Advances in Engineering Software 33 (2002) 339–349 www.elsevier.com/locate/advengsoft
A dynamic e-Reporting system for contractor’s performance appraisal S. Thomas Ng*, Ekambaram Palaneeswaran, Mohan M. Kumaraswamy Department of Civil Engineering, University of Hong Kong, Pokfulam Road, Hong Kong, People’s Republic of China Received 14 January 2002; accepted 22 July 2002
Abstract Contractor performance should be monitored and controlled on a regular basis, so that any undesirable shortfalls or failures could be identified and rectified without further losses or delays. However, contractor Performance Appraisal and Reporting (PAR) has been conducted in an ad hoc manner and is usually limited to independent project level exercises. The needs for a more structured approach to PAR and the potential benefits of reviewing contractor performance at an organizational level (i.e. by covering the overall project portfolio) lead to a proposal for an industry-wide dynamic PAR system. Advancements in World Wide Web techniques provide enhanced capacities to collect compile and disseminate performance-related information to various construction stakeholders in a timely and cost-effective manner. This paper describes the conceptual framework formulated for an e-Reporting system in the form of a web-based PAR. The system design and a brief overview of a prototype e-Reporting system are also provided. The potential applications of the e-Reporting system in dynamic decision support scenarios are also discussed. q 2002 Elsevier Science Ltd. All rights reserved. Keywords: Internet; Electronic reporting; Performance appraisal; World Wide Web
1. Introduction The construction industry has acquired a poor reputation for being unable to deliver projects on time, within budget and according to the predetermined quality standard. Project success is dependent on, amongst other factors, the performance of the contractor(s) who is/are entrusted to carry out a project. Birrell [1] suggested that the client should monitor and control contractor’s performance on a regular basis, so that any undesirable shortfalls could be identified and addressed without further aggravation or delay. Despite that, contractor Performance Appraisal and Reporting (PAR) is conducted in an ad hoc manner with a diversity of practices in recording, assessing, disseminating and interpreting the data. Clients who are aware of the importance of contractor performance have developed rigorous reporting and appraisal procedures [2 –4]. Nevertheless, a number of clients still neither report contractor’s performance through proper channels, nor archive performance-related data using any formal recording system [5]. This diminishes the capacities for using performancerelated data for monitoring and controlling a construction project and/or contractor. Furthermore, documenting and * Corresponding author. Tel.: þ 852-2857-8556; fax: þ 852-2559-5337. E-mail address:
[email protected] (S.T. Ng).
archiving performance data could be useful for future reference, such as for settling disputes on claims, and in maintenance and repair works. The lack of an agreed framework also dissuades clients from making performance-related data accessible to other clients or project team members. In practice, the sharing of performance data could help in selecting a more appropriate contractor for a construction project, as some clients may not have dealt with a particular contractor before, and an appreciation of the contractor’s previous performance may have to rely on a generalized report provided by referees who were named by the candidate contractor. In addition, some construction works would normally take a year or two to complete, and it may be almost impossible to obtain a full up-to-date picture of a contractor’s performance at a particular point in time, since he may be working for several clients at various stages of construction. The most up-to-date contractor’s performance data would therefore be very valuable for decision-making. What is needed is a more informed, systematic and integrative approach to collecting, appraising and disseminating contractor’s performance data [6,7]. This is supported by several influential industry reports, which urged the development of a structured, standardized and trustable PAR system [8,9]. Contractors are also in favor of
0965-9978/02/$ - see front matter q 2002 Elsevier Science Ltd. All rights reserved. PII: S 0 9 6 5 - 9 9 7 8 ( 0 2 ) 0 0 0 4 2 - X
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a transparent process in which the criteria and scoring mechanism for contractor appraisal are made available to them beforehand [10]. However, to set up an effective PAR system requires performance-related data to be acquired from various sources, such as the client’s team (including engineers, supervisors, consultants), project team (e.g. contractors, consultants, subcontractors), and others (e.g. external rating agencies and facility occupants). Immense efforts would be necessary for collecting, analyzing and managing this information. The PAR system should therefore be relatively easy to access, in order to ensure that each contractor’s performance is reported dynamically (e.g. by project teams and occupiers), and the latest analyzed information is available to the relevant users anytime, anywhere. The World Wide Web (WWW) is a convenient and cost-effective tool for gathering, filtering, managing, and sharing data [11]. Kiuchi and Kaihara [12] advocated the WWW as a promising method for the construction of an on-line data collection system. This paper aims to examine the potential for using the WWW platform for managing the performance-related data. The conceptual framework of a ‘web-based PAR’ (also called e-Reporting hereafter) system is developed and described, and the structure of the proposed e-Reporting system is then illustrated through a prototype.
