The Source of Degradation of the Construction Industry Performance

The Source of Degradation of the Construction Industry Performance

By Kashiwagi, D., Kashiwagi,J., Smithwick, J., Kashiwagi,I., Kashiwagi, A.

December 2012

The construction industry performance has been analyzed for the past 20 years.  There has been no simple answer to the source of the construction industry problems.  In 1991, the Construction Industry Structure (CIS) was formulated, and identified that the price based environment was more inefficient than the best value environment.  Over the past 18 years, the analysis of the CIS has led to the hypothesis that the price based sector is inefficient because the buyer controls it.  The hypothesis has been tested through case studies, and test results show that the owner is the biggest source of project risk and deviations.  The dominant information was formed through repeated testing by moving the control to the vendor, and documenting all sources of project deviation.  The studies have shown that the use of decision making, management, direction and control of the contractor by the owner increases the project risk.  Two longitudinal studies are used to confirm the potential accuracy of the deductive logic.  Key words: contractor control, owner releases control, contractor defined scope.

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