWE
CONTR
COST
CUSTO
ITBA
ITHS
ITSI
PROFI
SAFETY
SCHD

CO38

Peers: 3
References: 0
Potential Improvements
Actual
Target
2.20
2.10
3.00
4.78
2.00
3.56
1.00
2.78
4.26
3.99
2.50
2.05
2.60
2.60
2.00
3.34
1.00
1.59
2.00
3.47

Potential Improvement
-4.55 %
59.38 %
78.13 %
178.13 %
-6.40 %
-17.92 %
0.00 %
67.19 %
59.38 %
73.44 %

Peer Contributions
CO05
CO05
CO05
CO05
CO05
CO05
CO05
CO05
CO05
CO05
CO37
CO37
CO37
CO37
CO37
CO37
CO37
CO37
CO37
CO37
CO39
CO39
CO39
CO39
CO39
CO39
CO39
CO39
CO39
CO39

BWE
CONTR
COST
CUSTO
ITBA
ITHS
ITSI
PROFI
SAFETY
SCHD
BWE
CONTR
COST
CUSTO
ITBA
ITHS
ITSI
PROFI
SAFETY
SCHD
BWE
CONTR
COST
CUSTO
ITBA
ITHS
ITSI
PROFI
SAFETY
SCHD

65.48 %
71.90 %
77.19 %
74.16 %
67.21 %
72.59 %
79.33 %
82.24 %
43.14 %
79.28 %
16.67 %
18.30 %
12.28 %
15.73 %
27.03 %
10.66 %
8.41 %
6.54 %
27.45 %
12.61 %
17.86 %
9.80 %
10.53 %
10.11 %
5.76 %
16.75 %
12.26 %
11.21 %
29.41 %
8.11 %

Input / Output Contributions


BWE
ITBA
ITHS
ITSI
CONTR
COST

0.00 %
0.00 %
0.00 %
100.00 %
98.44 %
0.00 %
Page 285 of 332

Input
Input
Input
Input
Output
Output

CUSTO
PROFI
SAFETY
SCHD

0.00 %
0.00 %
1.56 %
0.00 %
Peers

CO05
CO37
CO39

Page 286 of 332

Output
Output
Output
Output

100.00%
Variable
BWE
CONTR
COST
CUSTO
ITBA
ITHS
ITSI
PROFI
SAFETY
SCHD

CO39

Peers: 0
References: 4
Potential Improvements
Actual
Target
4.00
4.00
5.00
5.00
4.00
4.00
3.00
3.00
2.45
2.45
3.67
3.67
3.40
3.40
4.00
4.00
5.00
5.00
3.00
3.00

Potential Improvement
0.00 %
0.00 %
0.00 %
0.00 %
0.00 %
0.00 %
0.00 %
0.00 %
0.00 %
0.00 %

Peer Contributions
CO39
CO39
CO39
CO39
CO39
CO39
CO39
CO39
CO39
CO39

BWE
CONTR
COST
CUSTO
ITBA
ITHS
ITSI
PROFI
SAFETY
SCHD

100.00 %
100.00 %
100.00 %
100.00 %
100.00 %
100.00 %
100.00 %
100.00 %
100.00 %
100.00 %

Input / Output Contributions


BWE
ITBA
ITHS
ITSI
CONTR
COST
CUSTO
PROFI
SAFETY
SCHD

0.00 %
82.54 %
17.46 %
0.00 %
0.00 %
0.00 %
0.00 %
0.00 %
100.00 %
0.00 %
Peers

CO39

Page 287 of 332

Input
Input
Input
Input
Output
Output
Output
Output
Output
Output

100.00%
Variable
BWE
CONTR
COST
CUSTO
ITBA
ITHS
ITSI
PROFI
SAFETY
SCHD

CO40

Peers: 0
References: 2
Potential Improvements
Actual
Target
2.40
2.40
3.00
3.00
5.00
5.00
2.00
2.00
3.51
3.51
1.67
1.67
2.40
2.40
4.00
4.00
3.00
3.00
4.00
4.00

Potential Improvement
0.00 %
0.00 %
0.00 %
0.00 %
0.00 %
0.00 %
0.00 %
0.00 %
0.00 %
0.00 %

Peer Contributions
CO40
CO40
CO40
CO40
CO40
CO40
CO40
CO40
CO40
CO40

BWE
CONTR
COST
CUSTO
ITBA
ITHS
ITSI
PROFI
SAFETY
SCHD

100.00 %
100.00 %
100.00 %
100.00 %
100.00 %
100.00 %
100.00 %
100.00 %
100.00 %
100.00 %

Input / Output Contributions


BWE
ITBA
ITHS
ITSI
CONTR
COST
CUSTO
PROFI
SAFETY
SCHD

100.00 %
0.00 %
0.00 %
0.00 %
0.00 %
62.50 %
0.00 %
0.00 %
37.50 %
0.00 %
Peers

CO40

Page 288 of 332

Input
Input
Input
Input
Output
Output
Output
Output
Output
Output

100.00%
Variable
BWE
CONTR
COST
CUSTO
ITBA
ITHS
ITSI
PROFI
SAFETY
SCHD
CO17
CO17
CO17
CO17
CO17
CO17
CO17
CO17
CO17
CO17
CO26
CO26
CO26
CO26
CO26
CO26
CO26
CO26
CO26
CO26
BWE
ITBA
ITHS
ITSI
CONTR
COST
CUSTO
PROFI
SAFETY
SCHD