2. Development of WWW in construction domains The construction industry is actively promoting the adoption of the WWW to transact business and exchange information between participants, electronically and in a seamless manner [8,9,13]. Web-based techniques have already been applied in gathering and manipulating construction information, e.g. for project information transfer [14 –16], and product libraries [17]. When combined with other decision tools, the WWW could perform assessment and support decision-making tasks for construction domains, such as for investment decisions [18], procurement path selection [19], architectural design and performance evaluation [20], field inspection reporting [21], cost control [22], dynamic workflow model [23], and project management [24]. Recently, WWW-based applications have been widely used to enhance construction procurement practices. For instance, the Department of Defense of the United States has devised a Centralized Contractor Registration (CCR) system for obtaining vendors’ information and evaluating their capabilities. The CCR system shares encrypted data with various government procurement and e-Business systems, such as the Defense, Finance and Accounting Service to facilitate paperless payments through electronic funds transfer. Similarly, NASA developed a suite of e-Procurement tools, such as the electronic posting system, financial and contractual status on-line query system, and virtual procurement office. According to NASA [25], these
e-Procurement tools would ensure that the relevant stakeholders have immediate access to current and complete information to accomplish the procurement function in much better ways than before. In Hong Kong, the Housing Authority is developing a web-based PAR system for inhouse usage. Despite the above organizational initiatives, an industry-wide thrust for the sharing of contractors’ performance data is yet to emerge.
3. Conceptual framework To establish whether a web-based PAR system can be developed for reporting and disseminating contractors’ performance-related data, an initial conceptual framework was derived on the basis of previous research studies [10, 26– 31], and the major issues were identified. Web-based surveys and discussions were conducted to establish the structure and data requirements of the conceptual framework. The initial framework, that was consequentially derived, was then presented to a group of domain experts (that included top-level executives from public clients and ‘knowledgeable’ and ‘experienced’ persons from academia) to ensure that the framework accurately represents the process and requirements of the current practice of performance appraisal. The critique sessions provided useful feedback, for example, on issues relating to the responsibilities for vetting and checking the raw data, and on an appeal mechanism. The initial conceptual framework was then refined according to the consolidated comments of the experts. The conceptual framework of the web-based PAR system (Fig. 1) consists of three key components: performance recording, appraisal, and dissemination. The performance recording module allows clients, consultants and external rating agencies to submit up-todate contractor performance data, and occupiers or consumers to perform post-occupancy evaluation through the web-based interface. Through this module, contractors can up-date their company profiles and lodge information relevant to the performance appraisal, e.g. their latest financial status, workload, claims records, etc. Client’s team (e.g. engineers, supervisors), consultants, contractors, subcontractors, and other generic users (e.g. the general public, rating agencies, facility users) can become registered users of the e-Reporting system by applying through the system interface. Implementing an industry-wide PAR system is, however, not without problems, and the major obstacle is to encourage stakeholders to participate by feeding performance data into the system on a regular basis. To ensure that contractor performance is properly recorded, periodical email-based notices/remainders will be sent to the relevant performance appraisers in the client’s team that may include engineers, supervisors, consultants and other external agencies. Such appraisers will be provided with suitable access and data entry rights in the e-Reporting system. The appraisal module aims to provide each listed
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Fig. 1. Conceptual framework of the e-Reporting system.
