A conceptual framework for ethical decision making in project procurement

There is a lack of research which identifies the role of the public-sector client in relation to ethical practice in plan procurement. This paper discusses a conceptual framework for ethical decision making in project procurement, focusing on public sector clients within the Malaysian construction industry. A framework is proposed to ensure that effective ethical decision making strategies are deployed to ensure that plan procurement is carried out with a transparent process so that the public sector clients are able to adopt. The conceptual framework adopts various factors that contribute to ethical decision making at the early stage of procurement and consists of the procurement system, individual factors, project characteristics, and organizational culture as the internal factors and professional code of conduct and government policies as the external factors. This framework rationalizes the relationships between systems, psychology and organizational theory to form an innovative understanding of making ethical decisions in plan procurement. It is expected that this proposed framework will be useful as a foundation for identifying the factors that contribute to ethical decision making focusing on the planning stage of procurement process.

Relationship Based Procurement Strategies for the 21st Century

This book Relationship-based Procurement Strategies for the 21st Century, is an important foundation document to better understand social and industry drivers from traditional adversarial contracting techniques to a more relationship-based approach building on the strengths of individual partners. This publication has evolved from the Commonwealth Government’s sponsorship of the case study of The National Museum of Australia Project—the first building construction project (as distinct from a resource development or engineering project) undertaken by a project alliance anywhere in the world.

Capturing organisational innovation in construction project procurement

Management of change in construction organisations to capture internal knowledge and maximise innovation is central to construction process re-engineering. Recent international trends toward privatisation and outsourcing of many government functions has seen wholesale changes to the role of government departments. In Brisbane, Australia, the Port of Brisbane Corporation has responsibilities for development and maintenance of all port and harbour facilities in the Brisbane region. The PBC is an acknowledged leader in encouraging internal technical development. Yet 20 years ago, this organisation operated as a small division within a large and bureaucratic Queensland Government public service department. This paper reviews construction project procurement strategies for the port’s civil and structural facilities since a separate organisational entity with responsibilities for Port of Brisbane was formed in 1976. The Port of Brisbane Corporation serves as an initial case study setting for a larger research project studying innovative practices in the context of the trend towards corporatising and privatising public sector organisations.

Relationship management implementation in the Australian construction industry from the contractor's perspective

Many studies carried out in relation to construction procurement methods reveal evidence of a need to change of culture and attitude in the construction industry. This culture change would transition from traditional adversarial relationships to cooperative and collaborative relationships. Relational contracting approaches, such as partnering and relationship management, are business strategies whereby client, commercial participants’ and stakeholders’ objectives are aligned for mutual benefit. The efficacy of relationship management in the client and contractor groups is proven and well documented. However, the industry has a slow implementation of relational contracting down the value chain. This paper reports the findings of an empirical study which examined the practices and prerequisites for relationship management implementation success and for supply chain engagement to develop. Questionnaire survey, interviews and case studies were conducted with Australian contracting organisations in this study. The study reveals that the adaption of relational contracting approach in the supply chain is found to be limited and contractors still prefer to keep suppliers and subcontractors at arm’s length. Findings also show that the degree of match and mismatch between organizational structuring and organizational process is found to have an impact on staff’s commitment level and performance effectiveness.

Developing a research method to test a new first-order decision making model for the procurement of public sector major infrastructure