CO41

Peers: 2
References: 0
Potential Improvements
Actual
Target
2.00
2.00
3.00
3.50
3.00
4.50
3.00
3.00
4.52
3.62
2.83
2.17
2.20
2.10
3.00
3.00
3.00
3.00
3.00
4.50
Peer Contributions
BWE
CONTR
COST
CUSTO
ITBA
ITHS
ITSI
PROFI
SAFETY
SCHD
BWE
CONTR
COST
CUSTO
ITBA
ITHS
ITSI
PROFI
SAFETY
SCHD
Input / Output Contributions
100.00 %
0.00 %
0.00 %
0.00 %
0.00 %
0.00 %
33.33 %
0.00 %
66.67 %
0.00 %
Peers

CO17
CO26

Page 289 of 332

Potential Improvement
0.00 %
16.67 %
50.00 %
0.00 %
-19.75 %
-23.53 %
-4.55 %
0.00 %
0.00 %
50.00 %
60.00 %
57.14 %
44.44 %
50.00 %
48.58 %
53.85 %
61.90 %
50.00 %
66.67 %
44.44 %
40.00 %
42.86 %
55.56 %
50.00 %
51.42 %
46.15 %
38.10 %
50.00 %
33.33 %
55.56 %
Input
Input
Input
Input
Output
Output
Output
Output
Output
Output

64.65%
Variable
BWE
CONTR
COST
CUSTO
ITBA
ITHS
ITSI
PROFI
SAFETY
SCHD

CO42

Peers: 5
References: 0
Potential Improvements
Actual
Target
2.00
2.00
1.00
3.21
2.00
3.21
1.00
2.54
3.72
3.72
2.00
2.00
2.40
2.32
1.00
2.30
2.00
3.09
2.00
3.09

Potential Improvement
0.00 %
220.99 %
60.55 %
154.20 %
0.00 %
0.00 %
-3.23 %
129.98 %
54.69 %
54.69 %

Peer Contributions
CO03
CO03
CO03
CO03
CO03
CO03
CO03
CO03
CO03
CO03
CO10
CO10
CO10
CO10
CO10
CO10
CO10
CO10
CO10
CO10
CO11
CO11
CO11
CO11
CO11
CO11
CO11
CO11
CO11
CO11
CO15
CO15
CO15
CO15
CO15
CO15
CO15
CO15
CO15

BWE
CONTR
COST
CUSTO
ITBA
ITHS
ITSI
PROFI
SAFETY
SCHD
BWE
CONTR
COST
CUSTO
ITBA
ITHS
ITSI
PROFI
SAFETY
SCHD
BWE
CONTR
COST
CUSTO
ITBA
ITHS
ITSI
PROFI
SAFETY
SCHD
BWE
CONTR
COST
CUSTO
ITBA
ITHS
ITSI
PROFI
SAFETY
Page 290 of 332

12.11 %
15.09 %
15.09 %
19.06 %
27.85 %
18.16 %
20.86 %
10.53 %
7.83 %
7.83 %
9.26 %
4.44 %
2.22 %
5.61 %
6.34 %
4.75 %
5.52 %
6.20 %
9.21 %
4.61 %
2.23 %
0.58 %
1.16 %
0.73 %
1.29 %
1.39 %
2.08 %
0.81 %
1.80 %
1.20 %
2.69 %
3.35 %
5.02 %
2.11 %
6.34 %
4.03 %
2.77 %
2.34 %
1.74 %

CO15
CO17
CO17
CO17
CO17
CO17
CO17
CO17
CO17
CO17
CO17

SCHD
BWE
CONTR
COST
CUSTO
ITBA
ITHS
ITSI
PROFI
SAFETY
SCHD

6.94 %
73.71 %
76.54 %
76.52 %
72.49 %
58.18 %
71.66 %
68.77 %
80.13 %
79.42 %
79.42 %

Input / Output Contributions


BWE
ITBA
ITHS
ITSI
CONTR
COST
CUSTO
PROFI
SAFETY
SCHD

56.58 %
34.68 %
8.73 %
0.00 %
0.00 %
0.00 %
0.00 %
0.00 %
97.07 %
2.93 %
Peers

CO03
CO10
CO11
CO15
CO17

Page 291 of 332

Input
Input
Input
Input
Output
Output
Output
Output
Output
Output

90.60%
Variable
BWE
CONTR
COST
CUSTO
ITBA
ITHS
ITSI
PROFI
SAFETY
SCHD

CO43

Peers: 4
References: 0
Potential Improvements
Actual
Target
2.40
2.40
3.00
3.31
1.00
4.12
2.00
2.95
3.35
3.35
2.83
2.33
1.80
1.80
1.00
2.85
1.00
2.77
2.00
3.99

Potential Improvement
0.00 %
10.38 %
311.69 %
47.49 %
0.00 %
-17.89 %
0.00 %
185.48 %
176.80 %
99.31 %

Peer Contributions
CO14
CO14
CO14
CO14
CO14
CO14
CO14
CO14
CO14
CO14
CO22
CO22
CO22
CO22
CO22
CO22
CO22
CO22
CO22
CO22
CO26
CO26
CO26
CO26
CO26
CO26
CO26
CO26
CO26
CO26
CO39
CO39
CO39
CO39
CO39
CO39
CO39
CO39
CO39

BWE
CONTR
COST
CUSTO
ITBA
ITHS
ITSI
PROFI
SAFETY
SCHD
BWE
CONTR
COST
CUSTO
ITBA
ITHS
ITSI
PROFI
SAFETY
SCHD
BWE
CONTR
COST
CUSTO
ITBA
ITHS
ITSI
PROFI
SAFETY
SCHD
BWE
CONTR
COST
CUSTO
ITBA
ITHS
ITSI
PROFI
SAFETY
Page 292 of 332

