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International Journal of Project Management 28 (2010) 79–91

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Construction quality in China during transition: A review

of literature and empirical examination
Ping Yung a,*, Brenda Yip b
a
School of Architecture, Design and the Built Environment, Nottingham Trent University, Burton Street, Nottingham NG1 4BU, UK
b
Department of Real Estate and Construction, Room 501, Knowles Building, University of Hong Kong, Pok Fu Lam Road, Hong Kong, China

Received 3 November 2008; received in revised form 25 February 2009; accepted 10 March 2009

Abstract

Proper management processes were often regarded as the most important factors affecting construction quality, while the availability
of capital, plant, and labour were taken for granted and the demands of property users were always ignored. The phenomenon that the
construction quality of projects undertaken by State-Owned Enterprises (SOEs) was better than that of non-SOEs revealed that in devel-
oping countries such as China during transition, the availability of resources could be very important to construction quality. By utilizing
regression models to evaluate 550 robust province level data from 1993 to 2001, this paper will offer an insight into the hard factors affect-
ing construction quality. It is found that higher power of machinery per labourer, the use of more plants or machinery per m2 of floor
space, properties with larger unit areas, the growth of GDP, the higher labour productivity tender to be associated with higher quality.
Ó 2009 Elsevier Ltd and IPMA. All rights reserved.

Keywords: Construction quality; State-Owned Enterprises; Resources; Demand

1. Introduction veloped economies (e.g. China over the past three

This paper is a contribution to the empirical study of
construction quality in China during the transition from
a planned economy to a market one. The motivation
behind it was the overwhelming use of questionnaire sur-
veys as a method to collect information in studies on the
construction industry and construction quality. A compar-
ison of the sample size and the factors examined in the lit-
erature has further raised the question of the robustness of
the studies. As most studies have concentrated on devel-
oped economies, the availability of resources, including
machinery, labour, and capital, was taken for granted.
Studies have usually found that management issues were
the most important factors that affected construction qual-
ity. These conclusions may not be applicable to underde-
*
Corresponding author.
E-mail address: ping.yung@ntu.ac.uk (P. Yung).
decades of transition).
This paper seeks to use publicly available province level
data of adequate sample size (550) to evaluate the factors
affecting construction quality in China during transition.
It includes five measures of availability of construction
machinery and labour, as well as the demand sides of prop-
erty users, both of which were largely ignored in the litera-
ture. It will offer valuable insights into the factors affecting
construction quality.
The rest of the paper will be arranged as follows. A
review of the methodologies and data sources of the studies
on China’s construction industry and on construction qual-
ity worldwide will be conducted, followed by a discussion
of the quantification methods of quality and a review of
factors affecting construction quality in the literature. In
the next section, the theory and hypotheses will be devel-
oped, followed by a description of the method and data.
Then the results will be discussed followed by the
conclusion.

0263-7863/$36.00 Ó 2009 Elsevier Ltd and IPMA. All rights reserved.