Given global demand for new infrastructure, governments face substantial challenges in funding new infrastructure and simultaneously delivering Value for Money (VfM). The paper begins with an update on a key development in a new early/first-order procurement decision making model that deploys production cost/benefit theory and theories concerning transaction costs from the New Institutional Economics, in order to identify a procurement mode that is likely to deliver the best ratio of production costs and transaction costs to production benefits, and therefore deliver superior VfM relative to alternative procurement modes. In doing so, the new procurement model is also able to address the uncertainty concerning the relative merits of Public-Private Partnerships (PPP) and non-PPP procurement approaches. The main aim of the paper is to develop competition as a dependent variable/proxy for VfM and a hypothesis (overarching proposition), as well as developing a research method to test the new procurement model. Competition reflects both production costs and benefits (absolute level of competition) and transaction costs (level of realised competition) and is a key proxy for VfM. Using competition as a proxy for VfM, the overarching proposition is given as: When the actual procurement mode matches the predicted (theoretical) procurement mode (informed by the new procurement model), then actual competition is expected to match potential competition (based on actual capacity). To collect data to test this proposition, the research method that is developed in this paper combines a survey and case study approach. More specifically, data collection instruments for the surveys to collect data on actual procurement, actual competition and potential competition are outlined. Finally, plans for analysing this survey data are briefly mentioned, along with noting the planned use of analytical pattern matching in deploying the new procurement model and in order to develop the predicted (theoretical) procurement mode.

Validating a model of cooperative procurement in the construction industry

Project management in the construction industry involves coordination of many tasks and individuals, affected by complexity and uncertainty, which increases the need for efficient cooperation. Procurement is crucial since it sets the basis for cooperation between clients and contractors. This is true whether the project is local, regional or global in scope. Traditionally, procurement procedures are competitive, resulting in conflicts, adversarial relationships and less desirable project results. The purpose of this paper is to propose and empirically test an alternative procurement model based on cooperative procurement procedures that facilitates cooperation between clients and contractors in construction projects. The model is based on four multi-item constructs – incentive-based compensation, limited bidding options, partner selection and cooperation. Based on a sample of 87 client organisations, the model was empirically tested and exhibited strong support, including content, nomological, convergent and discriminant validity, as well as reliability. Our findings indicate that partner selection based on task related attributes mediates the relationship between two important pre-selection processes (incentive-based compensation and limited bid invitation) and preferred outcome of cooperation. The contribution of the paper is identifying valid and reliable measurement constructs and confirming a unique sequential order for achieving cooperation. Moreover, the findings are applicable for many types of construction projects because of the similarities in the construction industry worldwide.

Relationship management as a strategy for supply chain engagement in the civil engineering construction industry

Many studies into construction procurement methods reveal evidence of a need to change the culture and attitude in the construction industry, transition from traditional adversarial relationships to cooperative and collaborative relationships. At the same time there is also increasing concern and discussion on alternative procurement methods, involving a movement away from traditional procurement systems. Relational contracting approaches, such as partnering and relationship management, are business strategies that align the objectives of clients, commercial participants and stakeholders. It provides a collaborative environment and a framework for all participants to adapt their behaviour to project objectives and allows for engagement of those subcontractors and suppliers down the supply chain. The efficacy of relationship management in the client and contractor groups is proven and well documented. However, the industry has a history of slow implementation of relational contracting down the supply chain. Furthermore, there exists little research on relationship management conducted in the supply chain context. This research aims to explore the association between relational contracting structures and processes and supply chain sustainability in the civil engineering construction industry. It endeavours to shed light on the practices and prerequisites for relationship management implementation success and for supply sustainability to develop. The research methodology is a triangulated approach based on Cheung.s (2006) earlier research where questionnaire survey, interviews and case studies were conducted. This new research includes a face-to-face questionnaire survey that was carried out with 100 professionals from 27 contracting organisations in Queensland from June 2008 to January 2009. A follow-up survey sub-questionnaire, further examining project participants. perspectives was sent to another group of professionals (as identified in the main questionnaire survey). Statistical analysis including multiple regression, correlation, principal component factor analysis and analysis of variance were used to identify the underlying dimensions and test the relationships among variables. Interviews and case studies were conducted to assist in providing a deeper understanding as well as explaining findings of the quantitative study. The qualitative approaches also gave the opportunity to critique and validate the research findings. This research presents the implementation of relationship management from the contractor.s perspective. Findings show that the adaption of relational contracting approach in the supply chain is found to be limited; contractors still prefer to keep the suppliers and subcontractors at arm.s length. This research shows that the degree of match and mismatch between organisational structuring and organisational process has an impact on staff.s commitment level and performance effectiveness. Key issues affecting performance effectiveness and relationship effectiveness include total influence between parties, access to information, personal acquaintance, communication process, risk identification, timely problem solving and commercial framework. Findings also indicate that alliance and Early Contractor Involvement (ECI) projects achieve higher performance effectiveness at both short-term and long-term levels compared to projects with either no or partial relationship management adopted.

