The physical substance of a house is a pile of materials assembled from widely scattered sources. They undergo different kinds of and degrees of processing in large number of places, require many types of handling over periods that vary greatly in length, and uses the services of a multitude of people organized into many different sorts of business entity (Cox & Goodman, 1956)
Contractor performance is critical to the success of any construction project as it is contractors who convert design into practical reality. Improved contractor performance leads to increased client satisfaction, an improvement in the reputation of contractors and hence their competitiveness in the market. (Xiao & Proverbs, 2003)
Methodology
Literature review
Industry presentation
What is the construction industry?
The Standard Industrial Classification defines the construction industry as such: 'This section includes general construction and specialised construction activities for buildings and civil engineering works. It includes new work, repair, additions and alterations, the erection of prefabricated buildings or structures on the site and also construction of a temporary nature' (SIC, 2007). (Morton & Ross, 2008) argue that this definition does not match nowadays reality as it does not include architectural and surveying practices which are important actors in today's construction industry. (Morton & Ross, 2008) recommend to use the following definition for the industry: 'all firms involved directly in the design and construction of building'. For the purpose of this report, the author will follow Morton and Ross recommendation and adopt this definition. Nevertheless, all the figures presented for the construction industry being official statistics from the government, the first definition may apply.
The UK construction industry have been qualified to be as its worst: 'Wasteful, inefficient and ineffective' (Morledge et al., 2009), p24.
(Anumba et al., 2000) argue that the construction industry is highly inefficient compare to other sectors.
Industry structure
The construction industry in Europe is very important, with an Estimated construction investment (EU 27 - 2009): 1.173 billion €, and representing 9,9 % of GDP of the EU 27.It is the biggest industrial employer in Europe with 44,6 million workers depending, directly or indirectly, on the construction sector and 14,9 million operatives representing 7,1 % of Europe`s total employment and 29,1 % of industrial employment Source: (FIEC, 2010)
In UK, the construction industry is also very important representing around 8% of gross domestic product (CIOB, 2006), with an annual output of approximately £123 billion (ONS, 2009).
The industry is also a large employer in UK with around 1.9 million people, of which 0.7 million are self-employed (Cooke & Williams, 2009) .
Construction has a very distinct structure with a few large firms carrying out the majority of the work Table XXX illustrate the example of the contractors where 0.7% of the firms (the bigger ones carry out 43 % of the work in terms of value.
Table XXX also illustrate the very large number of very small contractors (less than 13 employees) which are 188789 firms (93%). (Cooke & Williams, 2009) emphasise that there are few criteria limiting the entry in the construction industry, as a result there is a wide disparity in the standards of competence across the industry: a largely semiskilled and itinerant workforce and a generally low standard of education and qualifications in the managers employed in construction.
Table 3‑: Private contractors' repartitions( adapted from (ONS, 2009))
Peculiarities of the construction industry:
(BSI, 2006) presents in Table XXX the characteristics of the construction industry and its peculiarities. It widely insists on the diversity that can be encountered in the construction industry, as (Cooke & Williams, 2009) emphasise. a contractor may be a small 'sole trader' with an annual turnover of £100 000 or a large public company with a yearly workload of £1 billion and it also applies for the client who could be a domestic householder, private sector corporation or government department. .
Table 3‑: Characteristics of the construction industry
There is, however, one common feature, the construction industry is a project based industry (Morledge et al., 2009) (Cooke & Williams, 2009).
Nevertheless, every project has its own uniqueness and peculiarities depending on the site and location, the design and type of construction, the business arrangements between the parties and the hopes and expectations of all those involved; and this 'one-off ' nature of construction creates additional pressures (Cooke & Williams, 2009).
It is also important to note that the construction industry is a highly fragmented project-based industry and that leadership have to come largely from clients and not from the contractors and specialists who carry out the work. From (Cooke & Williams, 2009)
Fragmentation
The fragmentation of the construction industry has been identified as one of the causes of the poor performance of the industry (Egan, 1998) (Latham, 1994). (Cox & Townsend, 1998) attribute the fragmentation to the fact that the main contractor is uncertain to obtain continuous work. He, therefore, needs to be very flexible in order to accommodate the different features of each project resulting in a subcontracting approach resulting in further fragmentation.
