Procurement Effects on Coopetition in Client-Contractor Relationships

Client-contractor relationships are often criticized for being competitive and adversarial, rather than cooperative. The main purpose of this paper is to examine how construction clients’ procurement procedures affect the balance between cooperation and competition (i.e., coopetition) in client-contractor relationships. The empirical results, based on a survey to 87 Swedish construction clients, show that clients’ procurement procedures facilitate a focus on competition. It was also found that clients’ earlier experience of a certain procedure heavily affects their procurement choices, thereby preserving old behaviors. Although two-thirds of the clients wish to increase cooperation with contractors, this does not affect their procurement decisions. This study therefore concludes that the theoretical framework, based on transaction cost economics, is correct in prescribing more cooperation than is empirically observed in the construction sector. The theoretical framework can increase clients’ awareness of how procurement affects cooperation and competition, thereby serving as a basis for more unbiased and systematic procurement decisions, facilitating cooperation-based coopetition.     

Efficacy of Partnering on the Woodrow Wilson Bridge Project: Empirical Evidence of Collaborative Problem-Solving Benefits

This paper examines the large body of partnering rating data collected during more than 8 years of partnered construction contracts on the Woodrow Wilson Bridge replacement project. The writers report that partnering efficacy, as measured by “collaboration,” was not predetermined by bid results or regional/national distinctions between construction contractors. The data show that good partnering is strongly associated with team satisfaction with budget and schedule results. The correlation among these indicators is not “proof” of the effectiveness of partnering. However, had the analysis shown negative correlations where positive correlations were expected, enthusiasm for construction partnering would certainly have suffered a blow.     

Effective Partnering in Innovative Procured Multicultural Project

Effective partnering has been shown to improve projects in numerous ways including cost, schedule, safety, quality, and claims. However, partnering in a multicultural, multiphase environment has some additional challenges. This paper describes some lessons learned from the Tren Urbano project in San Juan, Puerto Rico, a $1.5 billion, 17.2-km heavy-rail project. The Tren Urbano Project has an innovative procurement strategy of turnkey with multiple primes, which combined with the multiphase, multicultural project environment presents additional challenges for providing an effective partnering environment. A system dynamics partnering model was built to demonstrate that the partnering effort in the Tren Urbano project was adequate for a traditional procured, limited culture project. However, for a project like Tren Urbano, a greater partnering effort is needed to achieve the same results.     

How Relational are Construction Contracts?

For many years, the construction industry has relied on formal contracts to define and enforce the obligations and rights of contracting parties. Legal scholars have suggested that, based on their transaction characteristics, there are three different forms of contracts: classical, neoclassical, and relational. Of these, which form is more appropriate for use in construction projects? With increasing awareness of the importance of teamwork in construction, there is clear evidence of a rising trend in adopting a partnering approach to construction project delivery. For projects that seek to achieve a partnering relationship, relational contracts that value relationships, trust, and communication appear to be the appropriate form of contract. This paper discusses the application of relational contracts in construction by examining the fundamental question “How relational are construction contracts?” The degree of relationalism is assessed using a relational index comprising eight factors: cooperation, organizational culture, risk, trust, good faith, flexibility, the use of alternative dispute resolution, and contract duration. It was found that in the traditional design–bid–build form of delivery, the main contract and domestic subcontract forms are more relational than those of the nominated subcontract and the direct labor contract. The study was conducted in Hong Kong.     

Contractor as Trust Initiator in Construction Partnering—Prisoner’s Dilemma Perspective