Towards testing a new first-order decision making model for the procurement of public sector major infrastructure

Given global demand for new infrastructure, governments face substantial challenges in funding new infrastructure and simultaneously delivering Value for Money (VfM). As background to this challenge, a brief review is given of current practice in the selection of major public sector infrastructure in Australia, along with a review of the related literature concerning the Multi-Attribute Utility Approach (MAUA) and the effect of MAUA on the role of risk management in procurement selection. To contribute towards addressing the key weaknesses of MAUA, a new first-order procurement decision making model is mentioned. A brief summary is also given of the research method and hypothesis used to test and develop the new procurement model and which uses competition as the dependent variable and as a proxy for VfM. The hypothesis is given as follows: When the actual procurement mode matches the theoretical/predicted procurement mode (informed by the new procurement model), then actual competition is expected to match optimum competition (based on actual prevailing capacity vis-à-vis the theoretical/predicted procurement mode) and subject to efficient tendering. The aim of this paper is to report on progress towards testing this hypothesis in terms of an analysis of two of the four data components in the hypothesis. That is, actual procurement and actual competition across 87 road and health major public sector projects in Australia. In conclusion, it is noted that the Global Financial Crisis (GFC) has seen a significant increase in competition in public sector major road and health infrastructure and if any imperfections in procurement and/or tendering are discernible, then this would create the opportunity, through the deployment of economic principles embedded in the new procurement model and/or adjustments in tendering, to maintain some of this higher level post-GFC competition throughout the next business cycle/upturn in demand including private sector demand. Finally, the paper previews the next steps in the research with regard to collection and analysis of data concerning theoretical/predicted procurement and optimum competition.

Social Procurement: Promoting the sustainability of NPOs through the transformation of economic, social and cultural capital

Social procurement provides a key source of income for the Third Sector, and is vital for the sustainability of many nonprofit organisations. Social procurement involves the exchange of economic capital from one organisation, typically government (although for-profit and non-profit organisations can also purchase), with a nonprofit organisations in order to deliver other forms of. It is this transformation of economic capital into other forms of capital (cultural, human, social) in the social procurement process, which is the focus of this paper. Four case studies, which are representative of the four main types of social procurement, will be examined in order to trace how economic capital is transformed into other types of capital in each of these cases. In so doing, the paper will advance our understanding of social procurement theoretically, and lead to a wider discussion about the role of social procurement in ensuring the sustainability of nonprofit organisations, and the civil societies in which they operate.

Juggling competing public values : resolving conflicting agendas in social procurement in Queensland