contractor with a score or ranking to reflect his current overall performance level and recent trend in pursuing performance improvement. However, one potential problem of any web-based system is that unauthorized sources or even the registered users may submit invalid data. Therefore, there is a need to ensure all data obtained is reliable, before any appraisal is carried out. In the e-Reporting system, data pertinent to performance appraisals will be submitted through a secure network connection. Furthermore, all raw data will first be vetted by the system administrator, and the vetted data will then be thoroughly checked and authenticated by an independent checking panel, which comprises of members from professional institutions, contractor associations/federations, client representatives through designated web-based interfaces in the e-Reporting system. Once the submitted data are vetted and checked, it will be periodically assessed by the appraisal model. Criteria for assessing the performance data will be made transparent to the registered users of the system
including the contractors. The outcomes of this module are the performance scores and ranking, which will be stored in the contractor performance database. The dissemination module makes the required ‘filtered’ information available to respective registered users via the web-based interface. One key purpose of sharing contractor’s performance data is to help encourage stakeholders in constantly feeding performance data into the system, since they would benefit from the data provided by others as well. However, since some performance-related data of contractors could be extremely sensitive, security measures must be in place to deter and exclude hackers from accessing or amending essential information. The security measures will also determine what information is to be made available to different types of registered users through the WWW. For instance, some registered users of the web-based PAR system, such as clients and consultants, may inquire into the contractors’ past and recent performance, current workload and financial situation. Similarly, the registered users, such
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Fig. 2. Design of the e-Reporting system.
as external rating agencies should be provided ‘specific’ access to contractors’ performance levels. Registered contractors will be able to query their current performance scores and rankings, as well as the criteria and rules used for assessment. Furthermore, they can submit their feedback on performance appraisals, which will be screened by the audit team before registering the performance records in the databases. Only non-sensitive contractor performance data will be made available to the other generic users (e.g. the general public) through the web-based interfaces of the e-Reporting system.
4. System design The proposed e-Reporting system will be made available to different stakeholders in the construction industry. It would be difficult, if not impossible, to restrict the users to a particular hardware or software platform. The system must therefore be flexible enough to allow the registered users to upload or download information from a range of web-based interfaces, such as networked personal computers, laptops or PDAs, and through various web client browsing software that are capable of handling ‘Cookies’ and JavaScript, such as Netscape Navigatore or Microsoft Internet Explorere. In view of the above considerations, a freely available (yet highly configurable) web server platform known as ‘APACHEe HTTP Personal Server’ was used for prototype development. In addition, XHTML (i.e. a blend of XML and
HTML), Java scripts, Cascading Style Sheets (CSS) and Common Gateway Interface (CGI) scripts using Practical Extraction and Reporting Language (PERL) were used for programming the client and server side web-based transactions in the prototype. In the prototype framework, some data would be accessed from Microsoft Excele spreadsheets as Comma Separated Variables (CSV). However, a suitable enterprise level server and database platform (such as Oracle) could be interfaced in the final system for implementation in the industry. The basic architecture of the e-Reporting system with potential data communication and storage/retrieval modalities is illustrated in Fig. 2. Another important consideration in designing the e-Reporting system relates to the definition of access and functional rights for different entities (users), as not all performance-related information should be disseminated or made equally accessible to every user. Table 1 depicts the access and functional rights conferred upon various types of users. To control the data communication and to prevent unauthorized users from accessing restricted information, a three-level security framework is proposed for the e-Reporting system: (i)
open access (i.e. no security) for non-sensitive information, such as reading contractor’s basic information or reading contractor’s performance rating and ranking; (ii) a simple ‘PIN and Password’ protected filtering arrangement for handling low level confidential
Client’s top-level management
C, R, U, A, D
R, U, A R, U, A C, R, U, A, D
Registered rating agency
R, F, A
R R R, F
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information, such as entering contractor feedback on project-specific performance evaluations or reading certain semi-confidential reports and publications; and (iii) a more complex encrypting and decrypting architecture through Public Key Infrastructure (PKI) with public and private keys and electronic signatures for highly secure and non-repudiatory data, such as updating project-specific performance evaluations or feedingforward information on claims and disputes.