doi:10.1016/j.ijproman.2009.03.003
80 P. Yung, B. Yip / International Journal of Project Management 28 (2010) 79–91
2. Literature review
Operating in what is potentially the largest construction
market in the world, China’s construction industry has
drawn the attention of scholars in recent years [1–8]. A
comprehensive review of methodologies and data source
for 30 research works on construction industry in China
by Yung and Lai [9] showed that most works were descrip-
tive, and opinion surveys were the standard method of
information gathering. The problem with opinion surveys
is that one had no way of contesting or verifying the cred-
ibility of the works based on opinion surveys, especially
when raw data were typically not published. Nonetheless,
these works provided some valuable ideas and aspects con-
cerning the factual background of China’s construction
industry, which has been, and still is, very different from
that of other countries.
Although it has been documented that general construc-
tion quality in China was poor [1,2,4], very few studies
have concentrated on the reasons behind this. A review
of 35 studies (Table 1) on construction quality showed that
only two studies [10,11] focused on China (excluding Hong
Kong), while another one [12] covered China. This paper
seeks to bridge this gap.
Due to the lack of empirical studies on China, studies on
other economies or countries have been included as well.
Three more problems were identified, namely, overwhelm-
ing use of opinion surveys, inadequate sample size and the
method of qualifying construction quality. These will be
detailed as follows.
2.1. Methodologies and data sources
Table 1 shows the methodologies and data sources of 35
studies on construction quality. The results again showed
the dominance of opinion surveys as the means of data col-
lection. Most (28 out of 35, or 80%) studies obtained infor-
mation through questionnaire surveys. 14% (5 out of 35) of
the studies were theoretical arguments that did not use
data. Two of the studies (6%) obtained their information
through case studies.
In addition, a careful examination of Table 1 further
revealed that the sample sizes were inadequate compared
to the factors the authors sought to examine. Tabachnick
and Fidell [13] suggested that the minimum sample size
should be five times the number of independent variables,
while Sachs [14] believed that 3–6 times could be enough.
However, in five studies, the number of factors considered
far exceeded the numbers of observations available, while
in two other studies, the number of factors was only
slightly less than the sample sizes. The validity of the results
is hence questionable.
This amazingly high proportion of questionnaire survey
data and insufficient sample sizes in the literature should
draw our attention to the robustness of the studies on con-
struction industry, especially in the field of construction
quality.
This paper shall contribute to the scholarship in this
area. It utilizes publicly available province level data to
examine factors affecting construction quality in China.
The next section will then discuss how quality is measured
or quantified.
2.2. Quantification of quality
Not all studies required a quantification of construction
quality. The authors of some studies did not intend to
establish the relationship between the explanatory variables
and the dependent variable (quality). Rather, they pre-
sumed the factors found would affect construction quality
[15–20]. In such cases, there was no need to quantify qual-
ity. Others used some statistical methods to establish the
relationship between explanatory variables and dependent
variable (quality). The statistical methods typically used
were multiple regression [10,21–28], correlation analysis
[11,29,30], and mean comparison [12,31]. Occasionally, a
rank correlation approach called Spearman’s rho was used
[32]. When such statistical methods were used, there was a
need to quantify construction quality.
Just like the fact that the questionnaire survey was the
most commonly used method of data collection, the subjec-
tive evaluation by experts interviewed or surveyed was the
most commonly used method of quantifying construction
quality. The primary reason was the lack of data. Nearly
all studies using statistical methods to identify factors
affecting construction quality mentioned above used this
method, although one study [29] did not specify the method
of quantification (see Table 1 for details). The only notable
exception was Chan et al. [23], who used the Hong Kong
Housing Authority’s (HKHA) Performance Assessment
Scoring System (PASS) scores.
Attempts were made to quantify project performance.
For instance, Menches and Hanna [33] proposed an index
to quantify project performance, although the paper did
not intend to examine factors affecting project perfor-
mance. However, few attempts were made to quantify
quality other than subjective rankings by experts.
The authors believed that the major difficulty in quanti-
fying construction quality is the availability of data. When
data was not available, scholars tended to either bypass
quantifying quality or collect opinions on quality via ques-
tionnaire surveys.
This paper does not intend to propose a better method
of quantifying construction quality in this paper. Instead,
publicly available data on construction quality, which
researchers have ignored for many years, will be used.
2.3. Factors affecting construction quality: a review
Table 2 shows a review of recent studies showing the fac-
tors that affect quality. Those studies that focused on pro-
ject management success or project success as a whole were
excluded, since quality is but one aspect of success and it is
difficult to isolate the effects of the explanatory factors. One
Table 1
Methodology and data source of studies on construction quality.
Ref. Author Aim/topic Data source Sample size No. of factors Dependent Data testing method Economy
considered variable studied
1 Abdel- Identify the factors that affect Delphi technique 159 respondents 16 factors (generalized N/A comparison of scores given Egypt
Razek [15] construction quality in Egypt (three rounds of from 52 elements) by respondents
and assess their relative questionnaires, of
importance which two include
feedback)
2 Abdul- Investigate the Initial interviews 23 respondents N/A N/A N/A UK
Rahman implementation of a quality and case studies
[45] management system in the followed a by

P. Yung, B. Yip / International Journal of Project Management 28 (2010) 79–91

UK construction industry. questionnaire
survey
3 Abdul- Investigate the issues of Initial interviews 23 respondents N/A N/A N/A UK
Rahman quality cost in the and case studies
[46] construction industry followed by a
questionnaire
survey
4 Albanese Evaluate the importance of Questionnaire 41 projects N/A N/A comparison of the mean USA
[47] using the team-building survey and scores given by respondents
process in project results interview
5 Arditi and Identify and rank by degree of Questionnaire 137 respondents 43 factors (17 for the N/A comparison of the mean USA
Gunaydin importance the factors that survey design phase, 18 for the scores given by respondents
[34] affect process quality during construction phase, and
the three phases (design, 8 for the maintenance
construction, and operation) and operation phase)
of the life cycle of a building
project.
6 Baccarini Propose the use of a logical N/A N/A N/A N/A N/A N/A
[48] framework method to provide
a framework for defining and
understanding project success
7 Belassi and Suggest a scheme that Questionnaire 57 respondents 27 (grouped into 5 N/A select the most commonly not specified
Tukel [17] classifies the critical factors survey categories) chosen factors
and describes the impacts of
these factors on a project’s
performance
8 Belout [49] Re-examine Pinto and N/A N/A N/A N/A N/A N/A
Prescott’s finding that the
personnel factor was the only
factor that was marginal for a
project’s success
9 Chan and Examine the underlying Preliminary 55 respondents on 77 Subjective factor analysis to reduce the Hong Kong
Tam [21] factors that affect the quality interviews and 110 projects perception of number of independent
of a building project detailed case quality variables from 77 to 16,
studies by performance followed by multiple
questionnaire regression
survey and
interviews
(continued on next page)