Adversarial relationships
(Morledge et al., 2009) emphasise that increased fragmentation increases the volume of transaction at at a lower average value, it also increases the level of opportunism. It is especially true in the construction industry there the entry barriers are low. As a result the industry has become less trusting, more self-interested and more adversarial. (Cox & Townsend, 1998) note that the adversarial attitude in the UK construction industry has been recognised for many years now. (Morledge et al., 2009) note that adversarial relationships and the fragmentation of the industry hinder significantly innovation and performance in the construction industry.
Adversarial relationship also impact the way risk is managed as each party try to reduce its exposure to risk by passing it down to the next level of the supply chain whether it is legitimate or not (Morledge et al., 2009). Figure XXX represents the different needs of the different level of the supply chain, this figure also illustrates the difficulty to have a non-adversarial relationship since these needs are so different from one level to the other.
Existing industry structure. Source: (Cox & Townsend, 1998)(1998, p. 33)
Complexity of the project - Uniqueness of the project
(Cox & Goodman, 1956)(p43) summarise well the dominant sentiment in the construction industry by emphasising on the complexity of the project: 'the number of possible permutations and combinations of specific places and entities is enormous, even for one product'.
It is important to note that the construction industry is a project based industry (Morledge et al., 2009), meaning that most of the time each project uniqueness is determined by a number of factors. This diversity and uniqueness often result in 'bespoke' project (Winch, 1987) emphasises this point by noting that 'construction projects are amongst the most complex of all undertakings' (p. 970) and (Gidado, 1996) notes the ' continuous increase in the complexity of construction projects' (p. 231).
(Gidado, 1996) notes that complexity in construction takes it origin from a number of factors such as; the resources that are employed, the environment in which construction takes place, the level of scientific knowledge required, and the number and interaction of different parts in the workflow.
Separation of design and production
One of the main problems in the construction industry is the extent to which the design is separated from the production / construction (Morledge et al., 2009). (Latham, 1994) and (Egan, 1998) have been criticising the separation of design and construction, emphasising on the resulting problems during the construction phase.
Competitive tendering
Unlike manufacturing, construction projects are not priced and advertised for sale (manufactured speculatively, without prior order form the customer) but instead uniquely priced after a negotiation or bidding process (Morledge et al., 2009).
Since the mid-1990s joint government and construction industry initiatives such as (Latham, 1994) and (Egan, 1998), and more recently (Wolstenholme, 2009) have encouraged the construction industry to modify their procurement strategies. It has encounter a certain success with experienced and informed client but the majority of the inexperienced (one off type) client are still using the traditional procurement ways (Morledge et al., 2009).
To some extend the survey conducted by the Royal Institute of Chartered Surveyors (RICS) illustrate this statement: in terms of number of projects traditional design-bid-build ('plan and specification' procurement routes and lump sum contracts) approach is still the dominant strategy but larger projects show a preference for Construction Management or a version of Design and Build (RICS, 2007).
For (Morledge et al., 2009), it makes no doubts that the 'low bid wins' strategy results in several undesirable outcomes: construction favouring low cost instead of right first time or best value, claim culture, low quality of material, lack of innovation, no cooperative problem solving.
(Morledge et al., 2009) also note that 'Low bid wins' procurement has been blamed for, late completion, client's budget overruns and poor quality of products.
Alternatives do exist, but require attitude change within the construction sector and its professions (Morledge et al., 2009).
The Governmental reports
In order to stimulate the construction industry the UK government has been ordering several reports over the years. (Murray & Langford, 2003) have summarised and analysed the different reports from the period from 1944 to 1998. The key governmental reports are presented tin table XXX.
Source: (Cooke & Williams, 2009)
The most important reports are considered to be the Latham and the Egan reports (Cooke & Williams, 2009) (Murray & Langford, 2003) (Winch, 2002).
Latham Report
The report written by Sir Michael Latham in 1994: 'Constructing the Team' is often considered as the most influential (Cooke & Williams, 2009). It is considered by (Egan, 1998) to be a 'Landmark report'. Its purpose was to review both the procurement and contractual arrangements in the UK construction industry and it was commissioned by the government AND the industry.