R, F R R, F
Note: C, create; R, read; E, enter; D, delete; U, update; A, audit; F, feedback.
R, F R R, F R, F U U C, R, U, D C
E, R, U, A R, U, A R, F, A
C, E, U, R C, R, E, U, A, D
E, R, U, A
R, F
5.1. Performance recording
Contractor’s basic information, such as workload, current projects, etc. Project-specific performance evaluation Performance rating and ranking Performance reporting Feed-forward restricted information, such as registration status, rewards/penalties, settlement of claims or disputes, etc.
Table 1 Access and functionality rights of different entities
System administration (e.g. web master)
Registered contractor
Performance appraiser (e.g. engineer, supervisor)
General public
5. A prototype e-Reporting system
To initiate the recording process, a registered client or his/her consultant should enter all relevant project information, including the name of the contractor entrusted to perform the project and the designated appraiser, through to the web-based PAR system. A project code will then be generated by the system automatically. When the predetermined interval (say every quarter) for recording contractor’s performance has lapsed, an email notice will be sent to the designated appraisers. Upon receiving such notice, each appraiser should access the recording module of the e-Reporting system and insert the correct code for the project. An initial recording interface pertinent to the project and contractor will then be launched. The appraisers will next be introduced to a list of key performance criteria as highlighted in Fig. 3. These criteria include the financial stability, progress of work, standard of quality, health and safety, resources, management capabilities, claims and contractual disputes, response to instruction, relationship and cooperative outlook, and integrity [5]. To ensure that the appraisal process is conducted objectively, each key performance criterion is further broken down into more specific sub-criteria as illustrated in Fig. 4. To reflect the specific requirements of the client and/or project, the designated members (of the client’s organization) are allowed to alter the weighting assigned to each criterion or sub-criterion. The appraisers are required to rate the contractor’s performance based on each of these key performance criteria and sub-criteria. The appraisers may simply skip any irrelevant questions. The system framework has been designed such that the appraisers can access the list of sub-criteria by clicking the relevant ‘Evaluate’ button to open up a corresponding subcriterion (e.g. ‘health and safety standard’) responserecording interface (Fig. 5). Hwang and Yoon [32] have argued that not all decision criteria are quantifiable. For instance, the data pertinent to ‘housekeeping and tidiness’ or ‘adequacy of protective clothing’ may be purely descriptive, and would call for the experience and perceptions of the appraiser. Despite that, this kind of information should not be ignored in the recording process [10]. Sometimes,
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Fig. 3. Performance criteria and their sub-criteria.
descriptive comments might be useful in justifying and clarifying the rating given to a qualitative criterion, and these could be extremely useful in case of differences in opinions (e.g. arising from contractor feedback) or disputes. Hence, provisions are built into the proposed e-Reporting framework for recording and storing comments or remarks in the form of textual data. Linguistic ratings for the non-quantifiable criteria are based on a predetermined rating scheme, as shown in Table 2 [2,4]. The rating scheme corresponding to each subTable 2 Typical rating scheme for non-quantifiable criteria Standard Progress of work All works were on or ahead of agreed schedule Any work was behind agreed schedule but unlikely to affect the overall program Any work was behind agreed schedule and caused/is causing delay to the overall program
Rating
Good Satisfactory
Poor
criterion could be accessed online by the appraisers through the corresponding ‘Guideline’ button hyperlink provided in the framework. An appraiser can simply choose a suitable rating (e.g. good, satisfactory or poor) that best represents the performance of the contractor against a particular subcriterion (Fig. 5). As fairness and transparency are the two key considerations for any PAR system to become useful, any sub-criterion that is rated poor should have to be justified by appraisers. This can be done by inserting comments in the ‘Remarks’ column (Fig. 5). After filling in the details, the appraiser will be prompted to the initial recording interface (Fig. 4) with a weighted score being calculated for that performance criterion. The appraiser can check the overall comments against any performance criterion by selecting an appropriate ‘View Remarks’ button (Fig. 4). The appraisals in the proposed e-Reporting system are carried out on the basis of a Multi-Attribute Analysis (MAA) approach [33]. A pre-determined set of weightings derived from a previous UK-based study [5] is initially allocated to each criterion by the system, to reflect its significance (Fig. 4). However, the appraiser is allowed to alter the weightings to reflect the criteria significance in a
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Fig. 4. Initial data recording interface with key performance criteria.
