/ Urban Culture di: Davide Mariani

The Building Delivery Process in China

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Since 1980 a great economic and social development is taking place in China and the Chinese government had to introduce many national reform policies and regulations to manage and speed up the growth, making the construction system quite far from the Western countries process.

Using the thesis work of Eng. Arch. Cesare Zilio[1], who kindly permitted the use of his research for the production of this article, we would like to realize a general description of the extremely complex and definitely not permeable Chinese building delivery system, underscoring the differences with the Western construction world.

The commonly used Project Delivery Method in China until the 2000s was the design-dib-build (DBB): in 2005 only 10% of the domestic construction projects were carried out using general contracting methods (Design-build, management contracting)[2].

The Chinese government started to promote the general contracting, with special effort with the Design-Build (DB) and Build-Operate-Transfer (BOT) methods from the middle ot the 80s. Despite several problems (lack of contractors’ competences, procurement systems difficulties and the reluctance of the owners that have to leave all the responsibility in one single point) there has been a huge increase of these processes in the last decade, configuring the following situation at the end of 2010:

diagram

Property © Cesare Zilio

As shown by the histograms, the traditional DBB is used for building projects, while the integrated systems have a great diffusion for industrial  and infrastructural projects.

It is interesting to recognize the actors that actually operate in the Chinese Building Process.
We can recognize four main parts inside the workflow:

  • CLIENT/DEVELOPERS/INVESTORS
  • DESIGN FIRMS
  • CONSTRUCTION SUPERVISORS
  • CONTRACTORS
diagram

Property © Cesare Zilio

CONSTRUCTION SUPERVISORS
The first important thing to consider is the task of the Construction Supervisors (CS), in Chinese Jian Li, whose presence is a legal requirement introduced in 1988 after the Provisional Construction Supervision Ordinance, replacing the traditional Project Preparatory Office (PPO), a temporary government-owned organization.

The role of the Jian Li is to supervise the works of a construction project as an independent third party[3] and it has been introduced to contrast the problem of non-experienced clients that used to manage the construction by their own.

Construction Supervision is quite similar to the western Project Management and it consists in a service on behalf of the client for managing and controlling the overall and specific activities of the construction process, from the feasibility,  up to the design and the pre-contruction phase, and to the realization, completion and also maintenance.

The application of the CS role has to face a lot of problems in Chinese construction system such as their poor skills and low qualification or the client misunderstanding of their roles and responsibility: often the CS companies are engaged only during the construction phase as simple “quality controllers” without any information about the design phase.
Due to the fact that they have the power to stop the works in case they find something wrong, they are also likely to be corrupted.

CONTRACTORS
The relation between client and contractor is similar to the Western construction system:  there is a contractual agreement between investors and builder, and builder can subcontract other companies for more specialized works. The difference resides in the fact that the client uses to pay the contractors in the really late phase of the process (after one-third of the contruction works).
It means that actually the contractors have to anticipate money for materials, supplies and labor, so they works as lenders.

For this reason the developers hire not qualified workers and delay their salary; often the construction workers are people from rural provinces coming in the cities in search of opportunities without workers’ syndicates, legal registration as hukou (citizen) and the possibility to protect their interest.
The poor preparation of the workers and their difficulties to understand technical drawings affect the quality of the buildings.

CLIENT
The growing Chinese market attracted both local and foreign investors, but the main peculiarity of Chinese construction system is the government action on every intervention.
Private Chinese clients check the profitability of the project and then they normally seek funding through obtaining a project loan.

All the documents required from a lender to grant a loan are oriented on legal requirements rather than on the financial life of the project.
Hence, Chinese lenders are not verifying if the project is financially sustainable and they don’t require market researches and technical submissions. This happens both for the economic situation and the fact that most of the banks are state-owned and their purposes are often more political than financial.
These banks are controlled by a government that is influenced by many factors, varying from profit, up to political necessity and to direct corruption.

The construction loans terms requested by Chinese demonstrate the frenzy that characterize this world: the term consists in a period between twelve and eighteen months, a lot shorter compared to Western standards.
Due to the fact that these are considered short-term loans, the investors have to face less application formality and a lower level of loan oversight. That’s why developers push contractors to work as fast as possible.