In December 1993, Latham published an interim report named 'Trust and Money'. This report emphasised the very important trusting issues between the different parties in the construction industry and on the 'endemic culture of late and conditional payments' in the industry (Cooke & Williams, 2009). These issues resulted in poor client satisfaction, important tensions within the project team and poor quality of work. (Cooke & Williams, 2009).
The purpose of the Latham report 'Constructing the team' was to 'reduce conflict and litigation and encourage the industry's productivity and competitiveness' (Latham, 1994).
(Latham, 1994) (summiraised by (Cooke & Williams, 2009)) insisted on some of the construction industry issues such as the unconsistency of the amount of public ccontracts, the fierce competition, lack of training, easy entry in the industry, lack of trust between the project participants, claim culture and the lack of cah flow of the contractors.
In order to solve these problems, Latham made recommendations and an action plan (both summurised and commented in Annex XXX). The most noticeable one was a reduction on the construction cost of 30 % by 2000, but the most important feature of the report was latham recommendation that the modification of the actual contractual arrangement ( greater use the New Engineering Contract) was an essential element in improving the performance of the construction industry (Morledge et al., 2009). Latham was insisting of the role of the contract into promoting a more cooperative way of work.
His recommendations also included a modification of the tendering process and a more advice on partnering arrangements, a value for money evaluation of the tenders and not only based on price, better cooperation between all the actors of the project and fairer payment conditions (Cooke & Williams, 2009).
Egan report
'Rethinking Construction' was published in July 1998 (Construction Task Force 1998) and represents the work of a special task force which was set up by the government to identify the scope for improving quality and efficiency in construction.
Egan report had a huge impact in the industry and was vividly contested. Egan became a verb signifying: to improve the process of construction, to remove waste, to increase efficiency, to rethink construction (Murray & Langford, 2003). It has been argued that contractors could not express themselves against the proposed measures as they might lose jobs from the clients supporting the report (Murray & Langford, 2003). (Building, 1999) even pushed the critics further, by referring to the 'gospel according to St John (Egan) and by asking the readers to test their 'faith' by completing a questionnaire and measuring the results on the 'Eganometer'.
The report is clearly setting a challenge for the construction industry in terms of modernisation with solutions largely based on manufacturing industry and several examples are coming from the automotive industry.
One of the problems with the Egan Report is the emphasis placed on the 'top-end' of the industry, when Latham looked at the fundamental problems of the entire industry. So while Egan has led to the development of several good ideas and worthwhile aims, the concepts may take some time to filter down to the lower echelons of the industry. (Cooke & Williams, 2009) also noted in (Murray & Langford, 2003).
The Egan report cited low profitability, low investment in research and development, inadequate training, selection of the designer or of the contractors based solely on lowest tender and low client satisfaction as the main issues in the construction industry (Wolstenholme, 2009) (Egan, 1998).
Egan recommendations:
Figure XXX summurises the Egan report recommendations. The report also set improvement targets and emphaises on th importance of using the best practice in order to achieve them (Egan, 1998).
Source: (SFC, 2002)
(Wolstenholme, 2009) has defined the terms of figure XXX as followed:
Drivers
Committed Leadership: The management must lead the culture change and be committed to improve performance
A Focus on the Customer: Satisfying the customer by providing a value for money product should be the main priority
Integrated Processes and Teams
A Quality Driven Agenda: getting it right first time with zero defects, on time and on budget. Innovating and stripping out waste. Reduced cost in use and after-sales care
Commitment to People: improved working conditions, improved training and developing a no blame culture
Improving the project process
Product Development: continuous development of the product to meet the client's needs
Project Implementation: using integrated team, modern computer modelling, standardisation and pre assembly
Partnering the Supply Chain: to improve performance, implement innovation and share the rewards
Production of Components: improve the quality (get it right first time) and increase performance by eliminating waste
(Egan, 1998) also set some very ambitious targets illustrated in figure XXXX
Modernising construction
The report Modernising Construction (NAO, 2001) starts by emphasising that 73% of the governmental construction project were over budget and 70% were delivered late.
