Failure Knowledge Database / 100 Selected Cases

The public constructions by Donburi-Kanjyo (rough accounting)〔From the second half of 20th century to the beginning of 21st century, Japan〕
Masahiko Kunishima（note1）

Quality, process, and cost are the essential ingredients in any construction pr
oduction and management system. However, quality, construction period observance(it is not a process) and the settlement according to planned budget in every s
ingle year have been emphasized in the public constructions of our country; That
is to say, the high quality by the new technology, the strict construction peri
od observance and the budget digestion in every single year were emphasized regardless of money and cost, which became the characteristics of the public constru
ction. Around 1990, the Japanese construction industry became enriched because of the bubble economy. Because of this, the public constructions of our country developed me a kind of malignant chronic illness called Donburi-Kanjyo(rough acco
unting).As the result, the public construction cannot remove the distrust from t
he nation, the public investment decreases, and a market economy, which made a point of free competition, was introduced from the beginning of 21st century. Man
y problems such as the unreasonable pressure on the subcontractor companies beca
use of the cost reduction without cost management, the spread of promissory notes on sites over the long term, the bad quality because of the construction work
done with some corner-cutting, and the fact that bad companies act high-handedly
have become tangible.
１．Event
Public offices and private companies have made various efforts together, in order to remove the distrust towards public construction which began following the scandal in 1993, and to maintain the environment for people who are engaged in in
frastructure management and want it to be active throughout the future. Also, “the law of promoting the proper contract and bidding for the public construction”
was promulgated on 27 th, November, 2000. However, the distrust for the public co
nstruction and the blockade sensation of the concerned parties are not removed in the least, at the present time of 2005.In addition, because the public investm
ent decreases and a market economy based on free competition was introduced fromthe beginning of the 21st century, many problems such as

the unreasonable pressure on the subcontractor companies because of the cost reduction without cost management, the spread of promissory notes on sites over the long term, the bad q
uality because of the construction work done with some corner-cutting, and the f1

Failure Knowledge Database / 100 Selected Cases

act that bad companies act high-handedly are not solved yet.
２．Course
In 1992, the Fair Trade Commission admonished that the Saitama Saturday associat
ion be excluded because of the doubt over “Damage”. And, in 1993, for only one y
ear later, twenty six persons including the prefectural governors at Miyagi and
Ibaraki, the Mayor of Sendai, and the management executives of a big construction company were arrested under the suspicion of requesting to ensure the nominati
on of nominative bids for public constructions. As a result, the distrust for pu
blic constructions was heightened remarkably. From 1994, the Ministry of Land, T
ransport, Infrastructure (the Ministry of construction and Ministry of Transport
in those days) has made “transparency, objectivity and competition” as the keynote. It has introduced the open bid instead of the nominative bid. It has been trying to decrease the cost by reviewing the ceiling price and the cost estimation. It has executed the pilot project such as the total technology proposal system, VE (Value Engineering), DB (Design Build), CM (Construction Management) and P
FI (Private Finance Initiative) etc as the new system of bid and contract. In or
der to make understood the “the law of promoting the proper contract and bidding
for the public construction” (which was promulgated on 27 th, November, 2000) com
pletely, the transparency and the competition of the bid and contract have been
increased. The dishonesty has been excluded. The public constructions have been
enforced properly. Various improvements have been introduced to create the const
ruction market where the companies which have good technology and management cangrow.
However, the distrust for the public construction and the blockade sensation of
the concerned parties are not removed in the least at the present time of 2005.
３．CauseThe way of payments of public constructions in our country is remarkably differe
nt from that of the payment of the international standard of foreign countries（Figure-1 reference）.
That is to say, not only in European countries and America but also in the devel
oping countries of Asia and Africa, it is common sense that the payment of pu
blic constructions from the public owner to the contractor (main contractor)
is paid by cash (including checks) according to monthly progress. (Figure-1（ｂ）reference）
However, in Japan after agreeing on the contract the way of the payment from thepublic owner to the contractor is that 40% of the yearly contract payment isalways paid into the bank account of the contractor within 2weeks though the r2

Failure Knowledge Database / 100 Selected Cases

eal construction is not done.

The public owner reserves the remaining 60% unt

il the time of completion (the end of construction) regardless of the type ofthe service (the construction contract or the design commission service). And
the remaining 60% is adjusted and paid so as to correspond with the planned bu
dget of the beginning of the year and the additional correction by considering
the design change.
Through the progress of payments to the subcontractors (the special construction
company) and the maker of machinery and materials, in order to cope with the si
tuation the public owner does not pay by cash according to the progress. The main contractors always pay partly by cash and by many promissory notes (like bondsof debt) in order to prevent a stream of substantial money from them. The promi
ssory note will be just a waste paper if the main contractors go bankrupt. The s
ubcontractor (the special construction company) and the maker of machinery and materials which received the promissory note, which may be extended beyond six months, cannot help going to the monetary facilities discounting in order to change the promissory note into cash. By being deducted commission rate and confidenc
e risk burden charge, the promissory note of 1 million yen can end up being 9000
00yen or less in real cash terms.
For public constructions, it is the world commonness to expect “the flow effect”
such as regional development and reflation countermeasure by the public funds(tax) redistribution. However, only main contractors and financial institution, ca
n get benefit by the way of payment of the public constructions in Japan. Even if the investment of public construction is increased, the level of consumption of the majority (nation) who are related to the construction industry cannot be a
ctivated.