4.61 %
6.07 %
3.66 %
3.41 %
5.40 %
4.32 %
6.14 %
7.04 %
5.44 %
3.78 %
40.75 %
29.54 %
23.76 %
33.16 %
30.27 %
32.70 %
25.36 %
22.84 %
35.33 %
24.54 %
32.88 %
44.68 %
59.89 %
50.15 %
54.79 %
42.40 %
43.84 %
51.82 %
35.63 %
61.86 %
21.77 %
19.72 %
12.69 %
13.28 %
9.54 %
20.58 %
24.67 %
18.30 %
23.59 %

CO39

SCHD

9.83 %

Input / Output Contributions


BWE
ITBA
ITHS
ITSI
CONTR
COST
CUSTO
PROFI
SAFETY
SCHD

21.96 %
57.79 %
0.00 %
20.26 %
100.00 %
0.00 %
0.00 %
0.00 %
0.00 %
0.00 %
Peers

CO14
CO22
CO26
CO39

Page 293 of 332

Input
Input
Input
Input
Output
Output
Output
Output
Output
Output

99.16%
Variable
BWE
CONTR
COST
CUSTO
ITBA
ITHS
ITSI
PROFI
SAFETY
SCHD

CO44

Peers: 4
References: 0
Potential Improvements
Actual
Target
2.20
1.68
3.00
3.03
3.00
3.87
2.00
2.50
3.98
3.98
1.83
1.78
1.40
1.40
2.00
2.18
1.00
1.97
4.00
4.03

Potential Improvement
-23.61 %
0.84 %
29.14 %
24.79 %
0.00 %
-3.06 %
0.00 %
9.25 %
96.63 %
0.84 %

Peer Contributions
CO15
CO15
CO15
CO15
CO15
CO15
CO15
CO15
CO15
CO15
CO22
CO22
CO22
CO22
CO22
CO22
CO22
CO22
CO22
CO22
CO26
CO26
CO26
CO26
CO26
CO26
CO26
CO26
CO26
CO26
CO37
CO37
CO37
CO37
CO37
CO37
CO37
CO37
CO37

BWE
CONTR
COST
CUSTO
ITBA
ITHS
ITSI
PROFI
SAFETY
SCHD
BWE
CONTR
COST
CUSTO
ITBA
ITHS
ITSI
PROFI
SAFETY
SCHD
BWE
CONTR
COST
CUSTO
ITBA
ITHS
ITSI
PROFI
SAFETY
SCHD
BWE
CONTR
COST
CUSTO
ITBA
ITHS
ITSI
PROFI
SAFETY
Page 294 of 332

9.50 %
10.55 %
12.36 %
6.40 %
17.61 %
13.47 %
13.68 %
7.31 %
8.12 %
15.83 %
22.48 %
12.49 %
9.75 %
15.14 %
9.86 %
16.53 %
12.59 %
11.53 %
19.21 %
9.37 %
50.41 %
52.51 %
68.34 %
63.65 %
49.61 %
59.59 %
60.51 %
72.70 %
53.86 %
65.63 %
17.61 %
24.45 %
9.55 %
14.82 %
22.92 %
10.41 %
13.21 %
8.46 %
18.81 %

CO37

SCHD

9.17 %

Input / Output Contributions


BWE
ITBA
ITHS
ITSI
CONTR
COST
CUSTO
PROFI
SAFETY
SCHD

0.00 %
35.55 %
0.00 %
64.45 %
34.50 %
0.00 %
0.00 %
0.00 %
0.00 %
65.50 %
Peers

CO15
CO22
CO26
CO37

Page 295 of 332

Input
Input
Input
Input
Output
Output
Output
Output
Output
Output

100.00%
Variable
BWE
CONTR
COST
CUSTO
ITBA
ITHS
ITSI
PROFI
SAFETY
SCHD

CO45

Peers: 0
References: 6
Potential Improvements
Actual
Target
2.60
2.60
3.00
3.00
4.00
4.00
3.00
3.00
3.20
3.20
2.17
2.17
2.80
2.80
5.00
5.00
4.00
4.00
4.00
4.00

Potential Improvement
0.00 %
0.00 %
0.00 %
0.00 %
0.00 %
0.00 %
0.00 %
0.00 %
0.00 %
0.00 %

Peer Contributions
CO45
CO45
CO45
CO45
CO45
CO45
CO45
CO45
CO45
CO45

BWE
CONTR
COST
CUSTO
ITBA
ITHS
ITSI
PROFI
SAFETY
SCHD

100.00 %
100.00 %
100.00 %
100.00 %
100.00 %
100.00 %
100.00 %
100.00 %
100.00 %
100.00 %

Input / Output Contributions


BWE
ITBA
ITHS
ITSI
CONTR
COST
CUSTO
PROFI
SAFETY
SCHD

42.87 %
57.13 %
0.00 %
0.00 %
30.14 %
0.00 %
0.00 %
69.86 %
0.00 %
0.00 %
Peers

CO45

Page 296 of 332

Input
Input
Input
Input
Output
Output
Output
Output
Output
Output

80.00%
Variable
BWE
CONTR
COST
CUSTO
ITBA
ITHS
ITSI
PROFI
SAFETY
SCHD

CO46

Peers: 3
References: 0
Potential Improvements
Actual
Target
4.60
3.80
3.00
4.00
3.00
4.13
2.00
2.50
4.02
3.50
4.33
2.37
4.20
2.95
3.00
3.75
3.00
3.75
4.00
5.00

Potential Improvement
-17.39 %
33.33 %
37.50 %
25.00 %
-13.04 %
-45.19 %
-29.76 %
25.00 %
25.00 %
25.00 %

