Relationship Contracting: A Strategy For Improved Project Performance? (original) (raw)
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A conceptualisation of relationship quality in construction procurement
International Journal of Project Management, 2016
Relational contracting is often regarded as means to improve performance and profit margins in managing projects. A continuum of contracts in construction projects attempts to provide fit for purpose relationships to different working conditions; hosting levels of relationship quality. This study aims to explore contracting methodologies within construction procurement in search of practical and manageable relationship quality attributes. Initially relational attributes such as teamwork, commitment and trust along with seven main strategies for achieving these attributes are extracted from relevant studies. In the second stage construction expert interviews suggest that performance satisfaction is also a practical attribute and necessity of relationship quality. The study proposes a framework of actions and seven strategies which can facilitate the attributes associated with relationship quality. Finally based on the framework and three case studies five levels of transaction, action, strategy, attribute and relationship are demonstrated for relationship quality evaluation in construction project's procurement practices.
2012
Yongjian Ke, bdgky@nus.edu.sg Department of Building, National University of Singapore, 4 Architecture Drive, Singapore 117566 Florence Y.Y. Ling, bdglyy@nus.edu.sg Department of Building, National University of Singapore, 4 Architecture Drive, Singapore 117566 Patrick X.W. Zou, patrick.zou@canberra.edu.au Faculty of Business, Government and Law, University of Canberra, ACT 2601 Australia ShouQing Wang, sqwang@tsinghua.edu.cn Department of Construction Management, Tsinghua University, Beijing 100084, China Mohan M. Kumaraswamy, mohan@hku.hk Department of Civil Engineering, The University of Hong Kong, Pokfulam Road, Hong Kong, China
2015
Supply chain management (SCM) concepts suggest that high fragmentation of roles on projects causes significant negative impacts such as lower processes integration and higher transaction volumes. Within the scope of construction SCM, relationship management (RM) is regarded as one of the most important aspects for achieving efficient SCM. The use of RM in construction projects administration worldwide is manifest on alternative procurement methods, drifting away from traditional systems to ones that are relationship-based. Despite the significance of relationships for project delivery, there were no previous studies that investigated the influence of supply chain RM on construction projects utilizing different project delivery methods (PDMs). The aim of this paper is thus, to determine how RM among parties may be influenced by the PDM utilized. This is achieved through conducting case studies to compare RM in multi-prime design-bid-build versus design-build projects. The researchers adopted the core values developed by Meng's 2011 RM maturity model to assess RM on projects utilizing different PDMs. Based on the two case studies, the total project RM score was seen to be lower in DBB projects compared to DB projects suggesting that the PDM employed influences RM on construction projects. Such findings can serve as a preliminary evidence of PDM choice effect on project RM and can help project parties gain a better understanding of PDM association to effective supply chain RM implementation. This study could be further extended to encompass more projects to provide statistical evidence of the influence of PDM on RM.
Throughout this work Building Team refers to the whole team involved in the project from inception to completion and including the client, designers, constructors and all specialists. The term Site Team refers only to those members of the building team who are engaged in the actual production process, i.e. main contractor, domestic and nominated subcontractors, etc.. The pronoun he is used throughout the text to represent both sexes and is preferred to the alternative he/she for the sake of readability and does not imply that women are excluded from any of the roles described.
arcom.ac.uk
Managing the relationships between the various parties involved in construction is becoming more crucial as the industry moves away from fragmented and adversarial ways of working. Under less-adversarial procurement routes and contractual arrangements such as partnering, it is essential that the parties develop mutually beneficial objectives and a high level of commitment, cooperation and trust. When disputes do occur, without good relationships between the parties they are likely to refer back to the clauses of the contract which, in turn, may start a return to adversarial ways of working. The concept of ‘relational contracting’ has been developed by Macneil (1974, 1980, 1981 and 1983). This considers a contract to represent a relationship between the parties and introduces a degree of flexibility into the contract on the basis of understanding the other party’s objectives. Based on a review of recent literature, this paper explores the dimensions of relational contracting that are applicable to the construction industry. Since the principles of relational contracting have received relatively little attention in the construction management literature, work from other disciplines have been explored in order to promote a fuller understanding of its implications to understanding the way in which people from different organizations work together. It is suggested that previous work has viewed the concept of relational contracting in isolation rather than as an integrated set of relational principles. It is argued that when viewed as a joined-up set of dimensions, relational contracting has the potential to facilitate a better understanding of interorganizational relationships within the industry. Keywords: relational contracting, long-term relationship, construction supply chain.
Construction Economics and Building, 2016
This paper aims to review the use of various construction procurement systems and present the development of Relationship-Based Procurement (RBP) Methods currently in use within the Australian construction industry. Therefore, this paper provides the historical development of procurement briefly and then focuses on the adoption of Relationship-Based Procurement (RBP) approaches in the Australian construction industry to investigate the future direction of the collaborative project procurement arrangements. Semi-structured interviews with high-level managers in the Australian state government organizations have been conducted to answer the research question. A discussion has been presented about the potential future tendency of the industry in adopting a RBP. The findings suggest that even though relationship based procurement systems offer significant benefits; they are not popular among the public sector decision makers because of inability to demonstrate Value for Money (VfM) prop...
Are relational contracting principles applicable to public construction projects?
The need for relational contracting in the construction industry is high because of the barriers arising from its highly fragmented nature. While relational contracting principles are less difficult to apply in private sector projects, it is not known if public sector projects can enjoy the full benefits of relational contracting. This paper aims to provide answers to this question. Difficulties of implementing relational contracting principles in public construction projects were firstly discussed. A theoretical framework including a basic model, an integrated stakeholder network, and three categories of measurement items were then identified. Although the theoretical framework and accompanying hypotheses are still required to be tested by a following survey, the proposed findings would guide the application of relational contracting in public projects, thus contributing to better relationships in the construction contracting environment, and thereby boosting project outcomes.
A Review of the Concepts and Definitions of the Various Forms of Relational Contracting
Construction project teams are unique entities, created through a complex integration of factors, with inter-disciplinary players, varying roles, responsibilities, goals and objectives . Collaboration and teamwork are therefore crucial since sharing up-to-date information between participants leads to minimising errors, reduction of time delays and breaking the widespread rework cycle, which allows a sustainable relationship between participants to evolve. Benefits of collaborative, rather than adversarial, working relationships within construction organisations are well documented .
Construction project procurement routes: an in-depth critique
International Journal of Managing Projects in Business, 2009
Purpose -The purpose of this paper is to examine different categories of building project procurement routes based on organisational, contractual, financial and technical issues. Design/methodology/approach -The paper is based on review of literature and conditions of contracts. The UK construction industry serves as a general frame of reference. The Royal Institution of Chartered Surveyors survey of Contracts in Use from 1985 to 2004 is used to probe the share and value of contracts along different procurement routes and across different conditions of contracts in the UK. The logic is that the value and the share of contracts will indicate the behaviour of different procurement routes in the UK construction market while the in-depth analysis of conditions of contracts will show the gaps and relationships between the general definition/categorisation and contractual context (conditions of contracts) of each of the procurement routes. Findings -The preliminary result of the analysis shows that traditional routes remain the main type of procurement route for the construction project industry sector, within which different management and incentivisation systems are applied for greater efficiency. The conditions of contracts in the UK support this assertion by aligning different procurement routes to different conditions of contracts and additionally specifying different forms of agreements, special provisions and incentivisation in order to increase performance, reduce risks and improve compensation methods.