THE CURRENT SITUATION OF THE CURRENT SITUATION OF UNIT PRICES ETC INUNIT PRICES ETC INUNIT PRICES, ETC. IN UNIT PRICES, ETC. IN 

SUBCONTRACTS OF REBARSUBCONTRACTS OF REBARWORKWORKSUBCONTRACTS OF REBAR SUBCONTRACTS OF REBAR WORKWORK: A : A HISTORY BASED CASE STUDY HISTORY BASED CASE STUDY 

OF A REBAR COMPANYOF A REBAR COMPANY

Jun Jun IwamatsuIwamatsu, Dr. Eng., Q. Arch.gResearch Institute on Building Cost (RIBC),

Tokyo, Japan

Creative Construction Conference Creative Construction Conference 20132013 (Creative Management: Dr. (Creative Management: Dr. ShabtaaiShabtaai ISAAC), 11:30ISAAC), 11:30‐‐11:45,  July 8, 11:45,  July 8, 2013, Budapest, Hungary2013, Budapest, Hungary

Background & ObjectBackground & Objectg jg j• One of the major factors that affect the Japanese the Japanese

construction production systemconstruction production system is the multithe multi--layering of layering of subcontractorssubcontractors It has been pointed out frequently that subcontractorssubcontractors. It has been pointed out frequently that business transactions in such multilayered systems often lead to pricing and scheduling difficulties pricing and scheduling difficulties due to the nature of thethe

i ii irelationship between relationship between contractors and subcontractorscontractors and subcontractors. •• HoweverHowever, such circumstances have seldom been examined , such circumstances have seldom been examined

quantitativelyquantitatively Therefore it has been difficult to it has been difficult to study them study them quantitativelyquantitatively. Therefore, it has been difficult to it has been difficult to study them study them objectively and to improve the systemobjectively and to improve the system.

• Nonetheless, we were able to obtain we were able to obtain a set of relevant dataa set of relevant data, hi h l l t di d d l d t i h which we closely studied and analyzed to examine such

transactions. The company that we examined, which we call Company ACompany A, is a rather large a rather large rebar company rebar company located near located near ggTokyoTokyo.

•• We We statistically analyzed statistically analyzed the firm's 650 contracts 650 contracts over the past decade and discovered useful factsdiscovered useful factsdecade and discovered useful factsdiscovered useful facts.

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Rebar Work in Cost booksRebar Work in Cost books

Fig. Kensetsu‐Bukka

3

Data for the AnalysisData for the Analysisyy• In the fall of 2007, we obtained the contract history

of one rebar firm. of one rebar firm. Location: Headquarters in Tokyo; Processing plants in 2 locationsFoundation: 1975 (Approximately)C it l 50 illi

Table 1: Profile of Company AProfile of Company A

Capital: 50 million yenSpecialization: Rebar work (Permit granted by the Governor of Tokyo)Employees: 160160 (30 in processing plants, 100 on‐site, 30 in other locations); 3030 second‐

tier subcontractors (all numbers are approximate)

1 Data: 650 contracts650 contracts (some small jobs were omitted)

( pp )Work description: Its principal client is one large general contractor.  Its work consists 

primarily in building construction.

1.Data: 650 contracts 650 contracts (some small jobs were omitted)2.Duration: 1997 1997 ‐‐ 20062006 (ten fiscal years)

Year Client Project Project Price Quantity DurationCompany Building Price given in ten tons of rebar month/year ‐

Table 2:Description of the Data in Company Aʹs Contract HistoryCompany Aʹs Contract History

Company name

Building name

Price given in ten thousands of yen

tons of rebar month/year month/year

4

Company Aʹs Contract HistoryCompany Aʹs Contract HistoryCompany Aʹs Contract HistoryCompany Aʹs Contract History

AA

BB

XX CC

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Work PerformanceWork Performance

Fig.1: FluctuationsFluctuations in Company A

• The rebar used in each contract is estimated to range between 50 and 200 tons, according to a journal on construction related pricing information (ex. Kensetsu-Bukka).

Fig. 2: PerPer‐‐Contract Quantity and PriceContract Quantity and Price• However, Company A ‘s Median 300 tons in their contracts. (This may be due to the fact that Company A is a favored subcontractor of a nation-wide large general contractor.) 6

Analysis of Analysis of ClientsClientsyy• 26 customer firms• GC17 is the main • GC17 is the main

general contractor

Fig. 3: Company Aʹs Statistics by 26 Contracting 26 Contracting Firms Firms 7Fig.4: Degree of exclusivity with GC17exclusivity with GC17

Quantity & Unit Quantity & Unit PricePriceyy• Unit prices in big contracts (more than more than 60 60 tonstons)

become more or less fixed around 50,000 yen/ton50,000 yen/ton, become more or less fixed around 50,000 yen/ton50,000 yen/ton, and thus no economy of scale is observedno economy of scale is observed.