81
Table 1 (continued)

82
Ref. Author Aim/topic Data source Sample size No. of factors Dependent Data testing method Economy
considered variable studied
10 Chan et al. Identify a set of project Questionnaire 53 respondents on 31 subjective principal factors extraction Hong Kong
[22] success factors for designing survey 19 projects ranking of time, with varimax rotation to
and building projects and cost and quality reduce 31 factors into 6,
examine the relative performance by followed by stepwise multiple
importance of these factors on respondents regression
project outcome
11 Chan et al. Develop a conceptual N/A N/A N/A N/A N/A N/A
[50] framework in critical success
factors through literature

P. Yung, B. Yip / International Journal of Project Management 28 (2010) 79–91

reviews.
12 Chan et al. Identify the factors that Questionnaire 54 respondents 72 (grouped into 7 HKHA PASS factor analysis to reduce the Hong Kong
[23] specifically affect the quality of survey groups) score number of independent
Hong Kong’s public housing. variables from 72 to 17,
multiple regression
13 Chua et al. Distinguish critical success Questionnaire 20 respondents 67 N/A comparison of the average Singapore
[18] factors according to different survey weights given by respondents
project objectives of budget,
schedule, and quality using the
analytical hierarchy process.
14 Clarke [51] Demonstrate the application Case study 1 case study 4 N/A N/A not specified
of key success factors to
overcome or minimise project
management problems
15 Cooke- Identify 12 critical factors for Case studies of 136 projects 12 time and cost, correlation analysis Europe
Davies [29] project management success, about 136 projects measurement
project success, and consistent from more than method not
project success 70 organizations specified
16 Cox et al. Determine the perceived key Questionnaire 64 respondents 15 N/A comparison of scores given USA
[52] performance indicators for the survey by respondents
construction industry at the
construction executive and
project management level.
17 de Wit [53] Discuss whether project N/A N/A N/A N/A N/A N/A
success can be measured and
the purpose of such
measurements
18 Dvir et al. Examine the relationship Questionnaire 110 projects 32 elements (grouped in subjective correlation analysis Israel
[30] between planning efforts and survey and 3 categories) ranking by
project success interview respondents
19 Kaye and Suggest a model with the 10 Interviews and 18 organizations 10 N/A N/A UK
Anderson best practice criteria for questionnaire
[54] continuous improvement survey
20 Konchar Compare the cost, schedule, Survey and 351 projects + 600 nearly 100 subjective sample mean comparison USA
and Sanvido and quality performance of interview interviews ranking by
[31] three project delivery systems, respondents
namely construction
management at risk, design/
build, and design/bid/build
21 Ling, et. al. Construct a model to predict Questionnaire 87 projects 59 subjective Spearman’s correlation Singapore
[24] performance (cost, time, survey and ranking by analysis to reduce the no. of
quality, and owner’s interview respondents factors, multiple regression
satisfaction) of design-build
and design-bid-build projects
22 Ling et al. Identify significant factors Questionnaire 35 111 (grouped in 7 subjective correlation analysis, multiple China
[10] that contribute to the survey and (questionnaire)+27 groups) evaluation of regression
successful performance of interview (interview) project success
projects undertaken by
international architectural,
engineering, and construction
firms in China
23 Luo [11] Investigate the management Questionnaire 97 JVs 6 profitability Pearson’s correlation China

P. Yung, B. Yip / International Journal of Project Management 28 (2010) 79–91

and operating performance of survey and and perceptual coefficient
Sino-foreign construction interview managerial
joint ventures, and the assessment of
relationships between performance
ownership, management
control, and JV performance.
24 Menches Describe a process for Questionnaire 27 contractors (55 N/A construction of N/A USA
and Hanna converting a project survey and projects) an index to
[33] manager’s qualitative interview measure
evaluation of successful performance
performance into a
quantitative measurement
25 Mohsini and Measure the impacts of a Questionnaire 21 respondents on 4 6 subjective multiple regression Toronto,
Davidson number of conflict-inducing survey projects ranking by Canada
[25] organizational variables on respondents
project cost, time, and quality.
26. Munns and Provide a logical explanation N/A N/A N/A N/A N/A N/A
Bjeirmi [55] for the distinction between
project management success
and project success and
outline the factors which affect
their success
27 Nguyen Determine the success factor Questionnaire 109 respondents 20 N/A factor analysis Vietnam
et al. [19] for large construction projects survey
in Vietnam
28 Pinto and Identify 10 critical success Questionnaire 159 projects 14 factors each consists subjective stepwise regression USA
Slevin [26] factors for R&D projects survey of 5 or 6 sub-items. ranking by
respondents
29 Pinto and Investigate changes in the Questionnaire 408 respondents 50 (10 factors each subjective ridge regression to dampen USA
Prescott [27] importance of project critical survey consists of 5 sub-items) ranking by multicollinearity; then
success factors across four respondents stepwise regression
stages in the project’s life
cycle.
30 Powl and Establish the extent of the Questionnaire 58 respondents 14 questions N/A comparison of responses Australia,
Skitmore hindrances on the survey given by respondents USA, UK,
[56] performance andutilization of Japan,
project managers Hong Kong,
Taiwan
(continued on next page)