Peer Contributions
CO02
CO02
CO02
CO02
CO02
CO02
CO02
CO02
CO02
CO02
CO24
CO24
CO24
CO24
CO24
CO24
CO24
CO24
CO24
CO24
CO47
CO47
CO47
CO47
CO47
CO47
CO47
CO47
CO47
CO47

BWE
CONTR
COST
CUSTO
ITBA
ITHS
ITSI
PROFI
SAFETY
SCHD
BWE
CONTR
COST
CUSTO
ITBA
ITHS
ITSI
PROFI
SAFETY
SCHD
BWE
CONTR
COST
CUSTO
ITBA
ITHS
ITSI
PROFI
SAFETY
SCHD

19.74 %
25.00 %
24.24 %
30.00 %
23.52 %
26.32 %
20.34 %
20.00 %
20.00 %
25.00 %
69.08 %
62.50 %
60.61 %
50.00 %
64.13 %
61.40 %
63.56 %
66.67 %
66.67 %
62.50 %
11.18 %
12.50 %
15.15 %
20.00 %
12.34 %
12.28 %
16.10 %
13.33 %
13.33 %
12.50 %

Input / Output Contributions


BWE
ITBA
ITHS
ITSI
CONTR
COST

28.48 %
22.92 %
24.68 %
23.92 %
0.00 %
0.00 %
Page 297 of 332

Input
Input
Input
Input
Output
Output

CUSTO
PROFI
SAFETY
SCHD

0.00 %
0.00 %
0.00 %
100.00 %
Peers

CO02
CO24
CO47

Page 298 of 332

Output
Output
Output
Output

100.00%
Variable
BWE
CONTR
COST
CUSTO
ITBA
ITHS
ITSI
PROFI
SAFETY
SCHD

CO47

Peers: 0
References: 2
Potential Improvements
Actual
Target
3.40
3.40
4.00
4.00
5.00
5.00
4.00
4.00
3.45
3.45
2.33
2.33
3.80
3.80
4.00
4.00
4.00
4.00
5.00
5.00

Potential Improvement
0.00 %
0.00 %
0.00 %
0.00 %
0.00 %
0.00 %
0.00 %
0.00 %
0.00 %
0.00 %

Peer Contributions
CO47
CO47
CO47
CO47
CO47
CO47
CO47
CO47
CO47
CO47

BWE
CONTR
COST
CUSTO
ITBA
ITHS
ITSI
PROFI
SAFETY
SCHD

100.00 %
100.00 %
100.00 %
100.00 %
100.00 %
100.00 %
100.00 %
100.00 %
100.00 %
100.00 %

Input / Output Contributions


BWE
ITBA
ITHS
ITSI
CONTR
COST
CUSTO
PROFI
SAFETY
SCHD

100.00 %
0.00 %
0.00 %
0.00 %
0.00 %
0.00 %
50.70 %
0.00 %
0.00 %
49.30 %
Peers

CO47

Page 299 of 332

Input
Input
Input
Input
Output
Output
Output
Output
Output
Output

100.00%
Variable
BWE
CONTR
COST
CUSTO
ITBA
ITHS
ITSI
PROFI
SAFETY
SCHD

CO48

Peers: 0
References: 4
Potential Improvements
Actual
Target
1.80
1.80
4.00
4.00
3.00
3.00
2.00
2.00
4.17
4.17
2.00
2.00
2.00
2.00
4.00
4.00
1.00
1.00
3.00
3.00

Potential Improvement
0.00 %
0.00 %
0.00 %
0.00 %
0.00 %
0.00 %
0.00 %
0.00 %
0.00 %
0.00 %

Peer Contributions
CO48
CO48
CO48
CO48
CO48
CO48
CO48
CO48
CO48
CO48

BWE
CONTR
COST
CUSTO
ITBA
ITHS
ITSI
PROFI
SAFETY
SCHD

100.00 %
100.00 %
100.00 %
100.00 %
100.00 %
100.00 %
100.00 %
100.00 %
100.00 %
100.00 %

Input / Output Contributions


BWE
ITBA
ITHS
ITSI
CONTR
COST
CUSTO
PROFI
SAFETY
SCHD

0.00 %
10.35 %
0.00 %
89.65 %
24.77 %
0.00 %
0.00 %
75.23 %
0.00 %
0.00 %
Peers

CO48

Page 300 of 332

Input
Input
Input
Input
Output
Output
Output
Output
Output
Output

40.91%
Variable
BWE
CONTR
COST
CUSTO
ITBA
ITHS
ITSI
PROFI
SAFETY
SCHD

CO49

Peers: 3
References: 0
Potential Improvements
Actual
Target
2.40
2.22
1.00
3.11
1.00
4.67
1.00
2.78
4.02
3.78
2.00
2.00
3.00
1.93
1.00
3.11
1.00
2.44
2.00
4.89

Potential Improvement
-7.41 %
211.11 %
366.67 %
177.78 %
-6.14 %
0.00 %
-35.56 %
211.11 %
144.44 %
144.44 %

Peer Contributions
CO04
CO04
CO04
CO04
CO04
CO04
CO04
CO04
CO04
CO04
CO24
CO24
CO24
CO24
CO24
CO24
CO24
CO24
CO24
CO24
CO26
CO26
CO26
CO26
CO26
CO26
CO26
CO26
CO26
CO26

BWE
CONTR
COST
CUSTO
ITBA
ITHS
ITSI
PROFI
SAFETY
SCHD
BWE
CONTR
COST
CUSTO
ITBA
ITHS
ITSI
PROFI
SAFETY
SCHD
BWE
CONTR
COST
CUSTO
ITBA
ITHS
ITSI
PROFI
SAFETY
SCHD

