Sherif, E h and Kaka, A (2004) A multi criteria mode for the selection of the payments systems in construction projects. In: Khosrowshahi, F (ed.) Proceedings of 20th Annual ARCOM Conference, 1-3 September 2004, Edinburgh, UK.
Abstract
The choice of payment system for construction work is one of the many important decisions that construction clients have to make. Yet there has been only limited work aimed at eliciting information on how these choices are made and what factors influence these choices. The term payment system in this context entails how construction work is priced and paid for, and there are several existing methods for pricing and payment. This paper focuses on lump sum, unit rates and cost plus for pricing methods and lump sum payment, interim measurements and milestones for payment methods. As a result of an earlier survey, several factors (such as the time available, cost certainty, contractor's cash flow, contract form, disputes likelihood and risk allocation) were identified as influencing the choice of payment system. In this paper, a new survey is undertaken to determine the extent of suitability of each payment system to these factors. These factors are in the main either project specific or client specific, hence each project client or project manager needs to objectively assess and prioritise these factors, so that a rational comparison of the suitability of alternative payment systems can be made. The multi-attribute utility technology was applied to provide a spreadsheet model to assess the relative importance weightings of the payment systems selection criteria and to derive utility values. This technology has been successfully applied in construction research in particular to aid procurement system selection. The model developed in this paper will act as a decision aid tool that aims to assist industry practitioners when selecting the most appropriate payment system for given sets of project requirements and characteristics.
| Item Type: | Conference Paper (Paper) |
|---|---|
| Uncontrolled Keywords: | cash flow; multi-attribute; payments system; pricing; selection criteria |
| Index terms: | risk allocation, spreadsheet, project client, construction project, suitability, construction client, dispute, pricing, practitioner, selection criteria, cost-plus, procurement system, cash flow, unit rate, construction work, survey, relative importance, project manager |
| Subjects: | economic analysis, financial risk, contractual arrangements, production management, operations management, financial and cost management, tendering, data science, sociology, data collection methods, dispute resolution, practitioner, risk assessment, design criteria, financial management, profession |
| Topics: | Stakeholder Management, Design Practice, Research Practice, Risk Management, Roles and Professions, Business Strategy, Legal Issues, Cost Management, Procurement, Project Management |
| Descriptive scope: | 3 PCE |
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