The report implies that a major contributor to this poor performance is the adversarial relationships that exist between the different parties (clients, designers, contractors, sub-contractors) (Cooke & Williams, 2009).
The report 'Modernising construction' identifies the key barriers to improve performance in the construction industry (Cain, 2003) (NAO, 2001):
Separation between design and construction
Lack of integration of the team (including specialist contractors)
Lack of customer focus
Use of prescriptive specifications limiting innovation and improvement to get better value for money
Lack of focus on constructability
Limited usage of value management
Resistance to the integration of the supply chain
Project management limited to crisis management
Accelerating change
This report, the second from Egan, first review the usage and effectiveness of the previous Egan report, it also compare the result between the industry average and the test project carried out by the Movement for Innovation (M4I).
Table 3‑: Demonstration project performance Source: (SFC, 2002)
Table XXX demonstrates the possibilities of applying the principles developed in the Egan report. (Murray & Langford, 2003) argues that the result might have been biased since some M4I project did not summited their KPI either because the project did not have the time to complete the indicators or as some 'cynics' may say because the projects failed to live up to the expectation in terms of time, cost and quality.
'Accelerating Change' proposed solutions to increase the pace of change following the recommendations of the Egan report. It identifies three main drivers to accelerate change (Cooke & Williams, 2009) (SFC, 2002):
The need for client leadership
The need for integrated teams and supply chains
The need to address 'people issues', especially health and safety
In a second part, 'accelerating change' sets objectives and an agenda for implementing the recommended solutions.
Wolstenholme report: 'Never waste a good crisis' (Wolstenholme, 2009)
The Wolstenholme report starts with two citations illustrating the improvement of the construction industry for the past 15 years:
'We could have had a revolution and what we've achieved is a bit of improvement. I would give the industry 4 out of 10' Sir John Egan, 2008
'What has been achieved? More than I expected but less than I hoped' Sir Michael Latham, 2009
The report then evaluates the effects, the main benefits and relevance in 2009 of the Egan report:
(Wolstenholme, 2009) notes that the industry failed to complete all the objectives fixed by the Egan report especially in terms of capital cost, construction time and predictability, but it also notes an improvement of the productivity and profits, and a reduction of the number of accidents and defects.
Figure 3‑: Main benefits of the Egan report (Wolstenholme, 2009)
Figure XXX shows that the main benefits of the Egan report is an improvement of collaborative work and team integration, but that most of the other principles did not have a big impact on the industry.
In a second part, the Wolstenholme report, analyse the different 'blockers' to an improvement of the performance of the industry and to Egan report principles. These blockers are divided into four categories: Economic, industry capability, industry delivery model and industry structure.
For the economic part, the identified blockers are: no willingness to change and satisfy with low profit, short term view in term of price, no reward system for improved performance, lowest bid strategy.
For the industry capability part, the main blockers are: failure to attract new talents, poor training.
For the industry delivery model, the main blockers are: best value is seldom required by the client, lack of team integration, tendency to push the risk to the next level.
For the industry structure, the main blockers are: fragmented industry, lack a single coherent voice for the industry.
Productivity
The Department for Business, Innovation and Skills has identified the key elements that improve the project productivity: use of integrated team from the very beginning of the project, sufficient planning and scheduling before construction, selection of contractors on value for money and not on lowest bid, and contractor / craft labour involvement in planning activities (BIS, 2009).
Best practice
(Cain, 2003) defines the six primary goals of construction best practice as followed:
The finished building will deliver maximum functionality, which includes delighted end users.
End users will benefit from the lowest optimum cost of ownership.
Inefficiency and waste in the utilisation of labour and materials will be eliminated.
Specialist suppliers will be involved in design from the outset to achieve integration and buildability.
Design and construction of the building will be achieved through a single point of contact for the most effective coordination and clarity of responsibility.
Current performance and improvement achievements will be established by measurement.