Partnering has been advocated for use in construction as a project-delivery approach to curb dispute and enable a cooperative contracting environment. Successful construction partnering is perceived to derive benefits to both developers and contractors. In view of significant implications to successful project delivery, there has been a surge of research and studies on construction partnering. These studies typically focus on the partnering process as well as the identification of critical success factors. Among the various success factors that underpin partnering success, establishing trust among partners is considered the most important. Moreover, skeptics have been swift to point out that establishing trust in construction is daunting. A better understanding of the role of trust and its manifestation in partnering efforts is therefore of both academic and practical value. In this study, motivating trust in construction partnering is described within the classic framework of “the prisoner’s dilemma,” which suggests the trust cycle can be kick-started if construction partners put cooperation before competition and self-interest. This paper reports a study that is designed to suggest a suitable candidate for the trust initiator. As such, the critical trust factors for two groups of construction partners in Hong Kong—developers/consultants and contractors—are first identified. It is found that “performance” and “permeability” of partners are the two most critical trust factors. “Performance” describes the partner’s competence and problem-solving ability as perceived by their counterpart. “Permeability” reflects the partner’s openness in sharing information. The result of a multiple-regression analysis further suggests that the contractor is in a position to initiate trust through competent performance and maintaining effective communication with the client. In this manner, the trust cycle can expand with reciprocal trustworthiness from the client.     

Enhancing Total Quality Management by Partnering in Construction

Total quality management (TQM) has increasingly been introduced into the construction industry across many countries as an improvement strategy, but there are many barriers impeding its effectiveness in implementation. Many researchers pointed out that partnering can facilitate TQM application, yet the quintessential nature on the linkage between the two techniques is still not clear due to a lack of rigorous verifiable empirical evidence. With support of the data collected from a survey of the Chinese construction industry, together with a case study of the Three Gorges Dam Project, this study reveals the mechanism of how partnering, associated with incentives, can enhance the implementation of TQM into the construction industry. It is concluded that partnering can enhance TQM largely due to enhancing the links across the boundaries of organizations within a trust environment; and the impacts of incentives on TQM are through both aligning strong motivations to encourage participants using the established links efficiently and aligning the necessary financial resources for participants to directly assist the investment on improving TQM. Further studies should be conducted to build optimum links and alignments among all project participants to ensure intraorganizational TQM activities are congruent with the interorganizational interactions, which require future project organizations to change in order to fit this.     

Cost Performance Comparison of Two Public Sector Project Procurement Techniques

Increased industry discussion of the potential benefits of alternative forms of construction project delivery often presents little cost analysis of options. This work presents the results of a cost comparison study of completed public sector municipal facilities design and construction projects—a portion of which delivered using a traditional design-bid-build procurement approach and a portion of which delivered using the procurement technique of a negotiated lump sum construction contracts with in-house construction forces. The study compares costs for all phases of all the projects (design, bid and award, construction, and total project cost) across both methods of project procurement. Conclusions examine the cost trade-offs of using negotiated contracts with in-house forces, outline key success factors identified through this study in order to optimize the use of this form of project procurement, and identify areas for future research.     

New Project Procurement Process

In the United Kingdom, partnering was proposed by Sir Michael Latham as a means of achieving 30% cost savings in a suitable organizational climate. How this is achieved within the construction industry involves not only a mutuality of purpose between project personnel, but appropriately applied methods of process. This paper addresses the issues surrounding the way forward in partnering. By applying systematic processes to selecting partners on a short-term construction project, a case study demonstrates that cooperative working can be developed and conflict can be avoided. A unique and rigorous selection methodology known as the project delivery process was adopted for the Forton Lake Opening Bridge Millennium project in the United Kingdom, and demonstrates how significant improvements may be achieved in line with worldwide improvement targets.     

Achieving Partnering Success through an Incentive Agreement: Lessons Learned from an Underground Railway Extension Project in Hong Kong

Over the years, it has been observed that partnering has been ineffectively implemented in the public sector of Hong Kong. Contributing factors to this lack of success are nature and the large size of bureaucratic organizations and commercial pressure compromising the partnering attitude. The Mass Transit Railway Corporation Limited (MTRCL), one of the prominent pioneers in adopting project partnering in the infrastructure sector of Hong Kong since 1999, however, implemented the partnering principle with significant success. This paper, based on a recently completed research project funded by the Construction Industry Institute?Hong Kong in late 2004 and a followup in-depth interview meeting with senior executives of MTRCL in early June 2005, analyzes the rationale behind the successful development of partnering culture in the infrastructure sector of Hong Kong through a case study—the Tseung Kwan O Railway Extension (TKE) Contract 654—platform screen doors. The project comprises the supply and installation of platform screen doors along the whole MTRCL’s TKE with five stations. This project was analyzed by means of the project documentation and face-to-face interviews with the project representatives, comparisons with another five partnering case studies, and a followup in-depth interview meeting with another two senior executives of MTRCL. After the analysis, it was found that the implementation of partnering together with an incentive agreement (IA), a kind of target cost (TC) contract, underpinned the partnering success of this project. Therefore, it is recommended that partnering together with TC contracts, such as IA, greatly assists in the achievement of construction excellence, and can provide a workable model for enhancing overall project performance in electrical and mechanical projects.     