83
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P. Yung, B. Yip / International Journal of Project Management 28 (2010) 79–91
Table 1 (continued)
Ref. Author Aim/topic Data source Sample size No. of factors Dependent Data testing method Economy
considered variable studied
31 Phua and Quantify explicitly the extent Interviews and 29 interviews + 398 20 subjective principal component analysis Hong Kong
Rowlinson to which cooperation, in questionnaire survey respondents ranking of with varimax rotation to
[28] relation to other factors, survey project success reduce 20 factors to 5
determines construction by respondents constructs, then use
project success Cronbach’s alpha to obtain
construction means, followed
by regression
32 Rao et al. Identify the best commonly Questionnaire 390 companies 14 subjective t-test for the comparison of India,
[12] followed practices in the survey ranking of 10 mean scores China,
human resource dimension of quality results Mexico
quality management in China, by respondents
India, and Mexico
33 Sanvido et. Define the critical factors that Questionnaire 16 projects 9 categories consisting subjective Spearman’s rho USA
al. [32] lead to project success and survey of 41 elements ranking by
provide a forecasting tool. respondents
34 Songer and Identify those characteristics Questionnaire 88 respondents 15 subjective comparison of mean scores USA
Molenaar that affect public-sector survey and ranking by given by respondents
[20] design-build project success interview respondents
more than others using the
analytical hierarchy process
35 Stevens Develop a quality- Questionnaire 34 Questionnaires more than 600 quality N/A N/A N/A
et al. [57] measurement matrix survey and and 15 Interviews measurement examples
interview
 P. Yung, B. Yip / International Journal of Project Management 28 (2010) 79–91
Table 2
Factors affecting construction quality.
Ref. Author Economy Studied
1 Abdel-Razek [15] Egypt
2 Arditi and Gunaydin [34] USA
3 Chan and Tam [21] Hong Kong
4 Chan et al. [23] Hong Kong
5 Chua et al. [18] Singapore
6 Ling, et. al. [24] Singapore
7 Ling et al. [10] China
8 Mohsini and Davidson [25] Toronto, Canada
can observe that management issues, including the atti-
tudes or commitments of management, the cooperation
of parties, and the abilities and experience levels of project
managers, were generally accepted as the most important
factors affecting construction quality.
This universal acceptance of the importance of man-
agement issues is contradictory to our observations of
construction quality performance in China. Despite the
generally poor construction quality in the Chinese con-
struction industry [1,2,4], researchers have noted the
superior construction quality of State-Owned Enterprise
(SOE) works relative to that of non-SOEs [2,9]. As SOEs
are notorious for their poor management, how could
their work quality be better than that of non-SOEs?
Yung and Lai [9] argued that the gradual implementa-
tion of mandatory supervision system over the period
1991 to 2001 had gradually improved construction qual-
ity. They found some relationship between construction
85
Factors affecting construction quality
Sixteen factors found, below are the five most important ones:
 Improving design and planning during the pre-construction phase
 Developing and improving quality assurance and the control system
 Improving the financial level and standard of living of employees
 Improving the accuracy of cost estimates
 Proper classification of contractors, consultants and projects
Eighteen factors found at the construction stage, below are the five most important ones:
 Management leadership
 Supervision by contractor
 Cooperation of parties
 Management commitment
 Selection of contractor
 Project management actions
 Client’s emphasis on time
 Client’s emphasis on quality
 Effectiveness of construction team leader
 Project manager’s experience
 Proactive quality culture
 Extent of direct skilled labour
 Comprehensiveness of subcontracting inspection system
 Competency of site labour
 Client emphasis on quality, safety and environment
Nine factors ranked, below are the five most importance ones:
 Adequacy of plans and specifications
 Constructability
 Site inspections
 Realistic obligations/clear objectives
 Project manager’s competency
For quality of building elements of design- build projects:
 Contractor’s ability in financial management
 Consultant’s experience with similar projects
 Adequacy of contractor’s plant and equipment
 For quality of building elements of design-bid-build projects
 Contractor’s quality control and management capability
 Flexibility of the scope of work when contractor is hired
For workmanship qualities (the authors admitted that some correlations are not logical):
 Technological supremacy
 Degree of specialization
 Sufficiency of information
 Degree of interdependence of tasks
quality and machinery owned by contractors, but their
results were mixed.
In this regard, this paper seeks to further investigate the
factors other than management issues that could affect con-
struction quality in China as a developing economy. The
next section will propose the theory and hypotheses to
examine construction quality.
3. Hypotheses and method
It is generally agreed that critical success factors (CSFs)
for quality are different at different stages of the building
process [34]. CSFs also differ as project objectives change
[18]. It is also agreed that CSFs for quality are different
in different industries [17]. Hence, it is very probable that
CSFs for quality could be different at different stages of
economic development.
86 P. Yung, B. Yip / International Journal of Project Management 28 (2010) 79–91
In developed economies, studies have shown that man-
agement issues are the factors most widely considered to
be decisive or critical. However, in developing countries
such as China over the past three decades, other issues
could be equally important, if not more so.
3.1. Availability of resources
Belassi and Tukel [17] recognized the importance of the
availability of resources (human, financial, raw materials,
and facilities). Nguyen et al. [19] also found that one of
the CSFs for large construction projects in Vietnam was
the ‘‘availability of resources”. In addition, Ling et al.
[24] found that the ‘‘adequacy of [a] contractor’s plant
and equipment” (or lack thereof) was one of the most influ-
ential factors affecting the quality of building elements in
design-build projects.
It is self-convincing that the availability of resources
could affect construction quality. The reason that manage-
ment issues were overemphasized in the literature could be
that the economies studied were well-developed and
boasted ample and mobile resources (including materials,
machinery, and labour). Hence, these factors were often
taken as granted and not considered to be critical factors
affecting construction quality. However, in underdeveloped
economies such as China’s as recently as a few years ago,
both the availability of materials and the mobility of labour
could well be matters serious enough to affect construction
quality.
Using national level data, Yung and Lai [9] found
that per capita machinery owned by contractors affects
construction quality. The variables tested were the
‘‘value of machinery per capita at constant price” and
the ‘‘power of machinery per capita”. The two factors
were both significant, but had contradictory effects. This
paper goes further by: (a) using more disaggregated
province level data that increased sample sizes from 22
to 550, (b) adding more explanatory variables on both
manmade and human resources, and (c) adding more
explanatory variables on the demand side of property
users.
This paper uses five measures of the availability of both
manmade resources, in particular construction equipment,
and human resources, in particular labour. Hence, the fol-
lowing five null hypotheses were formulated:
Hypothesis 1A. The value (at constant prices) of the
machinery per labourer had no effect on construction
quality.
Hypothesis 1B. The power of the machinery per
labourer had no effect on construction quality.
Hypothesis 1C. The value (at constant prices) of
machinery per unit area of floor space had no effect on con-
struction quality.
Hypothesis 1D. The power of the machinery per unit
area of floor space had no effect on construction quality.
Hypothesis 1E. The number of labourers per unit area
of floor space had no effect on construction quality.
3.2. The demand side
The economy of China has been developing at an amaz-
ing rate of about 10% for nearly 30 years [35]. The follow-
ing observations were based on the first author’s experience
as a resident in China for nearly 20 years and as a quantity
surveyor dealing with China projects for nearly 5 years.
People living in China 30 years ago were satisfied if they
could keep warm and satisfy their hunger. The primary
function of residential properties was to protect people
from the weather. Building services, the functions of which
were to primarily provide living comfort, were generally
unavailable. Electricity was the only type of building ser-
vice a building in an urban area provided for many years.
It only became available in rural areas much later. Plumb-
ing and drainage systems and fire services were gradually
provided in residential buildings during the 1980s, while
air conditioning only became widely affordable during the
late 1990s. Nowadays, fast lifts, building automation sys-
tems, and advanced telecommunications are standard in
many parts of China.
It could be argued that as China’s economy develops,
the quality standard will increase as more people will
demand higher quality space. Simple economic theories
could explain this. Suppose there are only two types of
housing in China, one with low quality, the other with high
quality. Suppose the building life is 40 years, then the cur-
rent stock of housing will be the integral of the two types of
buildings built in the past 40 years. When most Chinese
people were poor, the demand for high quality housing is
low, as demand shall be backed up with purchasing power.
Hence, low quality housing is dominant in the stock. The
standard for assessing quality of buildings would be low
as well.
As the economy developed, more and more people could
afford high quality housing, increasing the demand. The
total quantity transacted became higher and the price
higher as well. The higher price increased production which
lowered the price through economy of scale and advances
in production methods. This further increased the quantity
transacted. As more and more high quality housing were
constructed, the proportion of high quality housing in the
stock increased continuously. As a result, the authority
had to increase the quality standard for housing as higher
quality housing became dominant in the stock.
Even the minimum quality standard regarded as fit for
habitation could rise as a result of continued economic
development. This trend should remain until minimum
quality standards are high enough so that above average
quality becomes a strategy of product differentiation
instead of just a necessity. This trend in demand will cer-
tainly affect property supply. In other words, construction
quality will rise, albeit at a decreasing rate, as China’s econ-
omy develops. Hence, a null hypothesis is developed:
Hypothesis 2A. The per capita Gross Domestic Product
(GDP), in constant prices, has no effect on construction
quality.
 P. Yung, B. Yip / International Journal of Project Management 28 (2010) 79–91 87