Source: (Cain, 2003)
Problems in construction industry
(Anumba et al., 2000)
The construction industry is notoriously fragmented with a typical project involving
up to six or more di_erent professional disciplines. This has led to numerous
problems including inter alia21:
_ an adversarial culture;
_ inadequate capture, structuring, prioritization and implementation of client
needs;
_ the fragmentation of the di_erent participants in most construction projects;
_ lack of integration, coordination and collaboration between the various functional
disciplines involved in the lifecycle aspects of a project;
_ the fragmentation of design and construction data (with data generated at one
stage not being automatically available for re-use \downstream");
_ the lack of true life-cycle analysis of projects (including costing, safety assessment,
maintenance, etc.); and
_ the lack of communication of design intent and rationale which leads to unwarranted
design changes, unnecessary liability claims, increase in design time and
cost, and inadequate pre- and post-design speci_cations.
The survey analysis found that the number of design variations during construction had a detrimental effect on OCP. Even though variations allow clients' functional requirements to be met as closely as possible, when implemented during construction they have been known to be disruptive to the planned construction process, and to have implications in terms of construction cost, time and quality (Ireland, 1985; Flanagan et al., 1986; NEDO, 1988; Hanna et al., 1999). Design variations occur due to problems in aspects such as the thoroughness of the pre-design site investigation, the completeness of working drawings available at the time of estimate, and the general unpredictable circumstances during construction, or simply design errors and additions to the scope of work (Kaming et al., 1997; Hanna et al., 2002). (Xiao & Proverbs, 2003)
Results indicated that the OCP of high-rise concrete framed buildings was influenced by a contractor's past performance on similar projects, commitment towards lifetime employment, perceived importance of time performance, relationships with subcontractors, and the number of design variations during construction. Results of a sensitivity test indicated that the OCP index was relatively stable when varying the weighting of the performance indicators. Construction time is important to both clients and contractors because of its economic implications. Delays lead to an increase in construction costs and a reduction in quality. The past performance of contractors represents a reliable indicator of their performance on future projects. With a lifetime employment policy, the workforce may be more stable and more committed, and contractors more willing to invest in training, resulting in a better workforce and improved overall performance. Partnerships between contractors and subcontractors can enhance mutual trust and teamwork, and lead to harmonious relationships and also can help to achieve better performance. Design variations during construction are disruptive and often cause cost overruns and delays. (Xiao & Proverbs, 2003)
Definition of waste
(Formoso et al., 2002) waste material construction
For (Formoso et al., 2002), waste is defined as 'the loss of any kind of resources (materials, time ~labour and equipment, and capital) produced by activities that generate direct or indirect costs but do not add any value to the final product from the point of view of the client'.
(Formoso et al., 2002) defines the different ways to measure waste:
Excess consumption of materials (Skoyles, 1976; (Bossink & Brouwers, 1996)
Quality failure costs (Cnudde, 1991)
Maintenance and repair costs, accidents, and non-production time (Oglesby et al, 1989).
Measuring waste is a good way to measure the efficiency of the process (Formoso et al., 2002).
In the industry and most specifically in the construction industry, waste is most of the time linked with the debris removed from the site and disposed of in landfills. This
For many people in the industry the notion of waste is directly
associated with the debris removed from the site and disposed of
in landfills. The main reason for this relatively narrow view of
waste is perhaps the fact that it is relatively easy to see and
measure. Although such waste is very important from an environmental
perspective, this approach has been criticized since the
beginning of industrial engineering. Taylor ~1913! pointed out
that the economic loss caused by material waste is smaller than
the ones related to the inefficiency of human work. Ford ~1927!
also suggested that human work should be the focus of waste
prevention, since the value of materials depends, to a great extent,
on the work that has been spent on them.
Other types of material waste beyond debris also need to be
considered. Skoyles ~1976! makes a distinction between direct
and indirect material waste. Direct waste consists of a complete
loss of materials, due to the fact that they are irreparably damaged
or simply lost. In this case, the wastage usually needs to be removed
from the site. By contrast, indirect waste occurs when
materials are not physically lost, causing only a monetary loss- for example, waste due to concrete slab thickness larger than specified by the structural design. (Formoso et al., 2002).