Material & LabourMaterial & Labour

Labour OnlyLabour Only

Fig. 5: Quantity Contracted and Unit Price (Including only ordinary projects) 8

Unit Unit Prices Over TimePrices Over Time• Starting in the latter half of the 1990's, the unit price the unit price

of rebar of rebar declined, but declined, but it rebounded it rebounded in 2006in 2006.of rebar of rebar declined, but declined, but it rebounded it rebounded in 2006in 2006.

Fig. 7: Quarterly Fluctuations in Unit Prices in Contracts with GC17 (Box plot) 9

Rodman Rodman ShortagesShortagesgg• The rebound occurs following the shortage of the shortage of

rodmenrodmen in the Tokyo in the Tokyo area (Kanto Region) area (Kanto Region) in 2006in 2006. rodmenrodmen in the Tokyo in the Tokyo area (Kanto Region) area (Kanto Region) in 2006in 2006.

Fi 8 Fl t ti i R d Sh t (b N ti l A d R i )

Note: Figures created from the monthly data in the Survey of Supply and Demand of Construction Labor compiled by the Ministry of Land, Infrastructure, Transport and Tourism (MLIT) of JAPAN.

Fig. 8: Fluctuations in Rodman Shortages (by National Average and Region)

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RateRate ofof surplussurplus andand shortageshortage ofofRate Rate of of surplus surplus and and shortage shortage of of Rodman is the Rodman is the hugest hugest ((a referencea reference))gg (( ff ))

Rigger, Scaffold elector

%)→

Sho

rtage

05

1015

Rodman (Building)

05

1015

Sur

plus←

(%

2006 2008 2010 2012

-15-10-50

2006 2008 2010 2012

-15-10-50

Timber-man (Building)

%)→

Sho

rtage

05

1015

Plasterer

05

1015

Sur

plus←

(%

2006 2008 2010 2012

-15-10-50

2006 2008 2010 2012

-15-10-50

Electrician

%)→

Sho

rtage

05

1015

Plumber

05

1015

Sur

plus←

(%

2006 2008 2010 2012

-15-10-50

2006 2008 2010 2012

-15-10-50

FigureFigure. Transition of the rate rate (%) of surplus (%) of surplus and and shortage shortage of construction skilled laborer by by occupation occupation & & district district (Apr.,2005 Apr.,2005 ‐‐ Feb., 2013Feb., 2013)  SourceSource: MLIT, JAPAN 11

Seasonality of Seasonality of QuantityQuantityyy yy•• An analysis of work durations An analysis of work durations revealed little change in little change in

Company Company A's monthly number of finished projects A's monthly number of finished projects (Fig.9Fig.9--22), when compared with the number of projects begun the number of projects begun (Fig.9Fig.9--11).

•• Operational Operational resources are being effectively utilizedresources are being effectively utilized.

Fig. 9‐2: quantity of executed workquantity of executed workFig. 9‐1: quantity of new contractsquantity of new contracts 12

Work Work DurationDuration• While the duration of a job tends to increase with

the cost and scale of the contract, this relationship this relationship the cost and scale of the contract, this relationship this relationship is not precisely proportionalis not precisely proportional. Actual durations vary greatly from case to case.g y

Fig. 11: Relationships between the Work Duration Work Duration 

d th Q tit C t t dQ tit C t t dand the Quantity ContractedQuantity Contracted

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ConclusionConclusion• Its analyses resulted in some interesting findings as some interesting findings as

describeddescribed, but the scope of the results of this study p yis somewhat limitedsomewhat limited.

• The data used in this study has both strengths and both strengths and limitationslimitations. Because the contract history that was analyzed in this study comes from a single rebar company company.

• Nevertheless, this study provides a glimpse of the a glimpse of the current situation in the rebar work sector in Japan current situation in the rebar work sector in Japan current situation in the rebar work sector in Japan current situation in the rebar work sector in Japan and provides information that is virtually unknown outside the construction industry. outside the construction industry.

•• We We therefore believe that our results are valuabletherefore believe that our results are valuable.

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