CM4 Term Paper Brief
Option 2: Critically evaluate the potential of economic theory of construction
procurement as a decision-making tool in the selection of procurement systems.
In this assignment, you are required to draw on a solid theoretical and evidential ground to
critically review the transaction cost theory of construction procurement. You are expected to
meet the following requirements:
1. Show a thorough understanding of TCE and its application to construction procurement
(i.e., explain the theory in your own way).
2. You can choose a context of interest, including non-private finance delivery systems
(traditional method, design-build, management system), Public-Private Partnerships or
collaborative delivery systems.
3. Conduct a literature review that is broad enough to cover most of the important techniques
suitable for procurement system selection and discuss their limitations.
4. Develop a framework to compare the strengths and limitations of existing techniques (TC
based and non-TC based approaches).
5. Building on the result of point 4, you should make a proposal for the way the TC based
theory can be transformed into a decision-aiding tool.
6. Apply the tool you propose to a real-life project and explore the additional insights, if any,
one might gain from the application of TC theory to procurement system selection (for
this, you can consider contrasting the suggestions made by the TC approach and other
methods and explain the disparity, if any.)
See the key papers of transaction cost theory of construction procurement in the bibliography
section. Read as many as you can.
Useful information sources/references
1. Your literature review is expected to cover important papers on construction procurement
from the leading project/construction/engineering management journals, including:
ASCE Journal of Construction Engineering and Management (A*)
International Journal of Project Management (A)
Construction Management and Economics (A)
ASCE Journal of Management in Engineering (A)
Building Research and Information (A)
IEEE Transactions on Engineering Management (A)
Project Management Journal (B)
2. Conventional delivery systems
1) The Bartlett library has many textbooks on construction procurement systems, such
A. Franks, J. 1998, Building Procurement Systems: A Client’s Guide, 3rd edition,
B. Masterman, J.W.E. 2001, An Introduction to Building Procurement Systems, E&FN
Spon, London, UK.
2) The following studies on procurement system selection could be useful
A. Sidwell, T. 2001, Literature Review- Value Alignment Process For Project
B. Love, P.E.D., R.M.Skitmore and G.Earl, 1998, Selecting A Suitable
Procurement Method for A Building Project, Construction Management and
Economics, 16, 221-233.
C. Skitmore R.M. and D.E. Marsden, 1988, Which Procurement System?
Towards A Universal Procurement Selection Technique, Construction
Management and Construction, 6, 71-89.
3) HM Treasury’s Procurement Guide
4) HM Treasury’s Green Book
3. Public-Private Partnerships
1) World Bank (2014). Public-Private Parnterships: Reference Guide (Version 2).
2) UK Private Finance 2 (PF2) procurement guides
4. Collaborative delivery system
Cabinet Office (2014). New Models of Construction Procurement. London, HMSO.
• Cost Led Procurement
• Integrated Project Insurance
• Two Stage Open Book
Bibliography: Transaction cost theory of construction procurement
All papers are downloadable from my ResearchGate webpages.
1. Chang, C. & Shi Chen (2016) An Analysis of Transitional Public-Private Partnerships Model
in China: Contracting with little recourse to contracts. Journal of Construction Engineering and
2. Chang, C., & Qian, Y. (2015). An Econometric Analysis of Holdup Problems in
Construction Projects. Journal of Construction Engineering and Management. doi:
3. Chang, C., & Chou, H.Y. (2014). Transaction-Cost Approach to the Comparative Analysis
of User-Pay and Government-Pay Public-Private Partnership Systems. Journal of Construction
Engineering and Management. doi:10.1061/(ASCE)CO.1943-7862.0000883
4. Chang, C. (2013). When Might A Project Company Break Up? The Perspective of
Risk-Bearing Capacity. Construction Management and Economics, 31(12), 1186-1198.
5. Chang, C. (2013). Principal-Agent Model of Risk Allocation in Construction Contracts and
Its Critique. Journal of Construction Engineering and Management.
6. Chang, C. (2013). A Critical Analysis of Recent Advances in the Techniques for the
Evaluation of Renewable Energy Projects. International Journal of Project Management, 31(7),
7. Chang, C. (2013). A Critical Review of the Application of TCE in the Interpretation of
Risk Allocation in PPP Contracts. Construction Management and Economics, 31(2), 99-103.
8. Park, A., & Chang, C. (2013). Impacts of Construction Events on the Project Equity Value
of the Channel Tunnel Project. Construction Economics and Management, 31(3), 223-237.
9. Chang, C. (2013). Understanding the Hold-up Problem in the Management of
Megaprojects: The Case of the Channel Tunnel Rail Link Project. International Journal of
Project Management, 31, 628-637. doi:10.1016/j.ijproman.2012.10.012
10. Chang, C., Ive., & G. (2007). Reversal of Bargaining Power in Construction Project:
meaning, existence and implications. Construction Management and Economics, 25(8), 845-855.
11. Ive, G., & Chang, C. Y. (2007). The principle of inconsistent trinity in the selection of
procurement systems. Construction Management and Economics, 25(7), 677-690.
12. Chang, C. Y., & Ive, G. (2007). The hold-up problem in the management of construction
projects: A case study of the Channel Tunnel. International Journal of Project Management,
25(4), 394-404. doi:10.1016/j.ijproman.2007.01.001
13. Chang, C., Chou, H., & Wang, M. (2006). Characterising Corporate Governance of the
UK Listed Construction Companies. Construction Management and Economics, 24(6), 647-656.
14. Chang, C. (2006). The determinants of the vertical boundaries of the construction firm:
Comment. Construction Management and Economics, 24(3), 229-232.
15. Chang, C., & Ive, G. (2003). Discussion of “Model for Understanding, Preventing, and
Resolving Project Disputes” by Panagiotis Mitropoulos and Gregory Howell. Journal of
Construction Engineering and Management, 129(2), 231-233.
16. Chang, C., & Ive, G. (2002). Rethinking the multi-attribute approach based procurement
selection technique. Construction Management and Economics, 20(3), 275-284.
CM4 Term Paper Brief