10.00 %
7.14 %
9.52 %
12.00 %
13.10 %
7.41 %
10.34 %
7.14 %
9.09 %
9.09 %
42.00 %
28.57 %
19.05 %
16.00 %
21.12 %
25.93 %
34.48 %
28.57 %
36.36 %
22.73 %
48.00 %
64.29 %
71.43 %
72.00 %
65.78 %
66.67 %
55.17 %
64.29 %
54.55 %
68.18 %

Input / Output Contributions


BWE
ITBA
ITHS
ITSI
CONTR
COST

0.00 %
0.00 %
100.00 %
0.00 %
0.00 %
0.00 %
Page 301 of 332

Input
Input
Input
Input
Output
Output

CUSTO
PROFI
SAFETY
SCHD

0.00 %
0.00 %
11.11 %
88.89 %
Peers

CO04
CO24
CO26

Page 302 of 332

Output
Output
Output
Output

Appendix C: Ethical Approval

UNIVERSITY OF SALFORD
Research Governance and Ethics Committee
Ethical Approval Form for Post-Graduates
Ethical approval must be obtained by all postgraduate research students (PGR)
prior to starting research with human subjects, animals or human tissue. A PGR
is defined as anyone undertaking a Research rather than a Taught masters degree, and
includes for example MSc by Research, MRes, MPhil and PhD. The student must
discuss the content of the form with their dissertation supervisor who will advise them
about revisions. A final copy of the summary will then be agreed and the student and
supervisor will sign it off.

The applicant must forward a hard copy of the Form to the Contracts Office
once it is has been signed by their Supervisor and an electronic copy emailed to
the Research Governance and Ethics Committee through Max Pilotti
[email protected].
(The form can be completed electronically; the sections can be expanded to the size
required)

Name of student:

Yahuza Hassan Kassim

Course of study:

PhD in Construction Management

School:

School of the Built and Human Environment

Supervisor:

Dr. Jason Underwood

Research Institute:

Institute for the Built and Human Environment

Name of Research Council or other funding organisation (if applicable):


1. Title of proposed research project
I.T SoCA - Information Technology as Source of Competitive Advantage in
Construction Industry
1b.

Is this Project Purely literature based?


YES

2.

Project focus
The project will focus on an investigation into IT as a source of competitive
advantage within the UK construction industry.

3.

Project objectives (maximum of three)

Page 303 of 332

(b) To develop a comprehensive process oriented model to measure IT


business value for Construction organizations.
(c) To use the model to investigate IT as a source of competitive advantage in
the construction organizations proving a basis to benchmark the ITinduced performance in construction organizations

4.

(d) To provide a platform for investigating organisations IT readiness and


tools for monitoring continuous improvement in the deployment of IT
resources in construction organisation
Research strategy
(For example, where will you recruit participants? What information/data
collection strategies will you use? What approach do you intend to take to
the analysis of information / data generated?)
The research involves a three-phase methodologically triangulated process:
The first phase involves the development of a conceptual model using hybrid of
Porters (1980; 1985) competitive advantage and competitive strategy models with
organisation resource-based view and core competence approach (Barney, 1991).
Using non parametric approach of Data Envelopment Analysis (DEA), the model
will be used to measure the performance of the construction organization based on
the identified and operationalized IT resources as inputs. The outputs will use
construction performance metrics. This phase will be complemented by a
comprehensive literature review in the field of IT business value, construction
management and strategic management; identification and operationalization of
IT resources on the construction project value chain; establishing and defining
project performance metrics.
The second phase involves the validation of the model will through expert
interviews as case studies to establish the details of the work activities within each
main activity of the constructed value chain.
The third phase will involve empirically testing the model by collating data from
sample organisations within a strategic grouping of the industry. The data
collection instrument will be a 5-point likert scale questionnaire. The input
variable of IT resources inform of IT investment will be measured on the basis of
usage rather than the dollar value, since value depends on usage of IT and not on
investment alone.
Participants will be sought from approximately 150 (working on approximately a
30% success return) large UK construction organisations which will be identified
through established industry contacts/experts that are currently engaged in the
area of construction IT and also have an interested in the focus of this study. Prior
to their involvement, each of the identified organisations will be briefed on the
overall nature and focus of the study.

5.

What is the rationale which led to this project


(for example, previous work give references where appropriate)
Despite multitude of studies on IT business value and the concept of an
organisations competitive advantage using IT-enabled strategies; there is no
known model measuring the IT business value in the literature addressing the
unique nature of the construction industry. Most concepts of CA in strategic
management are derived with particular reference to manufacturing industries
and few applied to services industry such as banks and retails. Therefore the
overall aim of this research is to fill in this vacuum and contribute to literature on
Page 304 of 332

evaluation of IT investment in construction industry and construction


management.
6.

If you are going to work within a particular organisation do they have


their own procedures for gaining ethical approval
YES
If YES what are these and how will you ensure you meet their requirements?

Each of the construction organisations and their recommended participants will


be approached via the established industry contacts/experts. It is through these
industry contacts/experts that ethical approval will be discussed and sought
(where required) prior to their engagement.
7.

Are you going to approach individuals to be involved in your research?


YES
If YES please think about key issues for example, how you will recruit people?
How you will deal with issues of confidentiality / anonymity? Then make notes that
cover the key issues linked to your study

8.

More specifically, how will you ensure you gain informed consent from
anyone involved in the study?

9.

Are there any data protection issues that you need to address?
If YES what are these and how will you address them?
YES
It is believed that no data protection issues need to be addressed as the focus of
the study is at the organisational level and complete anonymity of individuals will
remain. However, along with ethical approval, this will be further discussed with
each organisation to ensure that the issue of data protection is in no way
contravened.