If the payment is not paid according to the progress, the price of co

nstruction cannot be calculated exactly. The situation where the balance between
cost and process is good is not secured.
So, the way of payment of public constructions of our country is Donburi-Kanjyo.

3

Failure Knowledge Database / 100 Selected Cases

Monthly progress+completion payments

payments

payments

2nd

Bill＋Cash

Payments by all cash

2ndtransaction

2ndtransaction
transaction

1st subcontractor

Main Contractor

ownertransaction

transaction

subcontract subcontract subcontract

Monthly progress
1st subcontractor

40% of prepaid money

Bill＋Cash

The way of payment of public constructions in our country(Source: Author made)Monthly progress

payments

payments

payments

2nd

Payments by all cashtransaction

2ndtransaction

2ndtransaction
transaction

1st subcontractor

Payments by all cash

Main Contractor

Ownertransaction

transaction

subcontract subcontract subcontract

Monthly progress
1st subcontractor

Monthly progress

Payments by all cash

The way of payment of public constructions of foreign countries (it isinternational standard)
Figure-1: The difference of payments(Source: Author made)4

Failure Knowledge Database / 100 Selected Cases

Figure-2: The transition of construction investment (Source: Author made)The meaning of Donburi-Kanjyo is using money haphazardly without calculating abalance (from Daijirin dictionary second edition). Donburi- Kanj yo derives fro m
the episode where money was put in “Donburi” of a craftsman ’s abdomen and could
be taken in and out easily (Donburi is not the “bowl” of Chinese noodles soup o r
the eel bowl).
When those concerned with the public constructions in our countr y are told thatthey have been troubled with asyndrome, many of them say

malignant chronic illness saying

Donburi-Kanjyo“it is nonsense ” and get angry. Though the publicconstructions are exposed to many credibility gaps and much infamy in 2005, thepersons concerned do not have the subjective symptoms, which is

the reason fo r

it to be called a “chronic illness”. It is l ike the lifestyle habit illness suchas hypertension or diabetes of the people who are fat because of

intemperance

and inactivity.
The way of payment of construction is one of the basic aspects of the contractsof public constructions. The symptoms of a malignant chronic illness saying Donb
uri-Kanjyo syndrome are shown as followings.
（１）In our country, progress payments which are the contract of i nternational
standard according to the progress of constructions and monthly

payments d o

not exist.
（２）In the public constructions of foreig n countries, it is ess ential for the5

Failure Knowledge Database / 100 Selected Cases

engineers of the public owner and the contractors to discuss daily a series ofprocesses which are inspections, acceptances, assessment, designchanges, andmonthly fare adjustments. In our country, the public constructions have a seriesof processes which are inspections, acceptances (always), assess

ments, designchanges, and the fare adjustment of a year budget by the way of Donburi-Kanjyo.
This happens only once when the construction begins. So,

the pub lic owner andthe contractor haveis natur al that thelittle influence asan engineer. It

social standing of civil engineers in our country is remarkably

lower than inforeign countries.
（ ３ ） Public constructions in Japan are made of lump-sum contracts.
of thetype andthe classification of theRegardles sconstruction, the unit

s of

specification etc, in short, money and cost, the public owner co ntracts with thecontractors. The unit price contract (the lump-sum contracts) is
contract on publicconstructions in

the mainstrea mforeign countries (the interstandard). The public owner contracts with the contractors withnational

considering thetype and the classification of the construction, the units of specification etc,
in short, cost. Between the public owner and the contractors in our country, the“Public” unit price which is agreed does not exist.
（４）In the public constructions of our co untry, the public owner pays 30%- 40%
prepaid money of the cost of construction immediately to the con

structioncompany which concluded the contract of construction.
（５）The remaining 60-70% of construction payments is paid in order to make th e
fiscal result which coincides with the budget which the public owner planned at
the beginning of the year (including the additional supplementar

y budget) i n

order to adjust the increase and the decrease of construction co sts by designchange after the inspection of the completion of the construction.
（ ６ ） It is necessary for the public owner to use up the yearly pla
budget(including the additional supplementary budget). When thepayments of constructions is

expected, the urgent (innnedsurplus o fcase, imag

constructions are created. And the owner uses up the budget. When the loss

inary)
ofthe payments of constructions is expected, the owner makes the contractors coverit and afterwards will take care of them.
（ ７ ） In t he public constructions of ourcountry, the public owner“actually”

does not worry that the planned budget can be sufficient for the construction
cost.(The owner does not need to worry.)（ ８ ） In the

public constructions of ourcountry, thecontractors(t heconstruction contractors) pay the subcontractors, who are the sp

ecial

construction companies and the makers of machinery and materials, by not onl ycash but also thepromissory notes (Recently, 210
6days wasexten ded in some