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Continuous improvement culture
Proposed solutions to improve performance and reduce waste
Procurement
Partnering
Definition
Partnering is defined by the British Standard Institution (BSI) as followed:
'Management approach used by two or more organizations to achieve specific business objectives by maximizing the effectiveness of each other's resources and minimizing conflicts.
NOTE 1 Other terms often used in the construction industry are alliancing, frameworks, extended arm.
NOTE 2 Partnering can be project-specific or for a series, or programme, of projects.' (BSI, 2006)
Definition of Project Partnering
Many research papers have discussed the definition and meaning of partnering. The fundamental principles of partnering- commitment, trust, respect, communication, and equality- are designed to include proper consideration of the interests of all parties at every level (CII 1991; Cowan et al. 1992; Uher 1999). The building of trust among the interested parties to a contract helps avoid problems with the project that, in recent times, more often than not lead to litigation (Moore et al. 1992).
Numerous definitions of partnering have been derived from past studies. Among them, the definition developed by the Construction Industry Institute (CII) in Austin, Texas, is the most widely cited. The CII (USA) defined partnering as
... a long-term commitment between two or more organizations for the purposes of achieving specific business objectives by maximizing the effectiveness of each participant's resources. This requires changing traditional relationships to a shared culture without regard to organizational boundaries. The relationship is based on trust, dedication to common goals, and an understanding of each other's individual expectations and values (CII 1991 ).
(Chan et al., 2003)
Partnering features
(Alderman & Ivory, 2007) emphasise that partnering helps to change the relations between the different project members by promoting collaborative and more open working relationships.
Thus partnering intends to reduce the adversarial relationships between the actors of the project and promote a better integration and cooperation between contractual partners to achieve a win/win outcome (Bresnen & Marshall, 2000). (Black et al., 2000)
(Chadwick & Rajagopal, 1995) notes that partnering approach includes the following concepts in comparison with a more traditional approach: focus on value for money, long term view instead of short term benefits, get it right first time motto, limited supply chain.
There are two kind of partnering: long between long-term (strategic) partnering and short-term (project) partnering. Strategic partnerships are intended to last for significant periods of time, include several projects and seek gains for the long-term whilst project partnerships are created and sustained for the life of a specific project and focus on short-term benefits [25,22,2,26]. Both approaches are practised in the private sector [22]. (Beach et al., 2005)
(Black et al., 2000) recognise that partnering allow a better quality and aimprove the safety, and that it alos prevent the cost from going out of control as it can be the case with the traditional procurement methods.
Benefits
(Alderman & Ivory, 2007) note that partnering allow a better communication which lead to increased effectiveness and more informed decisions. (Bresnen & Marshall, 2000) emphasise that in case of early involvement of contractors during the design, the project duration can be reduced by improving constructability, the client also get better value for money. In their studies, (Black et al., 2000) and (Beach et al., 2005) found that the main benefits for partnering are the reduction of the adversarial relationship and an increase of the customer satisfaction. In a smaller measure a better understanding between the parties, and a reduction of project duration, reduction of risk exposure and reduction of project cost. This result were confirmed by study done by
Partnering has become a means to increase the level of client satisfaction and secure a more stable workload. Mutual benefit emerges for clients, consultants, and contractors (CII 1991; Har- back et al. 1994; Black et al. 2000; Li et al. 2001). While partnering may not solve all the problems encountered in the construction process, it creates a framework for conflict resolution, improved communication, reduced litigation, and cost containment on potential overruns (Sanders and Moore 1992; CII 1996; Larson and Drexler 1997; Gardiner and Simmons 1998). Partnering has the potential to change the construction industry to work in a more cooperative environment (CII 1991; Brown 1994; Uher 1999).
Barriers agnd issues with partnering
Sceptics, however, point to the fragility of many partnering relationships as changing commercial pressures and the actions of unscrupulous clients can quickly lead to the abandonment of partnering. (Alderman & Ivory, 2007)
(Black et al., 2000) recognise that one of the main issue of partnering, is the management of cost issues.
Review of Common Problems of Partnering
(Chan et al., 2003) literature review allowed him to identify nine major issues for partnering: misunderstanding of the partnering concept, relationship problems, cultural barriers, uneven commitment, communication problems, lack of continuous improvement, inefficient problem solving, insufficient efforts to keep partnering going, and discreditable relationship. Table 1 shows the matrix of the identified problems and the frequency of their citation.
