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Advances in Engineering Software 34 (2003) 429–438

www.elsevier.com/locate/advengsoft

A case-based procurement advisory system for construction


Duc Thanh Luua,*, S. Thomas Ngb, Swee Eng Chena
a
School of Architecture and Built Environment, University of Newcastle, University Drive, Callaghan, NSW 2308, Australia
b
Department of Civil Engineering, University of Hong Kong, Pokfulam Road, Hong Kong, Taiwan, ROC
Received 5 June 2002; revised 14 February 2003; accepted 21 February 2003

Abstract
The selection and use of an appropriate procurement system are fundamental to the success of a construction project. However, the
procurement selection process involves the analysis of complex and dynamic criteria such as cost certainty, time certainty, speed, flexibility,
etc. Procurement selection is, therefore, plagued with uncertainty and vagueness that is difficult to be represented by a generalized set of
rules. In reality, decisions in procurement selection are usually derived from intuition and past experience. Case-based reasoning (CBR)
appears to be an appropriate approach to meet the requirements of the procurement selection process because of the value of experiential
knowledge. This paper reviews the practicality and suitability of a CBR approach for procurement selection through the development of a
prototype case-based procurement advisory system. In this prototype system, procurement selection cases are represented by a set of
attributes elicited from experienced procurement experts. The system is powered by a fuzzy similarity retrieval mechanism, which gives a
greater accuracy than the normal similarity retrieval process. The results indicate that the CBR approach can suitably model the
characteristics of construction procurement selection, and provide an indication of potential outcomes to any apparently suitable procurement
methods.
q 2003 Elsevier Science Ltd. All rights reserved.
Keywords: Construction procurement; Procurement selection; Case-based reasoning; Fuzzy similarity retrieval

1. Introduction process [12], multi-criteria/multi-screening [13], discrimi-


nant analysis [7] and expert system (e.g. ELSIE) [14].
A widespread dissatisfaction of clients with the outcomes Despite the structural rigor of these approaches, they fail to
of construction projects has prompted to the development provide an early indication of potential outcomes should a
and use of alternative procurement approaches. While an particular procurement approach be selected for a project.
appropriate procurement system may enhance the prob- To support decision-makers in selecting an appropriate
ability of project success [1 – 3], some decision-makers may procurement method, the following principles are critical:
encounter difficulties in ascertaining the suitability of
various alternative procurement approaches, as it is virtually † Adequately and accurately accounting for various
impossible for them to capture a diverse continuum of characteristics, requirements and conditions unique to a
procurement options, client’s characteristics and needs, client, project and external environment [4,15] so that the
project characteristics, and external environments through success of the project is not the result of a mere chance
their own experiences of prior projects [4]. but direct and guaranteed contribution of the derived
Over the last two decades, many procurement selection procurement system [16].
techniques have been developed to assist decision-makers in † Clearly addressing the implicit interrelationships of
reaching more informed decisions on procurement selec- procurement selection criteria (PSC) that describe the
tion. For instance, the procurement path decision chart [5], distinctive characteristics of the client, project and
procurement rating [6], multi-attribute utility approach external environment [17 – 19].
[7 – 10], multi-variate analysis [11], analytical hierarchical † Providing a procurement method solution that truly
reflects industry practice, i.e. actual procurement systems
* Corresponding author. Tel.: þ 61-2-4921-5771; fax: þ61-2-4921-6913. used by the construction industry, rather than theoreti-
E-mail address: duc.luu@studentmail.newcastle.edu.au (D.T. Luu). cally driven, arbitrary (and apparently inaccurate)
0965-9978/03/$ - see front matter q 2003 Elsevier Science Ltd. All rights reserved.
doi:10.1016/S0965-9978(03)00043-7
430 D.T. Luu et al. / Advances in Engineering Software 34 (2003) 429–438

contingency-based systems, the divisions between which


are being blurred by developing the best practice [20].
† Providing users with confidence in adopting the derived
solution through the provision of likely outcomes.