Failure Knowledge Database / 100 Selected Cases

construction field.) Japan is t he only co untry where the promi ssory note whichis equal to the amount of the debt is allowed as a method of pay
companies concerned with the

public constructions. The

ments amon gpayments

construction industry of foreign countries are paid by only cashin the(including acheck).
（ ９ ） In the public constructions of ou r country, the priceconstructions are higher because ofof paym ents of

the additional various financial costscaused by the distribution of the promissory note.
（１０）The public constructions of our country have the characteristics whichmean cost management cannot be done though cost finance budget management, pricemanagement and profit management can be done well because of the Donburi-Kanjyo
syndrome. It becomes remarkably difficult for the cost reduction to bescientifically and rationally practiced, if the cost management cannot be done.
４．Immediate Action
The indication that public works in Japan had become ill because of DonburiK an jo s y n d r o m e s a n d t h e d i s c u s s i o n c o n c e r n i n g i t b e g a n i n A p r i l 2 0 00.
In March 2001, the Ministry of Land, Infrastructure and Transpor

t started th etrial of "Progress Payments" in 2 constructions that Chugoku Reg ional Department
Bureau and Tohoku

Regional Department Bureau ordered. Mie

Prefectural Lan dDevelopment Department, which had carried out the advanced administrative reform
under the directions of Masayasu Kitagawa, Governor of Mie Prefecture, decideto try "Every Month

Progress Payments" of public

works fromdfisc al 2002 andbegan to use it in 34 constructions in fiscal 2002.
It was decided that the system which changes the price for public works tocompleted amount payment every month from fiscal 2002 was tried in theprefectural land imp rovement division by the adva

nced admin istrative reform

under the supervision of the Masayasu Kitagawa, Governor of Mie Prefecture, andit started in fiscal 2002 in 34 constructions.
５．Countermeasure
The verification of the effects and the extraction of the problems caused by the
introduction of the"Progress Payments System" were carried out

through themonitoring of the trial construction, the examination of the imp lemental method,
the survey on the actual situation of the construction price pay
the foreign countries, and soon by Ministry of Land, In

ment method i nfrastructure andTransport and Mie Prefecture.
As a result, the public owners from the Ministry of Land, Infras
Transport and Mie Prefecture confirmed the effects of the "7

tructure an dProgress Payments

Failure Knowledge Database / 100 Selected Cases

System" introduction, while they clarified many problems. The problems consistedof the decision of the inspection technique standard, the treatm

ent method o fconstruction progress, the method of the inspection and the office work, theefficiency improvement of the payment desk work, and so on. At last theyexpanded its trial and they attempted to introduce it seriously after fiscal
2005.
In the meantime, the (super) major construction companies have disagreed wit itand have been negative, and the regional small and medium-sized

construction

companies have agreed with it and have been aggressive concernin g the stance ofthe contractors (construction companies) involved in public works in Japan.
It seems that there are about 600,000 companies in Japan, but Sa
president of KAJIMACORPORATION) CEO

of Japan Civil Engineeringdao Ueda (theContractors

Association, which consists of the top one hundred and several companies, statedthat the usefulness of "Progress Payments" was doubtful at the p ress conferencein June of 2002. In

September of 2002 Yasuharu Maeda (the president of MAEDACORPORATION) CEO of A ll Japan Constructors Association, which co nsists of the
top several thousand companies, announced to the

Ministry of Land,Infrastructure and Transport that he wanted to protect the then current payments
system and disagreed with the introduction of "Progress Payments System".
But in 2003 it was written that "Progress Payments System is effective" in theeditorial of the house organ of J apan Civil Engineering Contract ors Association.
Some companies, which were related to the construction industry, abolished thesettlement by promissory notes and aimed to drastically reduce their publication.
Also the scientific and rational problems on the design change p

rocedure

happened, and the actual situation of the nonpayment and the late payment to thesubcontractors became tangible.