Misunderstanding of Partnering Concept
A thorough knowledge and understanding of the partnering process is essential to create partnering success; misunderstanding the partnering concept is thus a major problem for partnering implementation. Some project participants failed to understand how the partnering relationship could provide a competitive advantage (Cook and Hancher 1990; CII 1991, 1996). Larson and Drexler (1997) further noted that limited experience in the partnering approach affected the understanding and knowledge of project participants. Also the fair profit motive, like the concept of partnering, was not fully understood and supported by the project participants. Unfamiliarity or misunderstanding of the partnering concept by the project participants could cause a failure in partnering (Sanders and Moore 1992; Harback et al. 1994).
Adversarial Relationship
Win-win thinking is an essential element for partnering success (Hellard 1996; Ruff et al. 1996), but many parties do not trust the other party due to past experience and fear of the unknown and change (Larson 1995; Larson and Drexler 1997). Thus changing the myopic thinking of project parties is very difficult. Very often, project participants try to procure benefits out of their relationships and end up with a lose-lose environment. Participants gain recompense when problems arise (CII 1996; Hellard 1996).
Distrust
Partnering does not always work without risk; to develop trust for each other might be a risk in itself, although it is the key element of successful partnering (Cowan et al. 1992). Unfortunately, the project environment conducive to trust may be affected by bitter experience in litigation, dispute, and past adversarial relationships (Albanese 1994; Harback et al. 1994; Lazar 1997). It is difficult to build trust since parties bring adversarial experiences to partnering. It is also a hurdle to implementing more progressive approaches (Dozzi et al. 1996).
Failure of Sharing Risk
Risk sharing is another barrier to the success of a partnering project; project participants may find it difficult to share the risk fairly in the partnering process (Cook and Hancher 1990; CII 1991). They try to take full advantage of the partnering spirit to reduce their own risk and as a result may be unwilling to share the risk and maintain the trust relationship (Larson and Drexler 1997).
Overdependency on Others
The partnering concept is intended to accentuate the strengths of partners and as a result cannot compensate for fundamental weaknesses in the participants. In some cases, partnering created strong dependency on the partner (Cook and Hancher 1990; CII 1991).
Gardiner and Simmons ~1998! further explained that partnering did not remove or reduce interdependencies but could be used to strengthen the relationship and increase the trust between parties. Therefore, participants should better understand and appreciate the dependencies and damaging consequences of non-conformance to project requirements. On the other hand, partnering was a departure from business as usual; individuals and entire organizations often felt a loss of control, being at risk or awkwardlydependent on others ~Bresnen and Marshall 2000!.
Insufficient Efforts to Keep Partnering Going
The formation of a partnering arrangement requires extra staff, time, and resources. It may initially be costly to align all organizations with every partnering undertaking ~Larson and Drexler 1997!. Partnering also needs nourishment throughout the life of a project. After the initial workshop, it is easy to get back to daily activities and ignore the partnering concept ~Moore et al. 1992!. In the actual routine operation, project participants always encounter many difficulties in the partnering process that limit the success of partnering.
Inadequate Training
Inadequate partnering training is an obstacle to implementing partnering ~Albanese 1994; Matthews et al. 1996!. CII ~1996! Explained that inadequate staff training is the essential reason for partnering failure; the participants do not fully understand the concept of partnering and hence are not able to implement partnering successfully. Since partnering facilitators play a significant role in the success of partnering ventures, inadequate training or expertise of the facilitators could also be a crucial reason for partnering failure.
Key Parties Not Involved
A common myth about partnering is that it only exists between clients and contractors. Partnering, however, involves all parties: key subcontractors, design consultants, and suppliers should also be included with clients and contractors ~Sanders and Moore 1992; CII 1996; Love 1997!. Their opinions and advice cannot be sought if they are not involved in the partnering process.
