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.

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.

Towards a relational contracting framework in the Australian construction industry : an initial framework

The Australian construction industry is characterized as being a competitive and risky business environment due to lack of cooperation, insufficient trust, ineffective communication and adversarial relationships which are likely lead to poor project performance. Relational contracting (RC) is advocated by literature as an innovative approach to improve the procurement process in the construction industry. Various studies have collectively added to the current knowledge of known RC norms, but there seem to be little effort on investigating the determinants of RC and its impact on project outcomes. In such circumstances, there is lack of evidence and explanation on the manner on how these issues lead to different performance. Simultaneously, the New Engineering Contract (NEC) that embraced the concept of RC is seen as a modern way of contracting and also considered as one of the best approaches to the perennial problem of improving adversarial relationships within the industry. The reality of practice of RC in Australia is investigated through the lens of the NEC. A synthesis of literature views on the concept, processes and tools of RC is first conducted to develop the framework of RC. A case study approach is proposed for an in-depth analysis to explore the critical issues addressed by RC in relation to project performance. Understanding the realities of RC will assist stakeholders in the construction industry with their investment in RC.

Relational contracting and its efficacy of project performance in the Australian construction industry

The Australian construction industry is characterized as being a competitive and risky business environment due to lack of cooperation, insufficient trust, ineffective communication and adversarial relationships which are likely lead to poor project performance. Relational contracting (RC) is advocated by literature as an innovative approach to improve the procurement process in the construction industry. Various studies have collectively added to the current knowledge of known RC norms, but there seem to be little effort on investigating the determinants of RC and its efficacy on project outcomes. In such circumstances, there is lack of evidence and explanation on the manner on how these issues lead to different performance. Simultaneously, the New Engineering Contract (NEC) that embraced the concept of RC is seen as a modern way of contracting and also considered as one of the best approaches to the perennial problem of improving adversarial relationships within the industry. The reality of practice of RC in Australia is investigated through the lens of the NEC. A synthesis of literature views on the concept, processes and tools of RC is first conducted to develop the framework of RC. A case study approach is proposed for an in-depth analysis to explore the critical issues addressed by RC in relation to project performance. Understanding the realities of RC will assist stakeholders in the construction industry with their investment in RC.

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.

Relational contracting and its efficacy of project outcomes in the Australian construction industry

The Australian construction industry is characterized as being a competitive and risky business environment due to lack of cooperation, insufficient trust, ineffective communication and adversarial relationships which are likely lead to poor project performance. Relational contracting (RC) is advocated by literature as an innovative approach to improve the procurement process in the construction industry. Various studies have collectively added to the current knowledge of known RC norms, but there seem to be little effort on investigating the determinants of RC and its efficacy on project outcomes. In such circumstances, there is a lack of evidence and explanation on the manner on how these issues lead to different performance. Simultaneously, the New Engineering Contract (NEC) that embraced the concept of RC is seen as a modern way of contracting and also considered as one of the best approaches to the perennial problem of improving adversarial relationships within the industry. The reality of practice of RC in Australia is investigated through the lens of the NEC. A synthesis of literature views on the concept, processes and tools of RC is first conducted to develop the framework of RC.

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.

Green procurement framework for the Malaysian construction industry

Construction projects have a negative impact on the environment. As Malaysia is planning more construction projects to cater for its current and future development needs, practitioners are urged to undertake greener approaches to construction. One of the efforts is the introduction of green procurement, which is promoted under the Malaysian Government’s MyHijau initiative. Construction procurement is recognised as a tool to shift the construction business into a greener industry. However, the implementation of green procurement in Malaysia is still in its infancy and faces a number of challenges, such as the lack of knowledge. A significant gap has been found between policy formulation and actual project delivery as there are no practical guidelines for stakeholders to procure environmental-friendly construction projects. To address this problem, the present research (as part of an ongoing PhD project) aims to develop a green procurement framework that guides stakeholders in procuring green projects in Malaysia. This article highlights the concept of green procurement in Malaysia, the work carried out to date to achieve the research objectives and the preliminary framework that has been established. It is hoped that this research will help academics and practitioners to further explore the potential of green procurement to improve sustainability in the current construction industry practices.