Developing a system for assessing the costs associated with different procurement routes in the construction industry

In developing techniques for monitoring the costs associated with different procurement routes, the central task is disentangling the various project costs incurred by organizations taking part in construction projects. While all firms are familiar with the need to analyse their own costs, it is unusual to apply the same kind of analysis to projects. The purpose of this research is to examine the claims that new ways of working such as strategic alliancing and partnering bring positive business benefits. This requires that costs associated with marketing, estimating, pricing, negotiation of terms, monitoring of performance and enforcement of contract are collected for a cross-section of projects under differing arrangements, and from those in the supply chain from clients to consultants, contractors, sub-contractors and suppliers. Collaboration with industrial partners forms the basis for developing a research instrument, based on time sheets, which will be relevant for all those taking part in the work. The signs are that costs associated with tendering are highly variable, 1-15%, depending upon what precisely is taken into account. The research to date reveals that there are mechanisms for measuring the costs of transactions and these will generate useful data for subsequent analysis.

Developing a system for assessing the costs associated with different procurement routes in the construction industry

In developing techniques for monitoring the costs associated with different procurement routes, the central task is disentangling the various project costs incurred by organizations taking part in construction projects. While all firms are familiar with the need to analyse their own costs, it is unusual to apply the same kind of analysis to projects. The purpose of this research is to examine the claims that new, ways of working such as strategic alliancing and partnering bring positive business benefits. This requires that costs associated with marketing, estimating, pricing, negotiation of terms, monitoring of performance and enforcement of contract are collected for a cross-section of projects under differing arrangements, and from those in the supply, chain from clients to consultants, contractors, subcontractors and suppliers. Collaboration with industrial partners forms the basis for developing a research instrument, bused on time sheets, which will be relevant for all those taking part in the work. The signs are that costs associated with,with tendering are highly variable, 1-15%, depending upon what precisely, is taken into account. The research to date reveals that there are mechanisms for measuring the costs of transactions and these will generate useful data for subsequent analysis.

Partnering in flight: From being to becoming

Current literature offers little understanding about how procurement methods are enacted in practice. Developments in procurement are often viewed as the result of responding to recommendations from particular constituents within the sector. The research seeks to remove itself from such deterministic leaning, counselling instead that procurement should not be viewed in static terms, but dynamically manifesting over time within a complex web of interconnections between various actors, their situated context and the broader industrial structure. Attention is given to how a client and construction firm engaged in a collusive interaction to realise an innovative procurement method that derived its legitimacy from a backcloth of initiatives promoted by various commentators. A case study of a medium-size regional contractor demonstrates how the first partnering arrangement was enacted within the UK affordable housing maintenance sector in the UK. The case study finds that the enactment of new procurement methods strongly relies on iterative learning between clients and contractors. It is further suggested that construction firms need to initiate new procurement in order to remain competitive within the sector. The findings point towards a pro-active initiative by the contractor and client to enact a ‘procurement first’. Encouragement may be drawn from this example by other contractors seeking to offer more than simply responsive procurement solutions.

Exploration of relational factors: Sino-foreign joint-venture partnering

Purpose – Despite recent threats of economic contraction, China still offers attractive opportunities for foreign companies seeking to expand their business activities through joint venturing (JV) partnering entry strategies. Recent research has indicated a growing recognition of the importance of relational factors in JV partnering. The purpose of this paper is to build on recent research findings that identify critical relation success factors in JVs and explores these in the context of a Hong Kong-based civil aviation services company seeking to expand business activities in Greater China. Design/methodology/approach – While the extant management literature focuses primarily on factors relevant to the inter-partner relationship between partners in the formation stage of a joint venture, this research takes a dynamic stakeholder perspective in respect of the relevant relational factors over the evolution of a partnership. The research described in this paper is based on a case-based study that identifies and examines the relevance and importance of uniquely Chinese factors such as guanxi, renqing and mianzi in the specific context of a strategic partnering relationship. Findings – This phenomenological study provides empirical evidence of critical linkages of these to intrinsically Chinese notions of guanxi, mianzi and renqing – it links these to key strategic partnering success factors identified to be trust, conflict resolution, commitment and cooperation. This study thereby reinforces the importance of the uniquely Chinese relational context in cross-border JVs. Moreover, the research findings suggest that these factors underpin the dynamic bi-directional stakeholder relationship in a Sino-foreign strategic partnership. Originality/value – This study conceptually links the uniquely Chinese relational factors (guanxi, mianzi and renqing) to key success factors supporting the establishment of a strategic partnership in a Sino-foreign context; moreover, it contributes empirical evidence substantiating the proposed conceptual linkage.

Designing flexible procurement systems

The systems used for the procurement of buildings are organizational systems. They involve people in a series of strategic decisions, and a pattern of roles, responsibilities and relationships that combine to form the organizational structure of the project. To ensure effectiveness of the building team, this organizational structure needs to be contingent upon the environment within which the construction project takes place. In addition, a changing environment means that the organizational structure within a project needs to be responsive, and dynamic. These needs are often not satisfied in the construction industry, due to the lack of analytical tools with which to analyse the environment and to design appropriate temporary organizations. This paper presents two techniques. First is the technique of "Environmental Complexity Analysis", which identifies the key variables in the environment of the construction project. These are classified as Financial, Legal, Technological, Aesthetic and Policy. It is proposed that their identification will set the parameters within which the project has to be managed. This provides a basis for the project managers to define the relevant set of decision points that will be required for the project. The Environmental Complexity Analysis also identifies the project's requirements for control systems concerning Budget, Contractual, Functional, Quality and Time control. The process of environmental scanning needs to be done at regular points during the procurement process to ensure that the organizational structure is adaptive to the changing environment. The second technique introduced is the technique of "3R analysis", being a graphical technique for describing and modelling Roles, Responsibilities and Relationships. A list of steps is introduced that explains the procedure recommended for setting up a flexible organizational structure that is responsive to the environment of the project. This is by contrast with the current trend towards predetermined procurement paths that may not always be in the best interests of the client.

Identifying appropriate construction procurement strategies

The origins of the various procurement methods in construction are considered, followed by a discussion of the circumstances for which each procurement system is best suited. The likely future development sin management-based methods are discussed in the context of current research, showing that co-ordination of trade and specialist contractors , more flexible contracting, constructive conflict management and a potential polarization of views about project management in the industry are likely.

A preliminary survey of attitudes to UK construction procurement practice

Although much literature on construction procurement is based on personal experiences, there is little data available to undertake realistic comparison between regions or from one year to another. A survey was undertaken in the UK to examine the feasibility of developing a replicable survey technique that will enable longitudinal studies and international comparisons. The survey showed that a majority felt traditional procurement methods were inappropriate. However, traditional general contracting is still the most common form of procurement. There was strong agreement that economic muscle compels weaker contracting parties to accept onerous contractual terms. There is no relationship between the size of a project and its procurement method, contrary to popular belief. The findings indicate that wider surveys would generate useful data about attitudes.

What are the costs of procurement and who bears them?

The costs of procurement are transaction costs which are separate from the direct costs of a project. In this paper discussion is concentrated on costs of tendering. Types of cost, including money costs and opportunity costs, short-term and long-term costs, private and social costs are defined and examined in relation to various types of product and methods of procurement. The costs of the contractor and of the client are considered and tentative conclusions drawn as to who bears these costs in the short-run and in the long run. They may fall on the parties to the process for the particular project, on other contractors and clients or on society as a whole.