particular project and/or to a client, upon which the system will calculate a revised weighted score, accordingly. The total weighted score is generated according to the following formula:
ARj ¼
n X
ðWi ÞðRij Þ
ð1Þ
i¼1
in which ARj is the aggregated weighted rating of contractor j; n is the total number of decision criteria in the model; Wi is the weight of the decision criterion i (where the summation of Wi ¼ 100 for i ¼ 1; 2; 3; 4; …; n); Rij is the rating of decision criterion i of contractor j on a specific scale (for example, 1– 10); and a formula similar to above Eq. (1) may be used to consolidate the sub-criteria ðRij Þ: 5.2. Dissemination The aim of any PAR system is to enable the client and consultant to monitor a contractor’s performance on a particular project, and to allow stakeholders to ascertain the recent overall performance of a contractor or a group of contractors. Therefore, the e-Reporting prototype could currently offer two main types of report to stakeholders: (i) on a contractor’s performance in a given project, and (ii) a performance score league.
5.2.1. Contractor’s performance in a given project This report aims to depict a contractor’s commitment on improving his/her performance in a particular project, and the report is therefore more useful to the client and consultant of that project as a monitoring and controlling tool. As shown in Fig. 6, the performance of the contractor is provided against a time scale. The trend of each performance criterion may be examined by comparing the score of the latest quarter with those in other (previous) quarters. An upward movement in the scores against a particular criterion (e.g. ‘Health and Safety’) denotes an improvement in contractor’s performance, and vice versa. Through this facility, the progress and details of poorly performing areas could be reviewed on a quarterly basis, and further details (such as in the recorded Remarks, as shown in Fig. 5) may be accessed by clicking the relevant button shown in Fig. 6. This helps users to establish whether the contractor has made any improvements on certain poorly performing items. 5.2.2. Performance score league This report on the other hand highlights the overall performance of a contractor or a group of contractors in a particular work category, e.g. electrical and mechanical specialist, and/or size range. The quarterly score of each contractor is compiled by averaging all individual project scores within the quarter. For brevity, only scores in the last
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Fig. 5. Second level data recording interface with performance sub-criteria.
four quarters are presented in the display, but this may be extended if deemed useful. The score league information will be useful to establish (i) the overall performance trends of contractors over the last four quarters, (ii) the performance of a particular contractor when compared with others in the same work category and work capacity range, and (iii) who are the best contractors in terms of the performance criteria listed in Figs. 3 and 7.