Ward et al. [21] and Masterman [22] asserted that


procurement selection decisions are realistically founded on
experiences of previous similar examples, which are
coupled with intuitive evaluations to achieve the distinctive
requirements of the current situation. As a method of
solving a current situation by analogizing the solutions to
previous similar problems [23], case-based reasoning
(CBR) approaches draw on a repository of outcomes on
previous procurement experiences. Furthermore, the con-
cept of nearest neighbor matching (i.e. rather than exact
match) in CBR is suitable for domains with complicated
interrelationships between problem descriptors [24,25].
Aamodt and Plaza [26] describe CBR as a paradigm that
is similar to the way human beings adopt in problem Fig. 1. Processes in procurement selection.
solving.
In this paper, the processes involved in selecting a (e.g. construction only) used in a past project(s) that closely
suitable procurement system are first dissected, and a resembles the current one as well as the degree of success of
conceptual framework that mimics the decision processes the procurement method adopted. Decision-makers would
with regards to the CBR concept is proposed. The design of then compare the procurement approach recalled with other
a prototype Case-based Procurement Advisory System for available procurement options to determine the level of
construction (CPAS) is then elucidated. The practicality of appropriateness of the solution, and this could be done by
the prototype system is illustrated through a practical measuring the gap between the recalled procurement
construction procurement example, and finally the results of method with each of the other available procurement
validation are revealed to establish the value of CPAS for approaches. The one with the smallest gap would be
procurement selection decision support. considered the most appropriate and therefore, selected
(Fig. 1).
The degree of success of the procurement method
2. Procurement selection processes adopted in the recalled project would also be examined.
Depending upon how successful the historic project(s) is,
A review of relevant literature and semi-structured some modifications to the previous decision might be
interviews were carried out to encapsulate the mechanism needed to meet the dominant requirements, and/or improve
of procurement selection in practice. The interviews were the chance of success of the new project (e.g. to change from
conducted in Australia with managers of four local a stringent design and build to a design, novate and build
governmental and one major private client organizations. method).
The results of these activities confirmed the need for
establishing a list of PSC before various procurement
options were evaluated. These PSC should reflect the 3. Framework of case-based procurement selection
characteristics and requirements of the client, project and model
external environment [10,4]. According to Ng et al. [15],
commonly used PSC are fuzzy in nature, and the fuzziness A CBR procedure can be developed to support the
of these PSC could have significant effects on procurement procurement selection process and a conceptual framework
evaluation and selection. It is, therefore, necessary to to drive the development of a CPAS for construction is
identify and incorporate the linguistic classifications that shown in Fig. 2. The framework consists of three key
represent the fuzzy characteristics of fuzzy PSC into the modules, i.e. input, selection, and output.
procurement selection process. A list of fuzzy PSC and their The Input module provides users with an interface for
linguistic classifications can be found in Ref. [27]. The submitting the necessary data. The users have to input data
interviewees also suggested assigning importance of pertinent to the linguistic classification and importance of
weighting to each PSC to reflect its priority. weighting of each PSC. Linguistic classifications (such as
Based on the selected PSC, their linguistic classifications high flexibility, low complexity, medium quality, etc.) that
and importance of weightings for the new project, the best describe the specified characteristics and requirements
decision-makers would recall the procurement method of clients, projects and external environments should be
D.T. Luu et al. / Advances in Engineering Software 34 (2003) 429–438 431

Fig. 2. Conceptual framework of the CPAS.

established by the users. The assignment of appropriate the degree of success of that project (outcome) are provided
linguistic classifications calls on the experience of the users. to the users for consideration. When the users are convinced
Predefined values that replicate the linguistic classifications that the case selected is comparable to the current case, and
of fuzzy PSC, such as low certainty, high speed, etc. are that the solution and outcome are acceptable, they can apply
presented to the users in accordance with the recommen- the previous solution to the new project. Otherwise, the users
dation of Ng et al. [27]. might have to adapt the case to suit the distinctive
Depending on the weightings and linguistic classifications characteristics of the new project.
entered, similar cases are retrieved by the selection module. The hypothetically ideal solution is reported to the users
The retrieval process is performed through a fuzzy similarity through the output module. All the data entered by the users
retrieval mechanism. Such a mechanism can best encapsulate including the PSC, linguistic classifications and importance
the interrelationships between various linguistic PSC, and weightings are also presented to the users for checking. The
hence ensure the retrieval of the most appropriate procure- details of the new case and the adopted or adapted
ment system for a new project. The procurement system solution(s) are stored in the case-base for future reference
adopted in the most similar historic case (solution) and and retrieval.
432 D.T. Luu et al. / Advances in Engineering Software 34 (2003) 429–438

Fig. 3. Representation of cases in ARTpEnterprise.