A tricky point is the distinction between public and private interventions: the main visible difference resides in the fact that public construction deals with infrastructures, buildings and services for a primarily public purpose, but this is even not close to describe the situation.
If we consider the profit-oriented projects, there are always a strong links between private and public entities:

  • The government controls the sale of the land use rights and can rule a sort of territorial zoning deciding position and typology of buildings.
  • All the domestic lenders and banks are state-owned or controlled by the government.
  • Chinese need for Guan Xi[4] and often they prefer to give the work to people they know and with which they have relations, so the quality is not the first requirement they look for.
  • Also in private construction investments, the government asks the developers to provide some infrastructure within the project.

Clients are often vague about their real needs and they don’t give importance to initial phaseof strategic planning and market analysis so that a lot of architects must work without specific indications on the project they should design. This, as expected, seems to be more realistic for public clients and for inexperienced private clients, while the big developers and generally a great number of private investors are more well organized and are more careful about real market requirements[5]

DESIGN FIRMS
In China design firms play the role of the architect/engineer of the Western countries. In China they are responsible for the creation of preliminary and detailed design but not for the supervision of the construction yard and contractor’s quality work.

The design firms can check if the builder work is coherent with the drawings they produced and, in case of mistakes, they can advise the client about it.
Because of this peculiarity there are big gaps between the design firm production and the contractors work.

These are the main tasks of the design firm:

  • architectural services
  • landscape planning
  • civil engineering consultancy
  • structural engineering consultancy
  • soil investigation
  • technical building equipment
  • spatial development

Between 1949 and 1979, architecture and engineering activities were monopolized and managed by state-owned Local Design Institutes (LDIs), offices without direct competitors that have wages and design fees equally distributed in relation with annual quota given by the central government.
Even if in the 80s and 90s there was a little changing with the economic reforms and the leap of the Chinese market towards private investments, the 90% of the construction projects are still in the hands of big developers that prefer to deal directly with LDIs.

Hence, the main four actors of architecture and engineering sector are:

  • LDIs (market oriented and usually involved in big scale projects. In their frameworks there are external architecture firms and personal ateliers in order to have a system of small dynamic teams and a continuous stream of jobs)
  • semi of fully private local design institutes
  • private ateliers (a category born from 2000 in the main cities as result of the return of many chinese architects that studied abroad or that started to be influenced by foreign architects. These firms brought a new vision of architecture inspired from a more experimental and theoretical design, in constrast with the pragmatic LDIs design)
  • foreign offices (from the 90s the big opportunities in China attracted a lot of famous firms and small studios that have been able to find the chinese partners and the right connections)

A common characteristic between foreign offices and most of the Chinese private studios is that they only can do schematic and detailed design, without signing construction drawings and technical drawings: the conditions to obtain the stamp and the licenses required for mechanical, electrical, plumbing and structural engineering are quite hard to get and are mainly in the hands of local design institutes.
This involves that in the Chinese market there are a lot of offices undertaking only the design of a project with the resulting problems related with the information transfer to the other firms in charge of construction documents, construction and supervision.[6]


[1] Cesare Zilio is a graduate from the Building Engineering and Architecture of the University of Bologna. The title of his thesis is “Building Procurement Systems in China: overview and case study”, recently prepared with the Tutors Marco Alvise Bragadin, Ernesto Antonini, Holger Kehne, after his work experience at Plasma Studio, Beijing, China.

[2] Zilio C., Building Procurement Systems in China: overview and case study, Zilio C., Thesis work, p. 126, University of Bologna, 2015, Bologna

[3] Zilio C., Building Procurement Systems in China: overview and case study, Zilio C., Thesis work, p. 115, University of Bologna, 2015, Bologna

[4] Zilio C., Building Procurement Systems in China: overview and case study, Zilio C., Thesis work, p. 118, University of Bologna, 2015, Bologna
We can explain the meaning of Guan xi with this phrase: “It’s more important who you know than what you do”

[5] Zilio C., Building Procurement Systems in China: overview and case study, Zilio C., Thesis work, p. 119, University of Bologna, 2015, Bologna

[6] Zilio C., Building Procurement Systems in China: overview and case study, Zilio C., Thesis work, p. 122, University of Bologna, 2015, Bologna