As demands for space are usually correlated with
demands for better quality, the following null hypothesis
is also developed:
Hypothesis 2B. The average floor space per unit has no
effect on construction quality.
3.3. Institutional arrangement
Yung and Lai [9] documented the implementation of
mandatory construction supervising arrangements in China
and found that it improved construction quality. It has been
argued that the quality of buildings is an attribute borne
more by users, who have little control over and little infor-
mation on the quality of their buildings, than by developers
or contractors. Hence, certain institutional arrangements
could better affect construction quality than simply leaving
the market to price the differentials in quality in the case of
positive transaction costs. This argument is consistent with
the corollary of the Coase Theorem [9,36–39].
Since this mandatory arrangement was implemented
gradually throughout the years, the variable ‘‘Year” could
be used to capture the gradual effects over the study years.
Hence, the following null hypothesis is made:
Hypothesis 3. The gradual implementation of the man-
datory construction supervision arrangement had no effect
on construction quality.
3.4. SOEs vs. non-SOEs
One characteristic of China’s economic reforms is the
dual-track transition, in which state plans remained, while
the private market emerged at the same time [40–42]. State-
Owned Enterprises (SOEs) will obviously receive resources
and capital much more easily than non-SOEs because
most, if not all of them, are included in the state plans.
Table 3 shows the total output and the percentage allo-
cated by the Central Government of major construction
materials from 1989 to 1993. There was no data reported
on the percentage allocated by the Central Government
after 1993 in the China Statistical Yearbook. The reason
could be that the extent of state planning for construction
materials has gradually declined since 1993, and for this,
two pieces of evidence were found. First, the percentage
allocated by the Central Government for all three types
of major construction materials continuously decreased
from 1989 to 1992 (Table 3). Second, seven large steel man-
ufacturers were no longer included in the state plans after
1993, and the presence of state planning for the nine largest
steel manufacturers was also greatly reduced [43].
Although it was clear that the extent of state planning
for construction materials gradually declined after 1993,
it is very unlikely that the manufacturers succeeded in find-
ing new buyers. The probable outcome was that the SOE