6. Using the e-Reporting system for dynamic decision support A dynamic PAR system not only enables contractor performance-related data to be recorded, appraised, and disseminated expeditiously, but also implies that the information available could be used for supporting decision-making in a more dynamic fashion. For instance, strategic decisions could be made more dynamically in crucial tasks, such as contractor pre-qualification, bid evaluation, payments (especially, in cases of performancebased contracting) and dispute resolution. Palaneeswaran and Kumaraswamy [30] demonstrated how major State Government clients in the US adopted contractors’ performance ratings in pre-qualifying contractors with various dynamic capacity ratings, such as maximum
capacity rating, performance factor, and work class rating. Furthermore, they proposed a new dynamic pre-qualification framework in which contractors could be pre-qualified or registered dynamically using appropriate combination of financial, technology, personnel and experience and performance ratings. Thus, instead of relying on a static approved list of contractors, which could have already been outdated, more current information, such as the presently available financial capacity and the contractor’s more recent performance could be dynamically linked to its prequalification rating to determine who should be invited for tendering. Dynamic pre-qualification could be achieved by using the relevant information available in the e-Reporting system (such as contractor’s performance ratings pertinent to a given type of work). For instance, a contractor could be excluded from tendering if they have an averaged total performance score (over a predetermined time period— going backwards from the most recent one) that is below a cut-off value set by the client. A contractor may also be disqualified from tendering if their performance trend shows a continuous decline, irrespective of adequate (several/continual) warnings. Alternatively, clients may rely on the performance score league to establish which contractors should be included in the tender list. Contractors with high performance scores in the most recent period will be
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Fig. 6. Report 1: contractor’s performance pertinent to a project.
Fig. 7. Report 2: performance score league.
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checked for their prevailing workloads (or available capacity ratings). Those with good recent performance and adequate available capacities will be then invited to submit tenders. Dynamic bid evaluation, i.e. by taking into account performance-related and available capacity factors in bid evaluation as well, has already been adopted in some consultant selection practices. For instance, the HKSAR government [34] and Mass Transit Railway Corporation (HK) consider the past performance of consultants at the technical assessment stage, and the technical scores are then combined with the fee tenders to derive a final total score for each tenderer. This approach could be applied to evaluating bids submitted by constructors as well. The overall performance ratings of contractors (based on the latest quarter of performance score league) can be combined with the bid prices and other pre-determined factors to decide who could provide the best value for money to the client. This type of decision simply helps to determine who is the most suitable contractor without affecting the final tender price [34].
cost savings are anticipated, since those administrating the system do not have to seek out and wait for the necessary data, nor do they need to manually compile the overall performance of various contractors. More importantly, the effort involved in assessing a contractor at project level will not be wasted, as once the data are compiled into overall contractor performance scores, different stakeholders can dynamically link performance scores to various decision-making processes. Practical examples have revealed that performance scores can be used for contractor pre-qualification, bid evaluation, and rewarding contractors. The information that is dynamically disseminated by the e-Reporting system, such as contractor’s performance on a particular project and the general performance score league, can be used to support practical decisions in ‘real time’. It is envisaged that e-Reporting will provide an important feedback loop to the emerging e-Procurement and e-Commerce systems in construction. To verify the practicality and potential benefits of web-based PAR, the prototype discussed in this paper is being developed into a fully functioning system, which will eventually be integrated with an e-Registration system [35] for pragmatic testing.
7. Conclusions The performance-related data of contractors has not been recorded and utilized in an effective way, since this kind of data has been so far considered/assessed, mainly (if not only), at project level. With an aim to improve the usefulness of contractor performance data, an industrywide dynamic PAR system, based on emerging web-based technologies, is proposed in this paper. The e-Reporting system consists of three main components namely performance recording, appraisal, and dissemination. The capabilities of the WWW allow performance-related data at a project level to be submitted, checked, compiled to depict the overall performance of a contractor, and disseminated to relevant users in a seamless manner. Despite these capabilities, manual authentication must also be carried out by the designated independent checking panel, and information providers may be penalized should they be found to be deliberately submitting any inaccurate or misrepresented information to the system. A prototype e-Reporting system framework was developed. This demonstrates that performance reporting can be conducted in a more structured and transparent manner. Standard forms and guidelines for rating each criterion will be made available in the e-Reporting system. These can be accessed by PDAs, networked notebook or desktop computers. Furthermore, the weightings for performance criteria could be flexibly altered prior to the appraisal stage, on the basis of project-specific and client requirements. However, any changes in weightings should be appropriately disseminated to the users in advance, particularly the contractors (whose goodwill and business may be directly impacted by such changes). Significant time and
Acknowledgements The authors would like to acknowledge the experts who participated in this study and the financial support from the University of Hong Kong through the CRCG grant no. 10203780.
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