Quantitative Analysis of Partnered Project Performance

Partnering is a technique that has become the construction industry's application of total quality management and enjoys widespread use throughout the industry. This paper details the results of a statistical analysis of over 400 Texas Department of Transportation construction projects worth a total investment of nearly $2.1 billion. Half the projects were completed under partnering agreements. After comparing the two groups of projects, the paper concludes that partnering promises to furnish a means to control the two prime project performance indicators—cost growth and time growth. Additionally, in a large construction program the continuous application of partnering will result in improved project performance across the entire program.     

Toward a New Paradigm: Simultaneous Use of Multiple Project Delivery Methods

Since World War II, the American Strategy for infrastructure procurement has evolved to rely primarily upon a single delivery method, design∕bid∕build. While this strategy was used to implement massive federal investment in highways, transit systems, and wastewater treatment, it has restricted state and local flexibility in aligning the procurement process to achieve best value for locally funded projects. The engineering, procurement, and construction community in the United States has now recognized the limitations of a procurement process designed to support a single delivery method. Change is coming, and the transition to a new process will challenge public owners in novel, but meaningful ways. This paper focuses upon shifting from the current paradigm toward a new model that supports simultaneous use of multiple project delivery methods. The discussion and frameworks provided are the result of a variety of research efforts by the Infrastructure Systems Development Research team at the Massachusetts Institute of Technology. Studies of the history of American Infrastructure, analyses of case studies across the country, development of decision support models for capital programming, and real applications to municipal infrastructure planning provide the underpinnings for the results and conclusions presented.     

Reverse Auctions: Controversial Bidding Practice

Although reverse auctions have been utilized in the procurement of goods for many years, the availability and widespread use of the Internet has recently lead to a dramatic increase in its employment. Reverse auctions have recently found their way to a new market: procurement of construction services. As business and commerce have moved toward e-business and e-commerce, construction is drawn into such new practices. There is an ongoing debate as to whether reverse auctions are suitable equally for the procurement of both goods and services. Some contractors are concerned that reverse auctions are just another form of bid shopping. It is necessary for the construction industry to understand and evaluate the pros and cons of reverse auctions. This article discusses the procedures involved in conducting online reverse auctions and describes reverse auction practices, their advantages, and disadvantages. It also examines the legal principles of reverse auctions, potential problems, and challenges to its use.     

工业建筑工程最低价中标存在的问题及应对策略

工业建筑工程招标中采取的最低价中标,具有降低工程投资、评标过程操作简便等特点,但在具体实践中,存在可能导致施工企业亏损、工程质量低劣、工程造价失控、工程拖期等问题。应对策略上重点采取按相关法律规定合理确定最低价、做好投标企业的资格审查、正确评标、强化工程实施中的监管和竣工后的工程结算等工作。     

Risk Assessment for Construction Joint Ventures in China

The construction industry in China is developing toward the international procurement practice, and such development has attracted many foreign firms into the Chinese construction market through the formation of Sino-foreign joint ventures. Joint venture has become an important sector in the Chinese construction industry. However, the difference in management systems, technological practice, and cultural background among the partners within joint ventures brings difficulties to the function of joint venture. A significant degree of risk is involved in joint venture investments. Thus, foreign firms increasingly intend to spend more effort in studying proper strategies of managing risks in their joint venture businesses. Based on a survey, this paper establishes a risk significance index to show the relative significance among the risks associated with the joint ventures in the Chinese construction procurement practice. Real cases are examined to show the risk environment faced by joint ventures. The paper also investigates practical applications of risk management in the business of joint ventures.     