Table 3
Percentage of construction materials allocated by central government from 1989 to 1993.
Year Steel Products (millions of tons) Cement (millions of tons) Timber (millions of m3)
Domestic Allocation by the % of Domestic Allocation by the % of Domestic Allocation by the % of
Production Central allocation Production Central allocation Production Central allocation
Volume Government Volume Government Volume Government
1989 48.59 16.56 34 210.29 21.22 10 58.02 14.34 25
1990 51.53 15.80 31 209.71 21.25 10 51.09 14.25 28
1991 56.38 16.31 29 252.61 20.04 8 58.07 11.28 19
1992 66.97 14.16 21 308.22 17.32 6 61.74 8.34 14
1993 77.16 N/A N/A 367.88 N/A N/A 63.90 N/A N/A
Source: China Statistical Yearbook [58].

Table 4
Quality standards in GBJ300-88.
Pass Good quality
Sections: All items shall meet pass standard All Items shall meet good quality standard
guaranteed
items
Sections: All sampled items shall meet pass standard All sampled Items shall meet pass standard; and at least 50%
fundamental of them shall meet good quality standard
items
Sections: At least 70% of tolerance-allowed items in builder’s works and 80% At least 90% of all tolerance-allowed items shall fall within
tolerance- in services works shall fall within the maximum allowable tolerance. the maximum allowable tolerance.
allowed items
Parts All sections shall pass All sections shall pass, and at least 50% of them shall be of
good quality
Building All parts shall pass; and quality assurance documents shall be All parts shall pass, and at least 50% of them shall be of good
recorded; and visual quality judgement items shall have an overall quality, and quality assurance documents shall be recorded,
mark of at least 70% and bisual quality judgement items shall have an overall
mark of at least 85%
88 P. Yung, B. Yip / International Journal of Project Management 28 (2010) 79–91