4. An overview of the case-based procurement advisor costs, greater cost and time certainty, shorter procurement
duration, better quality, more effective and efficient
As an initial step to establish the suitability of CBR decision-making and communication, and minimization of
approaches for procurement selection, the conceptual disputes [4]. Therefore, these factors constitute the outcome
framework was developed into a prototype CPAS using a part of a case. Both successful and unsuccessful construc-
CBR shell—ARTpEnterprisee version 10. tion projects are recorded in the case-base of CPAS.
The case attributes in CPAS include those of the
4.1. Case representation symbolic and linguistic types. Symbolic attributes are
expressed by terms with unambiguous meanings. There
Aamodt and Plaza [26] pointed out that a good CBR are no implied logical relationships among the values of
system lies with a clear representation of the cases and an these attributes. An example of this is the attribute ‘time
appropriate structure for describing their contents. Like certainty’, which can be represented by Boolean values (i.e.
other CBR systems, cases in the procurement advisory yes or no). Linguistic attributes, on the other hand, are fuzzy
system consist of three main components: problem, solution linguistic variables with implied logical relationships
and outcome (Fig. 3). The problem part is represented by a
Table 1
collection of PSC. Table 1 highlights the details of the nine
Characteristics of case attributes
most commonly used PSC, namely time certainty, cost
certainty, speed, flexibility, responsibility, complexity, price Attributes Data type Domain values
competition, risk allocation and quality.
The solution part contains information relevant to the Time certainty Symbolic Yes; no
Cost certainty Symbolic Yes; no
procurement system used in a past construction project and
Speed Linguistic High; medium; low
its sub-managerial systems, including tendering method and Flexibility Linguistic High; medium; low
contractual arrangement. As for the outcome part of a case, Responsibility Linguistic High; medium; low
feedback detailing the degree of success of the past project Complexity Linguistic High; medium; low
is provided. The degree of success of a construction project Price competition Linguistic High; medium; low
Risk allocation Linguistic High; medium; low
is measured by the level of client’s satisfaction on critical
Quality Linguistic Prestige; good; basic
success factors such as reduction in capital and lifecycle
D.T. Luu et al. / Advances in Engineering Software 34 (2003) 429–438 433

among domain values. A sample attribute of this kind is the


‘speed of project’, which has the values of high, medium or
low [27]. For this type of data, it is essential to establish the
actual relationships between the values of its definition
domain, therefore, the fuzzy membership functions for these
attributes must be derived.
In ARTpEnterprise, case attributes are represented as a
flat list. This representation structure evades the requirement
for exploring deeply into the interrelationships between the Fig. 4. Similarity of two fuzzy linguistic variables xi and yi :
case attributes as in the case when case attributes are
represented hierarchically.
have been derived in a previous study [27]. Based on the
4.2. Indexing and retrieval area ratio approach and the established fuzzy membership
functions, the similarity scores of linguistic variables are
In deciding a suitable indexing and retrieval mechanism computed, and results are shown in Table 2. As can be seen,
for CPAS, three main considerations were taken into using ‘high speed’ and ‘medium speed’ for the new and
account—a combination of PSC, distinctive linguistic historic cases, respectively, as an example, a similarity score
classifications, and importance of weighting for each PSC. of 0.194 is derived. As for a comparison between ‘high
In the light of these considerations, a special kind of quality’ and ‘low quality’ for the new and historic cases,
similarity retrieval mechanism called fuzzy similarity respectively, a similarity score of 0.086 is derived.
retrieval was adopted, whereby a similarity score between Since cases in the procurement advisory system are
two cases is computed in accordance with the following indexed on a checklist basis, during the case retrieval
formula: process, the fuzzy similarity retrieval mechanism recur-
X sively calculates the similarity score between each historic
similarityðT; SÞ ¼ f ðTi ; Si Þwi £ 100 case stored in the case-base and the current project. Once the
similarity scores are computed for all the cases in the case-
where
base, they are rank-ordered, and the five cases with the
highest similarity scores are presented to the users for
T ¼ target case
S ¼ stored case
n ¼ number of attributes in each case Table 2
Similarity functions of case attributes
i ¼ an individual attribute from 1 to n
w ¼ importance weightings of attribute i PSC Stored case Presented case
f ¼ similarity function for attribute i in cases T and S
High Medium Low
Two types of similarity functions ðf Þ are available within
Speed High 1 0.194 0.039
the fuzzy similarity retrieval mechanism, one designated for
Medium 0.194 1 0.335
symbolic attributes and the other specific to linguistic ones. Low 0.039 0.335 1
The similarity function for symbolic attributes is similar to
Flexibility High 1 0.448 0.0023
that of a usual nearest neighbor retrieval, which means a
Medium 0.448 1 0.085
similarity score of 1 is assigned when the attribute values of Low 0.0023 0.085 1
the two cases match exactly whereas, a 0 score is given for
Responsibility High 1 0.359 0.161
completely different values. The similarity function for
Medium 0.359 1 0.456
fuzzy linguistic attributes is derived from the area ratio Low 0.161 0.456 1
approach [28]. Under this approach, the similarity between
Complexity High 1 0.566 0.172
two fuzzy linguistic attributes is defined as follows:
Medium 0.566 1 0.326
Similarityðxi ; yi Þ ¼ Aðxi > yi Þ=Aðxi < yi Þ Low 0.172 0.326 1
Risk allocation High 1 0.356 0.176
¼ Aðxi > yi Þ=Aðxi Þ þ Aðyi Þ 2 Aðxi > yi Þ Medium 0.356 1 0.500
Low 0.176 0.500 1
where A represents the area of the corresponding member-
ship function, xi > yi and xi < yi are the intersection and Price competition High 1 0.279 0.056
Medium 0.279 1 0.201
union of the membership functions of two fuzzy linguistic Low 0.056 0.201 1
variables xi and yi ; respectively (Fig. 4).
The fuzzy membership functions of common linguistic Quality High 1 0.404 0.086
Medium 0.404 1 0.290
case attributes—speed of project, flexibility, responsibility,
Low 0.086 0.290 1
complexity, price competition, risk allocation and quality
434 D.T. Luu et al. / Advances in Engineering Software 34 (2003) 429–438

