Per Erik Eriksson

Improving construction supply chain collaboration and performance: a lean construction pilot project

Improving construction supply chain collaboration and performance is central for achieving short-term business objectives as well as long-term competitive advantage. Lean thinking is an approach th ...

Procurement effects on trust and control in client‐contractor relationships

Purpose – This paper aims to investigate how construction clients currently deal with procurement and to analyse how the choices made during the buying process stages affect the combination of governance mechanisms and control types in client‐contractor relationships.Design/methodology/approach – Empirical data were collected through a survey of 87 Swedish construction clients.Findings – Current procurement procedures establish governance forms facilitating a focus on price, through output control, and authority, through process control. Since construction transactions are mostly characterized by high complexity and customisation and long duration, the theoretical framework prescribes a focus on trust and a somewhat lower focus on price and authority. Hence, from a transaction cost perspective, construction clients focus too much on price and authority and too little on trust. Since current procedures may cause problems in all stages of the buying process, the result suggests that partnering arrangements,...

Partnering : what is it, when should it be used, and how should it be implemented?

The interest in construction partnering has increased during the last decade. Much research has, however, found that cooperation and its benefits are not easily obtained, partly due to a lack of understanding of the partnering concept and when and how to implement it. The aim is therefore to increase this understanding by investigating three research questions: (1) What is partnering? (2) When should partnering be used and to what extent? (3) How should partnering be implemented? A thorough literature review and four case studies are utilized to develop a definition of partnering and discuss when and how partnering should be implemented through cooperative procurement procedures. Partnering is defined as a cooperative governance form that is based on core and optional cooperative procurement procedures to such an extent that cooperation‐based coopetition is facilitated. Mandatory core procedures are: soft parameters in bid evaluation, compensation form based on open books, and usage of the core collaborative tools start‐up workshop, joint objectives, follow‐up workshops, teambuilding, and conflict resolution techniques. Complementary optional procedures are: early involvement of contractors in concurrent engineering, limited bid invitation, joint selection and involvement of subcontractors in broad partnering teams, collaborative contractual clauses, incentives based on group performance, usage of complementary collaborative tools (e.g. partnering questionnaire, facilitator, joint risk management, joint project office, and joint IT tools), and increased focus on contractors’ self‐control.

Achieving Suitable Coopetition in Buyer–Supplier Relationships: The Case of AstraZeneca

ABSTRACT Purpose: The purpose of this research is to deal with the two crucial managerial challenges of first identifying and then achieving a suitable balance between cooperation and competition in buyer-supplier relationships. Methodology/Approach: First, a purchasing framework is developed by utilizing principal-agent theory to bridge the literature on transaction cost economics and industrial buying behavior. The practical use of this framework is then empirically illustrated by a case study description of how a construction clients purchasing procedures affect coopetition in a partnering project. Findings: The developed purchasing framework shows how actions taken during the different stages of the buying process affect coopetition in buyer-supplier relationships. It highlights the deficiencies of both the neoclassical competitive focus and the cooperative focus found in the literature on interorganizational relationships. Instead it emphasizes the importance of balancing cooperation and competition. Research Implications: This research shows how the traditional analysis of governance structure can be transformed into an analysis of coopetition. Furthermore, it explores how purchasing procedures affect governance forms through different control mechanisms. It also shows how trust and social context can be integrated into a transaction cost framework through social control. Practical Implications: The developed framework can be used for guiding purchasing decisions. Managers planning to implement coopetitive (cooperative and competitive ) relationships should recognize the importance of considering all stages of the buying process. Collaborative tools (e.g., teambuilding, joint objectives, and a shared project office) are useful but not enough to transform an otherwise competitive relationship into a cooperative one. Hence, technical aspects of the buying process need to be addressed as well (e.g., joint specification, bid evaluation, etc.).

How procurement options influence risk management in construction projects

Before proceeding with a project, a client has to choose an appropriate procurement option that facilitates an effective project organization in general and a thorough risk management process in particular. By identifying three procurement variables that have a major influence on risk management: project delivery method, form of payment, and use of collaboration or partnering arrangements, the effect of each variable is studied. An exploratory study and a series of interviews with clients, contractors and consultants involved in 11 Swedish construction projects, were performed in order to examine how risk management was carried out in each project. Irrespective of the procurement option, many projects suffered from variations in cost affecting one or more actors. Risk management was not carried out systematically throughout project phases. However, in the projects with early involvement of the actors, their participation throughout the project, and opportunities for open dialogue and collaboration, a more thorough risk management process was found. While project delivery methods define formal risk allocation, the use of incentives and collaboration or partnering arrangements help to establish a collaborative approach to risk management.