10.

Are there any other ethical issues that need to be considered? For
example - research on animals or research involving people under the
age of 18.
NO

11.

(a) Does the project involve the use of ionising or other type of
radiation
NO

(b)

Is the use of radiation in this project over and above what would
normally be expected (for example) in diagnostic imaging?

NO

(c)

Does the project require the use of hazardous substances?

NO

(d)

Does the project carry any risk of injury to the participants?

NO
Page 305 of 332

(e)

Does the project require participants to answer questions that may


cause disquiet / or upset to them?

NO
If the answer to any of the questions 11(a)-(e) is YES, a risk assessment of the project
is required.
12.

How many subjects will be recruited / involved in the study/research?


What is the rationale behind this number?
Based on the Data envelopment literature and the number of variables and
estimated 50 construction organisations will be expected to be used as sample.
Thus up to 150 may be target with questionnaires to mitigate the possible low
responses.

Please attach:

A summary in clear / plain English (or whatever media/language is appropriate) of the


material you will use with participants explaining the study / consent issues etc.
The focus of the research is to investigate the impact of IT as a source of
competitive advantage within the UK construction industry. A comprehensive
conceptual model to measure IT business value for construction organisations has
been developed. Your participation in testing and validating the model through
empirical data will provide tools:
o

to benchmark the construction organizations IT-induced performance

for continuous improvement in the deployment of IT resources in


Construction Organisation

to provide a platform for investigating construction organisation IT


readiness

To this end please find enclosed ten research questionnaires for your kind
response. Any personally identifiable information will be kept strictly
confidential and all the data will be used only for research purposes. The
outcome of the research will form part of partial fulfilment of requirements
for degree of PhD. Your cooperation is highly important to the success of
the project. A consent form is also attached explaining our undertaking to
protecting your confidentiality and confirming your consent to participate.
A draft consent form again in whatever media is suitable for your research purposes
/ population.
A copy of any posters to be used to recruit participants
Remember that informed consent from research participants is crucial, therefore your information
sheet must use language that is readily understood by the general public.
Projects that involve NHS patients, patients records or NHS staff, will require ethical approval by
the appropriate NHS Research Ethics Committee. The University Research Governance and Ethics
Committee will require written confirmation that such approval has been granted. Where a project
Page 306 of 332

forms part of a larger, already approved, project, the approving REC should be informed about,
and approve, the use of an additional co-researcher.
I certify that the above information is, to the best of my knowledge, accurate and correct. I
understand the need to ensure I undertake my research in a manner that reflects good principles
of ethical research practice.

Signed by Student Date

April 04, 2009.

In signing this form I confirm that I have read and agreed the contents with the student.

Signed by Supervisor Date .

Page 307 of 332

APPENDIX D: DEA Glossary of Terms

Adopted from (http://www.banxia.com/frontier/glossary.html)


Aggregate efficiency

A term used to describe the measure of efficiency from the


CCR model.

Allocative efficiency

The efficiency of a production process in converting inputs


to outputs, where the cost of production is minimized for a
given set of input prices. Allocative efficiency can be
calculated by the ratio of cost efficiency to technical
efficiency.

BCC

The BCC model is the DEA model used in Frontier Analyst


when a variable returns to scale relationship is assumed
between inputs and outputs. It is named BCC after Banker,
Charnes and Cooper who first introduced it in Charnes et al.,
(1984). The BCC model measures technical efficiency.

Benchmarking

The process of comparing the performance of an individual


organisation against a benchmark, or ideal, level of
performance. Benchmarks can be set on the basis of
performance over time or across a sample of similar
organisations, or against some externally set standard.

Categorical variable

Categorical variables are generally used to indicate the


presence or lack of a particular attribute. The use of
categorical variables requires modifications to the DEA
models.

CCR

The CCR (ratio) model is probably the most widely used


and best known DEA model. It is the DEA model used in
Frontier Analyst when a constant return to scale relationship
is assumed between inputs and outputs. This model
calculates the overall efficiency for each unit, where both
pure technical efficiency and scale efficiency are aggregated
into one value.

Composite unit

The attributes of a composite unit (which is a hypothetical


efficient unit) are determined by the projection of an
inefficient unit, through the origin, to the efficiency frontier.
The attributes are formed from the DMU's (units) reference
units, in the proportions indicated by the dual weights.

Constant returns to
scale

Constant returns to scale (CRS) may be assumed if an


increase in a unit's inputs leads to a proportionate increase
in its outputs i.e. there is a one-to-one, linear relationship
between inputs and outputs.

Page 308 of 332

Controlled
(discretionary) inputs

A controlled input is one over which the management of the


unit has control and, as a result, can alter the amount of it
used. (Controlled inputs are also sometimes referred to as
discretionary inputs).

Convexity constraint

The convexity constraint, which forms part of the


formulation of the BCC model, ensures that each composite
unit is a convex combination of its reference units.

Correlation coefficient

A measure of the strength of the relationship between two


variables. A relationship exists between two variables when
as the value of one variable changes the other variable
changes, in a related manner..

Cost efficiency

Cost efficiency (economic efficiency) is the ratio of the


minimum cost to the actual (observed) cost

A tool used to help with the identification of efficient


operating practices. A unit with a high average efficiency,
Cross efficiency matrix
from a cross efficiency matrix, offers a good comparator for
inefficient units to work towards.

Data Envelopment
Analysis. (DEA).

Data envelopment analysis is a non-parametric technique,


used for performance measurement and benchmarking. It
uses linear programming to determine the relative
efficiencies of a set of homogeneous units. It is a "process
based" analysis, in other words, it can be applied to any unit
based enterprise, regardless of whether or not a "profit"
figure is involved in the evaluation.

