Lena Borg

Service-led construction : is it really the future?

In recent years it has been argued that bundling construction with operation/maintenance can increase profits in the construction sector. This idea is critically evaluated using different theoretical frameworks and the main points are: innovative organizational models only lead to higher profits in the short run, unless the firm can reduce long‐run competition. Many firms should however be able to bundle construction and maintenance. Several arguments have been put forward for the proposition that bundling is more efficient, but none of them are very strong. Knowledge about the construction phase is difficult to transfer also within firms, and it is not clear how a construction firm can build up knowledge of the long‐run effects of different construction alternatives. A long‐run contract for certain services is—just as a construction contract—difficult to write in a way that does not lead to surprises and future problems, so the gain from this perspective is not clear. The initiative for bundling came from the public sector; it was not an innovation from the private sector looking for higher profits. The motives for the public sector seem more related to financing and risk for cost overruns and delays. Taking over risk leads to higher profits, but this is just compensation for the risk and nothing more, if it is a competitive market.

The effect of subsidy on housing construction in various regions of Sweden

Purpose – The purpose of this paper is to explore the extent that interest subsidies have impacted onthe total production of Swedish single- and multifamily houses. It also intends to examine wheth ...

How Can Clients Improve the Quality of Transport Infrastructure Projects? The Role of Knowledge Management and Incentives

The aim of this paper is to argue for a number of statements about what is important for a client to do in order to improve quality in new infrastructure projects, with a focus on procurement and organizational issues. The paper synthesizes theoretical and empirical results concerning organizational performance, especially the role of the client for the quality of a project. The theoretical framework used is contract theory and transaction cost theory, where assumptions about rationality and self-interest are made and where incentive problems, asymmetric information, and moral hazard are central concepts. It is argued that choice of procurement type will not be a crucial factor. There is no procurement method that guarantees a better quality than another. We argue that given the right conditions all procurement methods can give good results, and given the wrong conditions, all of them can lead to low quality. What is crucial is how the client organization manages knowledge and the incentives for the members of the organization. This can be summarized as “organizational culture.” One way to improve knowledge and create incentives is to use independent second opinions in a systematic way.