Exploring Critical Success Factors for Partnering in Construction Projects

The construction industry is a very competitive high-risk business. Many problems, such as little cooperation, lack of trust, and ineffective communication resulting in adversarial relationships between contracting parties, are facing the construction industry. Partnering is perhaps one of the most innovative developments in delivering a project efficiently and reducing construction disputes. It provides a sound basis for a “win-win” climate and synergistic teamwork. Project partnering in the Hong Kong construction industry has gained in popularity since 1994. A number of potential factors contributing to partnering success have emerged and deserve further study. This paper presents a review of the development of the partnering concept in general and identifies critical success factors for partnering projects from the Hong Kong perspective in particular. Through a postal questionnaire survey geared toward project participants with hands-on partnering experience, the opinions of various parties—clients, consultants, and contractors were sought and evaluated in relation to partnering success factors. The relationship between the perception of partnering success and a set of success factors hypothesized in the study was derived using factor analysis and multiple regression. The results indicated that certain requirements must be met for partnering to succeed. In particular, the establishment and communication of a conflict resolution strategy, a willingness to share resources among project participants, a clear definition of responsibilities, a commitment to a win-win attitude, and regular monitoring of partnering process were believed to be the significant underlying factors for partnering success. Such an identification of success factors could well formulate effective strategies for minimizing construction conflicts and improving project performance.     

Contractor Selection for Design∕Build Projects

As traditional construction procurement approaches are found to be inadequate in meeting the demands and challenges of recent times, alternative procurement routes such as through management contracting or build-operate-transfer are increasingly being adopted. Although design∕build is one of the more popular alternative procurement methods that also has a long history, it does not appear to have well-established contractor selection procedures. This paper focuses on developing a model for contractor prequalification and bid evaluation in design∕build projects. For this purpose, it presents a comparative overview of some international practices in the design∕build contractor selection process. The overall objective is to identify the core aspects of selecting a suitable bidder in order to achieve the best “value for money.” The strengths and weaknesses of current practices of contractor selection are highlighted while identifying some of the best practices followed in design∕build projects by various clients.     

Partnering on Small Construction Projects

Application of partnering concepts on small construction projects by owners or government functionaries could result in substantial savings for private owners and public exchequers annually. This paper develops a concept for partnering for small construction projects based on recent management research and theories being developed in universities with the lessons learned from the U.S. Army Corps of Engineers experiences on partnering for large projects. The discussion addresses current attitudes toward partnering, particularly, in small (i.e., up to $3,000,000) private or government sponsored projects. An objective of this paper is to share the benefits of partnering on small construction projects, based on practices and experiences of the U.S. Army Corps of Engineers. A final objective is to develop a primer for construction practitioners.     

设备采购管理简述

介绍了设备采购形式,并重点分析了公开招标的基本程序以及设备采购管理中应注意的设备制造过程的监理和催交等重点工作,从而达到有效地控制设备投资、质量、进度之目的。     

Model for Financial Renegotiation in Public-Private Partnership Projects and Its Policy Implications: Game Theoretic View

Today, government is no longer considered the sole provider of public works or services. Public-private partnership (PPP) has been recognized as an important approach to solving problems for governments in providing infrastructure systems. However, the joint ownership or partnership in PPP complicates the administration of PPP projects. Too often, in PPP, many serious problems occur mainly because of bad administration policies. In particular, the fact that government may rescue a distressed project and renegotiate with the developer causes major problems in project procurement and management. This paper aims to study when and how government will rescue a distressed project and what impacts government’s rescue behavior has on project procurement and management. A game-theory based model for government rescue dynamics is developed. Propositions, corollaries, and important policy implications are then derived from the model. This pilot study, the writer hopes, may provide theoretic foundations to policy makers for prescribing effective PPP procurement and management policies and for examining the quality of PPP policies. The study can also offer researchers a framework and a methodology to understand the behavioral dynamics of the parties in PPP.