property developers and contractors, who had been their relevant government quality supervision department
customers for many years, probably remained their cus- according to the quality standard prevailing at the time
tomers. In other words, SOE contractors could obtain con- of inspection. The quality standards prevailing during
struction materials more easily than non-SOEs not only our study period were those prescribed by the Standards
before 1993, but also for a few years after that time. for Assessment of Quality of Construction and Installation
In addition, SOEs tend to obtain funding from banks Projects (GBJ300-88), in which three categories of quality,
more easily than non-SOEs. This availability of construc- namely, good, pass and fail were defined.
tion materials and capital can not all be captured by the Essentially, a building is divided into several parts accord-
explanatory variables considered in Hypotheses 1A to ing to the location, for example, the builder’s works consist
1E, so a dummy variable is used to capture these difference of substructure, frame, floors, doors & windows, finishes &
between SOEs and non-SOEs. Then the following hypoth- roofing. Each part will be further divided into a number of
esis is formulated: sections according to work trades. The items under each sec-
Hypothesis 4A. The state ownership of contractors had tion are further categorized into three categories, namely,
no effect on construction quality. guaranteed, fundamental and tolerance-allowed items.
State-Owned Enterprises are well-known for their low Table 4 describes the standards required for accreditation
efficiency. Yung and Lai [44] found that a mandatory as ‘‘pass” or ‘‘good quality”.
expert tender evaluation system did not improve the effi-
ciencies of SOE property developers in China. It is interest- 3.6. Method and data
ing to know if their higher quality products were made at
the expense of their lower efficiency. A common measure All the data were collected from various issues of the
of efficiency is the labour productivity defined as total out- China Statistical Yearbook. Table 5 shows some descrip-
put value (at constant prices) per labourer. Hence, the fol- tions of the data. Nominal values have been discounted
lowing hypothesis is formulated. with appropriate indices to obtain constant prices in
Hypothesis 4B. Labour productivity had no effect on 1993. In particular:
construction quality.
(a) The ‘‘Value of Machinery” was discounted with the
3.5. Quality defined ‘‘purchase of equipment, tools, and instruments”
index (one component index for the Price Index of
For the purpose of this paper, quality is defined as the Investment in Fixed Assets) for each province pub-
total floor areas of ‘‘good quality projects” as a percentage lished in the China Statistical Yearbook (available
of total floor area of completed projects in a particular from 1991 only);
province in a particular year. ‘‘Good quality projects” here (b) ‘‘labour productivity” and the ‘‘Gross Domestic
refer to those projects accredited as ‘‘good quality” by the Product” were both discounted with the ‘‘construc-
Table 5
Description of data.
Variable Meaning Unit Min. Max. Mean Standard
deviation
Dependent variable
Good_Q Good Quality Rate by Area % 6.84 71.00 36.05 12.01
Independent variables
Hypotheses 1A to 1E
VM_L Net value of machinery per labourer at 1993 constant prices RMB/person 94 16,350 4845 2731
PM_L Power of machinery per labourer KW/person 0.00 20.07 4.74 2.10
VM_m2 Net value of machinery per m2 of floor space completed at 1993 RMB/m2 28 11,814 1863 1279
constant prices
PM_ m2 Power of Machinery per m2 of floor space completed KW/m2 0.00 9.51 1.89 1.24
Lab_m2 Number of labourers per m2 of floor space completed Person/m2 0.05 1.89 0.40 0.18
Hypotheses 2A and 2B
GDP Per capita gross domestic product at 1993 constant prices 1000 RMB/ 1.22 26.18 5.21 3.71
person
U_Area Average area of unit completed m2 19 1224 135 70
Hypotheses 3
Year Year of the data observation N/A 1993 2001 1997 3
Hypotheses 4A and 4B
SOE Dummy variable equals 1 if the enterprises are SOE and 0 if N/A 0 1 0.5 0.5
otherwise
Lab_P Labour productivity is defined as output value at 1993 constant RMB/person 7.426 202.272 39.162 23.581
price per labourer
 P. Yung, B. Yip / International Journal of Project Management 28 (2010) 79–91 89

tion & installation” index (another component index
for the Price Index of Investment in Fixed Assets); and
(c) when the index for a particular province in a particu-
lar year was unavailable, the national average data
for that year will be used.
There were a total of 550 pieces of data that covered all
observations at the provincial level from 1993 to 2001. A
substantial part of the construction activities were grouped
under a few ministry-affiliated units instead of under each
province before 1993. It is impossible now to disaggregate
these data and allocate the relevant portions into relevant
provinces. In addition, these pieces of data were no longer
reported on or after 2002. Hence, the period from 1993 to
2001 represented the maximum range of province level data
available to the public. Although these data did not cover
the recent years, they nonetheless covered the most impor-
tant period of transition period in China. These data were
valuable as there are many countries in the world still try-
ing to transit but not doing well. This study will be infor-
mative to those economies. More recent data will not add
much value to this study, as modern China is reasonably
developed, as least in larger cities. In addition, there have
already been a lot of studies on developed economies.
Those studies usually took availability of resources for
granted. While it is found that availability of resources
did affect construction quality in less developed economies.
As it is forecasted that construction quality will increase,
although at a decreasing rate, as per capita GDP increase, a
square term for ‘‘GDP” is also added.
Multiple regression models will be used to test the data
and redundant variable tests will be conducted to identify
the most insignificant variables (the highest p-value of t-
test). If the results show that the variable is redundant, then
it will be dropped from the full model until all the variables
left are significant. Then an optimal model will be
obtained. Since the variables ‘‘Value of Machinery per
labourer” (VM_L) and ‘‘Value of Machinery per m2 of
floor space” (VM_m2) have very high variances (compared
to the values of their means), the logarithm values of these
two variables will be used instead. The results of the model
will be discussed in the next section.
4. Results and discussion
Table 6 shows the results of the full multiple regression
model and the optimal model. Only one variable, ‘‘PM_m2,”
was dropped from the full model. All the variables left are
significant at least at the 10% level. The F-statistics for both
the full model and the optimal model are very significant.
The variable ‘‘power of machinery per m2 of floor
space” was not significant, while the other four variables
for measuring the availability of resources are all signifi-
cant. There are two implications of this.
First, as ‘‘PM_L” is significant at the 5% level and has a
positive coefficient, the power of the equipment per
labourer is a better measurement of the equipment level
of labour than the net value at year’s end of the machinery
(or equipment) per labourer (‘‘VM_L” is very significant
and has a negative coefficient). It appears that the more
power (of the machinery) per labourer, the better was the
construction quality. However, merely having a high book
value of machinery will not increase construction quality.
Second, although construction is a labour-intensive
industry, it appears that using more equipment per m2 of
floor space will increase construction quality (VM_m2 is
very significant and has a positive coefficient), while using
more labour per m2 of floor space will decrease construc-
tion quality (Lab_m2 is significant at the 10% level and
has a negative coefficient).