Fig. 5. Outcome generated by the fuzzy similarity retrieval mechanism.

analysis and consideration. Fig. 5 shows the outcome Further case details can be made available should the
generated by the matching and scoring processes. users click on the view details button. As shown in Fig. 6,
In the matching result box (Fig. 5), five most similar cases these additional details include project’s PSC and their
along with their similarity scores are retrieved and presented linguistic classifications, the procurement system used in
to the decision-makers. By selecting a particular retrieved the stored case and its full details (i.e. mechanism,
case in the matching result box, the users can review the case advantages and disadvantages), sub-managerial systems
details, and the client’s evaluation on the project performance, (i.e. tendering method and contractual arrangement), and
such as communication efficiency, team performance, future the extent to which the retrieved case differs from the
working relationship between client and the main contractor. current one.

Fig. 6. Critic-based adaptation in the procurement advisory system.


D.T. Luu et al. / Advances in Engineering Software 34 (2003) 429–438 435

Fig. 7. Rule-based adaptation provided in the prototype system.

4.3. Adaptation case to better suit expectations button, the system displays
an adaptation screen to guide the users through the
A combination of different adaptation strategies was adaptation process (Fig. 7).
adopted for CPAS. For instance, if the users are satisfied that The upper part of the adaptation screen (Fig. 7) displays
the retrieved case closely resembles the current one, they the adaptation information, i.e. the full extent of differ-
can employ a null adaptation strategy by simply adopting ences between the retrieved and the present cases as well
the solution of the matching case to the new case without as advices on case attributes that might require subsequent
any modification. However, when the intrinsic character- adaptation. Built-in adaptation rules (Table 3) determine
istics and requirements between the two cases differ, the extent to which adaptation is required for the retrieved
modifications to the historic solutions might be desirable. case. By selecting any particular case attribute highlighted
Critic-based adaptation [29] and parameterized adaptation for potential further modifications, the users are provided
[23] strategies are provided to help decision-makers come with a list of activities that might be implemented to
up with a more suitable solution. Once the users have improve the performance of this attribute to the expected
decided to adapt the retrieved solution and chosen the adapt level. This list was compiled according to the advantages
436 D.T. Luu et al. / Advances in Engineering Software 34 (2003) 429–438

