Title A Study of the Influencing Factors for Decision Making on Construction Contract Types : Focused on DoD Construction Acquisitions with Firm Fixed Price and Cost Reimbursable in FAR
Authors Son, Young-Hoon ; Kim, Kyung-Rai
DOI https://dx.doi.org/10.6106/KJCEM.2024.25.2.023
Page pp.23-35
ISSN 2005-6095
Keywords Contract Types; Cost Reimbursement Contract; DoD; FAR; AHP; Binominal Logistic Regression
Abstract This study analyzed the correlation between each of the 12 influencing factors in FAR 16.04 and the decision-making process for construction contract types, using data from a total of 2,406 DoD Construction Acquisitions spanning from 2008 to 2022. The study considered 12 independent variables, grouped into 4 Characteristics with 3 factors each. Meanwhile, all other contract types were categorized into two types: Firm-Fixed-Price (FFP) and Cost-Reimbursement Contract (CRC), which served as the dependent variables. The findings revealed that FFP contracts significantly dominated in terms of acquisition volume. In line with prevailing beliefs, logistic data analysis and Analytical Hierarchy Process (AHP) analysis of Relative Weights from Experts’ Survey demonstrated that independent variables like Uncertainty of the Scope of Work and Complexity found out to be increasing the likelihood of selecting CRC. The number of contractors in the market does indeed influence the possibilities of contract decision-making between CRC and FFP. Meanwhile, the p-values of the top 3 influencing factors on CRC from the AHP analysis?namely, Appropriateness of CAS, Project Urgency, and Cost Analysis?exceeded 0.05 in the binominal regression results, rendering it inconclusive whether they significantly influenced the construction contract type decision, particularly with respect to payment methods. This outcome partly results from the fact that a majority of respondents possessed specific experiences related to the USFK relocation project. Furthermore, influencing factors in construction projects behave differently than common beliefs suggest. As a result, it is imperative to consider the 12 influencing factors categorized into 4 Characteristics areas before establishing acquisition strategies for targeted construction projects.