Data set

The data set is the group of DMU's and the values of their
inputs and outputs to be included in the analysis.

Decision making unit.


(DMU).

Decision making unit was the name used by Charnes et al


(1978) to describe the units being analyzed in DEA. The use
of this term is intended to redirect the emphasis of the
analysis from profit making businesses to decision making
entities. In other words, the analysis which is performed can
be applied to any unit based enterprise and need have
nothing to do with profit.

Decreasing returns to
scale. (DRS).

Decreasing returns to scale. (DRS). Decreasing returns to


scale are operating when an increase in a unit's inputs result
in a less than proportionate increase in its outputs.

Dual model

The dual model and the primal model provide two ways of
looking at the same problem and the efficiency scores
calculated are the same with both. Mathematically, the dual
model is much faster to solve.

Dual weights (l)

The dual weights (l) - so called because they are calculated


using the dual model and sometimes also called dual
multipliers - give an indication of the importance given to a
particular unit in determining the input/output mix of the
Page 309 of 332

composite unit.

Effectiveness

Degree to which the outputs of a service provider achieve


the stated objectives of that service for example, the
extent to which hospitals are meeting the demand for nonelective surgery. In the case of government service
providers, the government normally sets such objectives.

Efficiency

Degree to which the observed use of resources to produce


outputs of a given quality matches the optimal use of
resources to produce outputs of a given quality. This can be
assessed in terms of technical efficiency and allocative efficiency.

Efficient/ efficiency
frontier

The efficiency frontier is the frontier (envelope) representing


"best performance" and is made up of the units in the data
set which are most efficient in transforming their inputs into
outputs. The units that determine the frontier are those
classified as being 100% efficient.

Efficiency score

DEA results in each unit being allocated an efficiency score.


This score is between zero (or 0%) and 1 (100%). A unit with
a score of 100% is relatively efficient. Any unit with a score
of less than 100% is relatively inefficient.

Efficiency study

The process of studying efficiency within an organisation.

Envelopment form

This term is used to describe the formulation of a DEA


model which involves the concept of composite units.

Epsilon ( )

Epsilon is a very small positive constant (circa 10-6) which is


a non-Archimedean variable. Epsilon is a theoreticalmathematical device to allow driving slack variable values
to zero, without adding or subtracting any "real" amount to
the objective function.

Environmental factor

An environmental factor is neither an economic resource nor


a product but rather an attribute of the environment in
which the units operate.

Facet

Each of the segments which make up the efficient frontier is


known as a facet. Generally, where efficient units make a
reference set, they are located on the same facet. Facet and
reference set refer to the same concept.

Global leader

A global leader will act as a model of good operating


practice for inefficient units. Oral and Yolalan (1990) define
a global leader as an efficient unit which appears most
frequently in the reference set for inefficient units.

Homogeneous

A DEA study requires a set of homogeneous units.


Homogeneity refers to the degree of similarity between
units. The operational goals of the units should be similar, as
should their operational characteristics.

Page 310 of 332

Increasing returns to
scale

Increasing returns to scale exist when an increase in a unit's


inputs yields a greater than proportionate increase in its
outputs.

Inefficient unit

An inefficient unit is one which, when compared with the


actual performance achieved by other units in the analysis,
should be able to produce its current level of outputs with
fewer inputs or generate a higher level of outputs given the
same inputs.

Inputs

An input is any resource used by a unit to produce its


outputs (products or services). This can include resources
which are not a product but are an attribute of the
environment in which the units operate. They can be
controlled or uncontrolled.

Input minimization

Input minimization is the DEA mode adopted when the


analysis tries to minimize the amount of inputs used to
produce the specified outputs.

Input orientated

Input orientated is a term used in conjunction with the BCC


and CCR ratio models, to indicate that an inefficient unit
may be made efficient by reducing the proportions of its
inputs but keeping the output proportions constant. (Note:
the CCR model will yield the same efficiency score
regardless of whether it is input or output orientated. This is
not the case with the BCC model).

Input/output mix

The term "input/ output mix" refers to the relative


proportions of a unit's inputs and outputs.

Intensity factor. (Z).

In the dual model the scalar, Z, is the intensity factor. The


intensity factor indicates the proportional reduction in
inputs (when using input minimization) or the increase in
outputs (if using output maximization) to achieve efficiency.

Linear program

A set of linear mathematical equations for which a solution


can be obtained subject to an upper bound (maximization) or
a lower bound (minimization).

Local returns to scale

Local return to scale describes what happens to units


outputs when the input levels are changed.

Most productive scale


size. (MPSS).

The most productive scale size of an efficient unit refers to


the point (on the efficient frontier) at which maximum
average productivity is achieved for a given input/ output
mix. At MPSS constant returns to scale are operating. After
reaching MPSS, decreasing returns to scale set in.

Multiplier form

Associated with both the BCC and CCR models the


multiplier form is both a primal and a dual formulation. The
multiplier form of DEA model formulation involves virtual
multipliers (see Ali and Seiford 1993).
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Ordinal variable

A special type of categorical variable where the factor takes


on a predefined set of values ranked in a specific order.

Outlier

An outlier (some times in statistics referred to as an "obscene


outlier") is a unit whose input/output mix differs
significantly from the other units in the data set. Where an
outlier is found to be efficient, it may introduce bias into the
results.

Output

Outputs are the products (goods, services or other outcome)


which result from the processing and consumption of inputs
(resources). An output may be physical goods or services or
a measure of how effectively a unit has achieved its goals.

Output maximization

Output maximization is the DEA mode adopted when the


analysis tries to maximize the outputs produced for a fixed
amount of inputs. (The opposite of output maximization is
input minimization).