Table 6
Statistical results.
Variable Full model Optimal model Remarks
Coefficient Prob. Coefficient Prob.
Constant 3487.70 0.0000 3488.143 0.0000
Log(VM_L) 13.9006 0.0016* 13.0342 0.0019*
PM_L 0.9105 0.0940*** 0.5955 0.0252**
Log(VM_m2) 14.0681 0.0013* 13.1279 0.0015*
PM_m2 0.7640 0.5060 Dropped
Lab_m2 10.9100 0.1576 12.6347 0.0822***
GDP 0.6721 0.0399** 0.6965 0.0320**
(GDP)2 0.0340 0.0397** 0.0353 0.0312**
U_Area 0.0271 0.0010* 0.0255 0.0012*
Year 1.7653 0.0000* 1.7657 0.0000*
SOE 5.2811 0.0014* 5.4179 0.0009*
Lab_P 0.0001 0.0377** 0.0001 0.0340**
Adjusted R-squared 0.4364 0.4370
Prob(F-statistic) 0.0000 0.0000
Dependent variable: Good_Q, Method: least squares.
Sample: 550; Included observations: 549; Excluded observations: 1.
*
Significant at the 1% level.
**
Significant at the 5% level.
***
Significant at the 10% level.
90 P. Yung, B. Yip / International Journal of Project Management 28 (2010) 79–91
As a result, all Null Hypotheses except for 1D concern-
ing availability of resources were refuted.
The variable ‘‘GDP per capita” (GDP) and its square
term were both significant at the 5% level. ‘‘GDP” had a
positive coefficient and ‘‘(GDP)2” a negative coefficient.
This indicated that as the economy develops, people will
demand higher quality, while competition forces supply
to meet such demand. Construction quality will hence
improve, but at a decreasing rate. At a time when the min-
imum quality standard becomes acceptable to all people,
quality merely becomes a dimension of product differentia-
tion and then stops increasing with GDP. This result per-
fectly confirmed our observation and analysis shown in
the previous context.
The variable ‘‘U_Area” was very significant and had a
positive coefficient, indicating that larger unit areas tend
to be of higher quality. Hence, both Hypotheses 2A and
2B were refuted.
The variable ‘‘YEAR” was very significant and had a
positive coefficient, indicating that apart from the demand
generated by higher GDP, construction quality still
increased over the years, confirming our observation of
the gradual implementation of mandatory construction
supervising systems during the study period. This result
was consistent with that in Yung and Lai [9]. Hence,
Hypothesis 3 was refuted.
The variable ‘‘SOE” was significant and had a positive
coefficient. This indicated that apart from the availability
of resources, which have been considered, there are other
features in SOEs that could have affected construction
quality. They could well be the availability of construction
materials, capital funding, etc., which have been discussed
in the previous section. However, the detailed examination
of these features was beyond the scope of this paper.
Hence, Hypothesis 4A was refuted. This result was also
consistent with that in Yung and Lai [9].
Finally, the variable ‘‘labour productivity” (Lab_P) was
significant and had a positive coefficient, indicating that
higher efficiency is associated with higher quality as well.
Hence, the proposition that the lower efficiency of enter-
prises is the result of their efforts in providing higher qual-
ity products was not valid and this refutes Hypothesis 4B.
The adjusted R2 of the study was 0.437, indicating that
43.7% of the variations in the dependent variables could be
‘‘explained” by the independent variables. This percentage
is reasonably high given the sample size of our study. The
rest of the variations could be due to:
(a) The cross-province construction activities and
(b) The project management issues.
Yung and Lai’s study [9] on national level data
‘‘explained” 89% of the variations in construction quality,
indicating that project management issues might not be
overwhelmingly important in underdeveloped countries
such as China.
5. Conclusion
This paper addressed the problem of the overwhelming
use of questionnaire surveys as the preferred method of
data collection in the study of construction quality. Using
robust province level data from 1993 to 2001 of sufficient
sample size (550 entries), this paper challenged the impor-
tance of management issues to construction quality in
developing countries, although they were generally found
very important in developed countries. It also contributes
by introducing the demand factors of property users to
explain construction quality, defined in this paper as the
percentage of ‘‘good quality projects”.
Some interesting conclusions could be drawn from the
results:
 The availability of resources, including machinery and
labour, was particularly important because it affects
construction quality in underdeveloped economies;
 the power of machinery per labourer is a better measure-
ment of the impact of equipment on quality than the
book value of the machinery per labourer;
 the use of more plants or machinery per m2 of floor
space will increase construction quality, while the use
of more labourers per m2 of floor space will decrease
construction quality;
 construction quality will improve, but at a decreasing
rate, as China’s economy develops;
 properties with larger unit areas tend to be better
constructed;
 construction quality has improved over the years, prob-
ably due to the gradually implementation of mandatory
construction supervising system;
 SOE projects tended to be of better quality than those
undertaken by non-SOEs, probably due to the greater
availability of construction materials and capital
enjoyed by the former; and
 higher labour productivity tends to be associated with
better construction quality.
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