Then, the effects which improved thefinancecondition of each private party concerned with public works have been recognizedthanks to "Progress Payments System".
In December 2004, the Ministry of Land, Infrastructure and Transport announcedthat they had seven new pavement constructions, which were directly controlledby them, targets and would begin the trials in the whole country

in order t oswitch to the unit price type cost estimation system.
The unit price type cost estimation system means that public owners use the unit
price and estimate cost. Then in case ofthis system, after public owner andcontractors conclude the "contract" at the total contract price, they each otheragree with the unit price in the every unit division. Therefore, it seems thatthey can attempt to make not only the contracted office work pro cedure smooth
but also the cost estimation efficient.
"Public owners and contractors agree with each other over the unit price in the8Failure Knowledge Database / 100 Selected Cases

every unit division" which can make the contracted office work procedure o"Every Month Progress Payments" smooth.

fThis is the contract sy stem of theinternational standard.
We can say that Japanese contract system of public works approached the dawn of
the restoration at last.
６．Knowledge"Progress Payments" on public works is the tool that makes come true thfollowing things as a kind of c

ontract system.

It c an keep the

between owners and contractors being equal even with their straierelationshipns.

It canachieve accountability against taxpayers. Thanks to it engineers can exert theirskill to construct high quality infrastructures. It can make theconcerned attempt the technology improvement witheach other.

partie s
On the soundcompany management it can return tangible and intangible profits to society.
should introduce "Progress Payments" into public

works in

Japan

We

as soon as

possible and make eff ort to cur e the mali gnant chronic disease c alled Do nburiKanjo syndromes.
７．BackgroundThe construction payment method (Fig.-1), that is to say, the co ntract system of
public works of in Japan, was Donburi-Kanjo (rough accounting).

Weshouldrecognize that we could rapidly achieve the infrastructure facil

ities'

development and improvement what became the foundation of today' s rich economi csociety, as it suited the Japanese society in recovery age after the World War
II.

This is why, it can be said that Donbu ri-Kanjo was the syste m which sui ted

the past society. In the past Japanese society, the budget scale of public works
was small, and the plan designs and constructions were carried out by the directcontrol of the public owner.

The mission of the em ployment measures and theeconomic improvement countermeasures were remarkably enforced on public works a s
it was the poor age.

In addition, it can b e said that people str ongly requiredthat the public owners, from the viewpoint of the government, sh ould protect andtrain the private contractors (builders).

The modern Japanese s ociety after

1990's has been the rich age, and the budget scale of public works rapidly
increased, and the public owners came to be in the position of pconstructions.

During This time, public works which were not us

rocuring
ed in theprinciple as the economic improvement countermeasures began to grow up, and th e
construction industry matured.

It has become unreasonable for t he government toprotect and train people by public works.

We can say that it is natural to needto change the contract system, which suited the past society, in order to suit
9

Failure Knowledge Database / 100 Selected Cases

the modern society under the present finance condition when the country andlocal government, which should cover government funds for invest ments and loan sof public works, have been tight.
When the finance condition becomes tight, that is to say, themoney which th e

private companies involved in public works receive, in a society which keeps
Donburi-Kanjo, the parties concerned in weak positions will havea hard time .

That present state is left will do retain the hard bully in the public workssystem.
８．Sequel
In a trial construction which the Ministry of Land, Infrastructure and Transport
carried out in 2001, the construction manager of the contractor seemed to reallyhave trouble. Every month he had submitted the bill to the staffs of theconstruction work office in the Ministry of Land, Infrastructure and Transport,
and had fr equently negotiated the withdrawal amount o f money in the atmos pherethat is the biased view of the remarkable official power, which gave him too bi ga stress,so he wasvery timi d at first . But heseemed tofeel " Progress

Payments" were reasonable by reason of the method that public orders accurately
assessed the construction progress and aggressively paid the con struction pric eeven if the advanced payment was zero.
At the beginning the public owners have expressed the strong fear overincreasing the quantity of office work because of inspections, a cceptances, andassessments, and on the division supervision business andBut "Progress Payments" contributes toinspec tion business .

highlight many problems, andprovide s

many solution measures in order to carry out businesses without any seriouserrors and in order to introduce it earnestly within the range of the operationof the current laws and rules.

９．On the Side
The improvement and innovation of tender contract system in Japan was carefullyplanned by using the scandal about the public work in

1993 as an oppor tunity.

And the active scientific research in Japan and the survey on acof the supply system of

public works

Asian countries has been car

in European

ried out, and many

and American co untries andresearch reports

published. But the very important matters (that the contract sys
works intual situatio n

European and American countries and Asi

have bee n

tem of publi can countries wasba sed o n"Progress Payments" and it is ordinary that there was not previo us payment) were
not mentioned in any report at all. It is a mystery.
10

Failure Knowledge Database / 100 Selected Cases

It is possible that, sometimes, things which are too taken-for-granted arefailed to be reported.
END(note 1).
Professor of Course of International Studies, Institute of Environmental Studies, Graduate
School of Frontier Science, the University of Tokyo
Professor of Department of Civil Engineering, The University of Tokyo (plural office)11