Output orientated

Output orientated is a term used in conjunction with the


BCC and CCR ratio models, to indicate that an inefficient
unit may be made efficient by increasing the proportions of
its outputs while keeping the input proportions constant.

Peer group

Another name for a Reference Set

Primal (CCR) model

The primal model is that referred to by Charnes et al 1978.


The primal model allows a set of optimal weights to be
calculated for each variable (input and output) to maximize
a unit's efficiency score. The weights are such that were
these weights applied to any other unit in the data set the
efficiency score would not exceed 1 (or 100%).

Production function

The production function describes the optimal relationship


between inputs and outputs with the aim of maximising
output for the given inputs. In DEA the equivalent of the
production function is the efficiency frontier.

Productive efficiency.
(Efficiency).

Productive efficiency is a measure of a unit's ability to


produce outputs from a given set of inputs (Norman and
Stoker. 1991). The efficiency of a DMU is always relative to
the other units in the set being analysed, so the efficiency
score is always a relative measure. A unit's efficiency is
related to its radial distance from the efficient or efficiency
frontier.

Productivity

In the case of a process with a single input and a single


output, productivity is the ratio of the unit's outputs to its
inputs. DEA does not measure productivity; it measures the
efficiency of the production process. Productivity is a
function of production technology, the efficiency of the
production process and the production environment.

Radial measure

Both the BCC and CCR ratio models use a radial or


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proportional measure to determine a unit's efficiency score.


A unit's efficiency is defined by the ratio of the distance
from the origin to the inefficient unit, divided by the
distance from the origin to the composite unit on the
efficient frontier.
Ratio models

Both the BCC and CCR models are called ratio models
because they define efficiency as the ratio of weighted
outputs divided by weighted inputs.

Reference contribution indicates the degree to which a


Reference contribution reference unit contributes to the calculation of the efficiency
score for a unit.

Reference set

The reference set of an inefficient unit is the set of efficient


units to which the inefficient unit has been most directly
compared when calculating its efficiency rating. It contains
the efficient units which have the most similar input/output
orientation to the inefficient unit and should therefore
provide examples of good operating practice for the
inefficient unit to emulate.

Results

Having conducted an analysis, the DEA model will produce,


for each unit, an efficiency score, virtual multipliers,
intensity factors, the dual weights and the slacks. From these
are calculated the virtual inputs and virtual outputs, the
reference sets and improvement targets for each unit.

Scale efficiency

Scale efficiency A unit is "scale efficient" when its size of


operation is optimal. If its size of operation is either reduced
or increased its efficiency will drop. A scale efficient unit is
operating at optimal returns to scale.

Slack(s)

Slack represents the under production of output or the over


use of input. It represents the improvements needed to
make an inefficient unit become efficient. These
improvements are in the form of an increase/decrease in
inputs or outputs.

Surrogate measures

Surrogate measures are used to represent factors such as


environment factors, for example a "score" for the type of
neighbourhood in which a unit operates, or the achievement
of an organizational goal (which does not have a statistically
quantifiable outcome) and so on.

Targets

The values of the inputs and outputs which would result in


an inefficient unit becoming efficient.

Technical efficiency

A unit is said to be technically efficient if it maximizes


output per unit of input used. Technical efficiency is the
efficiency of the production or conversion process and is
calculated independently of prices and costs. Technical
efficiency is calculated using the BCC model. The impact of

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scale size is ignored as DMU's are compared only with units


of similar scale sizes.
Total factor
productivity (TFP)

Ratio of the quantity of all outputs to the quantity of all


inputs. TFP can be measured by an index of the ratio of all
outputs (weighted by revenue shares) to all inputs
(weighted by cost shares).

Uncontrolled
(exogenously fixed)
inputs/ outputs

An uncontrolled or uncontrollable variable (input or output)


is one over which the unit's management does not have
control and hence cannot alter its level of use or production.
An example of an uncontrolled input for a retail outlet
would be the number of competitors it had in its area.
Uncontrollable variables are also referred to as exogenously
fixed and non-discretionary variables.

Unit

A "unit" is a short form for "decision making unit" or


"DMU". Units may refer to construction organisations. DEA
can be applied to any unit based process.

Variable

Variables are the input and output factors identified as


being of particular importance to the operation of the units
under consideration.

If an increase in a unit's inputs does not produce a


proportional change in its outputs then the unit exhibits
Variable returns to scale variable returns to scale (VRS). This means that as the unit
changes its scale of operations its efficiency will either
increase or decrease.

Virtual input/output

Virtual inputs are calculated by multiplying the value of the


input with the corresponding optimal weight for the unit as
given by the solution to the primal model. Similarly for
virtual outputs. Virtual inputs/ outputs define the level of
importance attached to each factor. The sum of the virtual
inputs for each unit always equals 1. The sum of the virtual
outputs is equal to the unit's efficiency score.

Virtual multipliers

Another term used to describe weights.

Weight flexibility.
(Weighting/ User
defined weights).

The CCR (primal) model does not place any restrictions on


the weights in the model, other than a minimum (lower
bound) on epsilon, as a result it is possible for units to be
rated as efficient through a very uneven distribution of
weights.

Weights

Within DEA models weights are the 'unknowns' which are


calculated to determine the efficiency of the units. The
weights are calculated to solve the linear program, in such a
way that each unit is shown in the best possible light.

Window analysis

Window analysis is a tabular method which allows an


analysis of efficiency changes over time. The user chooses a
set of time periods and then calculates the efficiency of each
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unit for each time period. The efficiency of a given unit over
each of the time periods is treated as a new unit.

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Not Used

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