Table 3 5. System reliability


Inference rules deciding which case feature(s) might require further
adaptation
In order to demonstrate the practicality of CPAS, an
Case attributes Presented Stored attribute Requirement actual construction project involving the procurement of a
attribute value value (historic for further hardware retail facility in New South Wales, Australia was
(current situation) adaptation
situation)
selected to test the model. The client was a renowned
Australian hardware retailing company. While the project
If 0 # importance site had relatively good construction traffic ingress and
weighting # 3 egress as well as posed little risks to the construction
activities; the client did not envisage any apparent
All attributes All values All values No
difficulties to any building contractors in delivering
If 4 # importance the project. Nevertheless, the client also saw this project
weighting # 6 as a good opportunity for establishing a close business
relationship with one particular local contractor whose
Speed, flexibility, High Low Yes
performances in a couple of similar past construction
complexity, price
competition, risk projects were quite excellent as they recognized the benefits
allocation, quality of having a good communication channel between the
High Medium No contracting parties. The major challenge, however, was the
Medium High No time they had to complete the project, as that would lead to
Medium Low No
Low Medium No
extra financial resources.
Low High No In implementing CPAS to solve the procurement
problem in this project, a total of 30 historic construction
Responsibility High Low Yes
High Medium No
projects were collected to train the model. A set of PSC and
Medium High No their importance weightings were identified in accordance
Medium Low No with the characteristics of the project, its client and external
Low Medium No environment. Using these data as input, CPAS evaluated
Low High Yes
the situation and recommended negotiated design and build
Timer certainty, Yes No Yes (the solution of case 28) as the most appropriate procure-
cost certainty ment system for the project (Fig. 8).
No Yes Yes
To determine whether the solution generated by the
If 7 # importance
model is comparable to that produced by domain experts,
weighting # 10 four independent experts were invited to solve the
specified problem based on their own experience. As
Speed, flexibility, High Low Yes shown in Table 4, CPAS and the experts unequivocally
complexity, price
competition, risk
pointed to the use of negotiated design and build for this
allocation, quality project. In fact, this procurement method was selected by
High Medium Yes the client for implementation in the project.
Medium High No At the time this paper was written, the project had been
Medium Low Yes
progressing well into its third month. According to the main
Low Medium No
Low High No contractor of this project, the use of design and build
procurement method has by far provided the project team
Responsibility High Low Yes
High Medium Yes
Medium High Yes
Medium Low Yes
Low Medium Yes
Low High Yes
Timer certainty, Yes No Yes
cost certainty
No Yes Yes

and disadvantages of currently available procurement


systems. The adaptation process is completed once the
relevant activities have been selected, and the users are
prompted to the adapted results through the system output
screen. Fig. 8. Procurement system solution for the case study.
D.T. Luu et al. / Advances in Engineering Software 34 (2003) 429–438 437

Table 4 selection models, the CBR approach caters for the fuzzy
Case study procurement solutions generated by experts and CPAS characteristics and the complicated intrinsic interrelation-
Decision- Solution ship of PSC. Since CBR is an experience-based approach, the
maker experiences of previous cases can be made available to the
Procurement Tendering method Contract type users to provide an early indication of the likely future
systems outcomes of the prospective project. This feature is not
addressed in the current analytical approaches for procure-
Expert A Design and Selective competition AS4300
build using a list of pre-
ment selection.
qualified contractors Based on the information collected from the experts, a
Expert B Design and Negotiation with the Design and construct conceptual framework for a CPAS for construction was
build mentioned local contracts–Master devised. The framework was subsequently developed into a
contractor with a Builders Association computer prototype using a CBR shell—ARTpEnterprise.
view to go into a of New South Wales
long term partnering
The prototype, using trial data, has demonstrated that CBR
relationship approach can provide appropriate recommendations for the
Expert C Design and Negotiation with the AS4300 procurement of a hardware retail facility. Further validation
build mentioned local on the performance of the system also yielded satisfactory
contractor with a results.
view to go into a
long term partnering
As the process of identifying the PSC, their conditions
relationship (i.e. linguistic classifications), and impacts (i.e. importance
Expert D Design, Selective competition C21 contract weightings) is largely dependant on previous experiences of
construct & using a list of pre- decision-makers, it seems sensible to model this process
maintenance qualified contractors
using the CBR approach too. The development of such a
CPAS Design and Negotiation Design and construct
build contracts—Master sub-system for procurement selection is being investigated.
Builders Association Once developed, this sub-system should overcome the
of New South Wales inherent weaknesses of the CPAS proposed in this paper, as
Client Design and Negotiation with the In-house written it will no longer have to rely rigidly on a list of nine PSC
build mentioned local contract incorporating
alone for case representation and retrieval.
contractor clauses for partnering

with greater flexibility in utilizing its experience/knowledge


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