Cooperation and partnering in facilities construction – empirical application of prisoner's dilemma

Purpose – To investigate if game theoretic reasoning may be used to explain a lack of cooperation in buyer‐supplier relationships within construction and facilities management. In order to make an empirical application of the prisoners dilemma (PD) game, possible important variables are operationalized and empirically measured.Design/methodology/approach – Empirical data concerning pay‐offs and the variables in the discount parameter formula (created in this paper) have been obtained through interviews with clients and contractors in the Swedish construction sector.Findings – This paper suggests a way to operationalize pay‐offs and the discount parameter, making empirical measurements possible. Owing to differences in pay‐offs and the discount parameter, different forms of contracts will affect cooperation. Cumulative values of cooperation are much higher in lasting relationships than in occasional transactions. Thus, the best way to facilitate cooperation between rational players is long‐term contracts....

Open innovation in process industries: a lifecycle perspective on development of process equipment

The development and installation of new process equipment in production plants typically requires strong collaboration among a process firm and various equipment suppliers. While incentives to collaborate often are strong, close collaboration also poses significant problems, throughout the lifecycle of process equipment. The purpose of this article is to explore the problems and opportunities faced by process firms and their equipment suppliers throughout the lifecycle stages of collaborative development projects. This paper combines literature on open innovation, collaborative development and buyer-supplier relationships. Empirically, we draw on a large number of interviews in a dual case study of two process firms. Our results show that strong collaboration is neither positive nor negative in general. Rather, opportunities, problems, and collaboration intensity are strongly contingent on the specific stage in the lifecycle of process equipment. Our findings underscore the managerial and theoretical importance of a lifecycle perspective on the development of process equipment, since significant overlaps and interconnections exist across different stages.

Procurement and Governance Management - Development of a Conceptual Procurement Model Based on Different Types of Control**

Due to the importance of external suppliers for most companies, procurement and governance management is of utmost relevance for achieving competitive advantage. Research in the field of industrial buying behaviour (IBB) has largely been influenced by transaction cost economics (TCE). However, some TCE research has been rather simplistic; not distinguishing between governance structures and mechanisms, while research in IBB has a surplus of descriptive empirical studies and a critical shortage of analytical and conceptual constructs. This paper aims to address these shortcomings by integrating IBB and TCE in a conceptual model regarding procurement and governance of transactions. The model regards the analytical choice of a suitable combination of governance mechanisms (price, trust and authority) for different types of transactions. Additionally, a procedure for facilitating the achievement of a suitable mechanism mix is developed. The procedure shows how decisions during the buying process, regarding different types of control, will affect the mechanisms? levels in the transaction relationship. The model together with its procedure can serve as a basis for analysing planned purchases, in order to tailor governance mechanisms to transaction characteristics.

Industrialized construction in the Swedish infrastructure sector: core elements and barriers

Improving productivity and innovation is a central challenge in all industries, but particularly in construction where improvements have been slow. To meet this challenge, a recent investigation into the actions of Swedish government clients has recognized needs to improve planning during project procurement phases, increase numbers of turnkey contracts and raise industrialization of the sector. In response, the Swedish Transportation Administration has launched a research and innovation programme to foster an industrial approach and identify ways to increase the standardization of products and processes. However, increasing industrialization has been difficult to achieve in the project-based construction industry except in the process-based housing sector. Further, there has been little research on the concept of industrialized infrastructure construction and barriers to its implementation. Opinions and attitudes of clients, consultants and contractors in the infrastructure sector were investigated in relation to the core elements of industrialized construction, and the barriers hindering its development. Opportunities and obstacles related to both product and process standardization for continuous improvements and the relationships between clients and contractors are revealed. Hence, the implementation of industrialized construction requires tightly focused governance at the outset of projects and profound changes to established attitudes, norms and regulations.

Managing short-term efficiency and long-term development through industrialized construction

There is a strong need for a productive and innovative infrastructure sector because of its monetary value and importance for the development of a sustainable society. An increased level of industrialization is often proposed as a way to improve efficiency and productivity in construction projects. In prior literature on industrialized construction, there are however neither many studies addressing more long-term aspects of innovation and sustainability nor studies within the infrastructure context. Organizational theory suggests that firms need to be ambidextrous and focus on both long-term exploration of new knowledge and technologies and short-term exploitation of current knowledge and technologies, in order to achieve sustainable development. Therefore, an investigation of how both short-term exploitative performance objectives and long-term explorative development can be addressed when implementing industrialized construction in infrastructure projects was conducted. A case study consisting of four infrastructure projects shows that the main drivers for increased industrialization are of an exploitative nature, focusing on cost savings and increased productivity through more efficient processes. The main barriers to increased industrialization are however related to both explorative and exploitative activities. Hence, by managing the identified barriers and explicitly addressing both exploitation and exploration, industrialized construction can improve both short-term efficiency and long-term innovation and sustainability.