Organisations within the not-for-profit sector provide services to individuals and groups government and for-profit organisations cannot or will not consider. This response by the not-for-profit sector to market failure and government failure is a well understood contribution to society by the nonprofit sector. Over time, this response has resulted in the development of a vibrant and rich agglomeration of services and programs that operate under a myriad of philosophical stances, service orientations, client groupings and operational capacities. In Australia, these organisations and services provide social support and service assistance to many people in the community; often targeting their assistance to clients facing the most difficult of clients with complex problems. Initially, in undertaking this role, the not-for-profit sector received limited sponsorship from government, relying on primarily on public donations to fund the delivery of services. (Lyons 2001). Over time governments assumed greater responsibility in the form of service grants to particular groups: ‘the worthy poor’. More recently, government has engaged in widespread procurement of services from the not-for-profit sector, which specify the nature of the outcomes to be achieved and, to a degree, the way in which the services will be provided. A consequence of this growing shift to a more marketised model of service contracting, often offered-up under the label of enhanced collaborative practice, has been increased competitiveness between agencies that had previously worked well together (Keast and Brown, 2006). One of the challenges which emerge from the procurement of services by government from third sector organisations is that public values such as effectiveness, efficiency, transparency and professionalism can be neglected (Jørgensen and Bozeman 2002), although this is not always the case (Brown, Furneaux and Gudmundsson 2012). While some approaches to the examination of social procurement - the intentional purchasing of social outcomes (Furneaux and Barraket 2011) - assumes that public values are lost in social procurement arrangements (Bozeman 2002; Jørgensen and Bozeman 2002), alternative approach suggest such inevitability is not the case. Instead, social procurement is seen to involve a set of tensions (Brown, Potoski and Slyke 2006) or a set of trade offs (Charles et al. 2007), which must be managed, and through such management, public values can be potentially safeguarded (Bruin and Dicke 2006). The potential trade-offs of public values in social procurement is an area in need of further research, and one which carries both theoretical and practical significance. Additionally, the juxtaposition of policies – horizontal integration and vertical efficiency – results in a complex, crowded and contested policy and practice environment (Keast et al., 2007),, with the potential for set of unintentional consequences arising from these arrangements. Further the involvement of for-profit, non-profit, and hybrid organisations such as social enterprises, adds further complexity in the number of different organisational forms engaged in service delivery on behalf of government. To address this issue, this paper uses information gleaned from a state-wide survey of not-for-profit organisations in Queensland, Australia which included within its focus organisational size, operational scope, funding arrangements and governance/management approaches. Supplementing this information is qualitative data derived from 17 focus groups and 120 interviews conducted over ten years of study of this sector. The findings contribute to greater understanding of the practice and theory of the future provision of social services.

Evaluation of green public road procurement in Australia : current practices and gaps to fill

Public road authorities have a key responsibility in driving initiatives for reducing greenhouse gas (GHG) emissions in the road construction project lifecycle. A coherent and efficient chain of procurement processes and methods is needed to convert green policies into tangible actions that capture the potential for GHG reduction. Yet, many infrastructure clients lack developed methodologies regarding green procurement practices. Designing more efficient solutions for green procurement requires an evaluation of the current initiatives and stages of development. A mapping of the current GHG reduction initiatives in Australian public road procurement is presented in this paper. The study includes the five largest Australian state road authorities, which cover 94% of the total 817,089 km of Australian main roads (not local) and account for 96% of the total A$13 billion annual major road construction and maintenance expenditure. The state road authorities’ green procurement processes and tools are evaluated based on interviews and a review of documents. Altogether 12 people, comprising 1-3 people of each organisation, participated in the interviews and provided documents. An evaluation matrix was developed for mapping the findings across the lifecycle of road construction project delivery. The results show how Australian state road authorities drive decisions with an impact on GHG emissions on the strategic planning phase, project development phase, and project implementation phase. The road authorities demonstrate varying levels of advancement in their green procurement methodologies. Six major gaps in the current green procurement processes are identified and, respectively, six recommendations for future research and development are suggested. The greatest gaps remain in the project development phase, which has a critical role in fixing the project (GHG reduction) goals, identifying risks and opportunities, and selecting the contractor to deliver the project. Specifically, the role of mass-haul optimisation as a part of GHG minimisation was reviewed, and mass-haul management was found to be an underutilised element with GHG reduction potential.

Sustainable road infrastructure procurement in Australia

According to Tan et al. (2011), the establishment of a clear sustainability policy in the construction industry is paramount, if only as a statement of the commitment of the top management to protecting the environment and enhancing social responsibility. The resulting policies should then translate into proactive strategies and action plans that improve the sustainability performance of contractors and provide a competitive advantage by integrating “long-run profitability” with sustainable development efforts. The strategies should also take into account climatic protection issues through greenhouse gas emissions (GHGe) monitoring and reduction initiatives (Stocker & Luptacik, 2009)...