Lack of Top Management Support
Lack of top management support is an obstacle to initiating partnering. Even if top management aggressively pursues the partnering relationship, partnering does not filter down to staff at the project level easily. The partnering concept may be misunderstood by midlevel staff ~Lazar 1997! and front-line staff alike. If the top management is seen to only provide lip service to the partnering approach, the partnering relationship is bound to fail ~Hellard 1996!.
(Chan et al., 2003)
(Erikson et al., 2008)
Ptifalls
In this paper we suggest that the notion of partnering rests heavily on its metaphorical properties and represents a particular language and articulation used by clients and others to promote desired actions and approaches to projects by their suppliers. Partnering contracts can therefore be seen to require a high level of commitment from suppliers, not least in resource terms, and so their potential failure must be regarded as a source of risk. To manage this risk, and make more informed decisions about the relationships they are entering into, project actors, particularly those occupying commercially weak positions in the relationship, should be advised to take a hard look at the risks as well as the benefits. (Alderman & Ivory, 2007)
In one case documented by the construction press, for example, a UK civil engineering firm had entered a partnering agreement with an Australian power provider to build five identical power stations. The price for each power station was agreed at £26 million but the contractor completed the first power station for £22 million, providing the contractor and client with a saving of £2 million each. However, the benchmark for the next project was then set at £22 million placing the contractor under enormous pressure [20]. Beach et. al [21] have reported similar behaviour by clients.
At its worst, it is a discursive smokescreen behind which to conceal 'business as usual', while at the same time motivating suppliers and contractors to 'go the extra mile'. (Alderman & Ivory, 2007)
However, evidence in favour of partnering is not always convincing. There is a tendency within the partnering literature to concentrate on success stories. These often have an anecdotal ¯ avour to them and concentrate on the experiences of `exemplar' organizations such as DuPont (Cowan et al., 1992), the US Army Corps of Engineers (Weston and Gibson, 1993), Marks and Spencer (Tse, 1985) and BP (Knott, 1996). In an attempt to overcome the dearth of systematic empirical evidence for the performance effects of partnering, Larson (1997) conducted a survey of 291 construction projects and discovered a positive relationship between partnering activities and measures of project success. However, although there have been fewer indications of the failure of partnering to meet performance expectations, these are by no means absent (CII, 1994; Rackham et al., 1996; Angelo, 1998). (Bresnen & Marshall, 2000)
Factors responsible for unsuccessful collaboration in construction Anglisger and Jenk (2004) reported the Accenture research that about half of all alliances fall well of expectations due to the following causes in order of importance: shift in partners strategic direction, senior management attention wanders; champions move on; lack of career path and shortage of staff; and clash of corporate cultures. Sconnenbery (1992) identified important reasons why partnerships fail as lack of commitment, cultural differences, poor management, poor communication, and failure of individual relationships (i.e. where individuals involved in the partnership lack interpersonal skills or personal chemistry may be missing). Table VIII shows the UK contractors' opinions on the factors that are responsible for unsuccessful collaboration. The most important factor is collaborating partners' failure to contribute to the partnership needs, goals and objectives as expected. This is followed by lack of trust between the collaborating partners and lack of frequent consultation between them. (Akintoye & Main, 2007)
(Akintoye & Main, 2007)
Conclusion
In sum, partnering can and does work, but all project participants must re-think their attitudes and work to make projects more ecient, successful and free of con¯ict. Partnering has a future, is the general opinion and respondents believe that all parties bene®t to varying degrees from its use. (Black et al., 2000)
Longterm relationship / framework agreement
Definition
(BSI, 2006) defines a framework agreement as followed:
'Agreement between a client and supplier, for the supplier to do a particular type of work for the client for a fixed period of time'
NOTE 1 The framework agreement will last for a stated period of time, subject to successful periodic evaluations.
NOTE 2 There can also be framework relationships between suppliers, e.g. between contractor and subcontractors.
Benefits of framework agreement
(Winch, 2010) notes the benefits for framework agreement:
Development of trust between the parties as they work together on several projects
Possibility to develop standardised item that can be used on a series of programme and therefore reduce the costs and the learning curve
Reduced cost by eliminating long selection process and dispute resolution
More predictable workload for suppliers allowing them to invest in equipment or R&D
More collaborative approach based on problem solving
Possibility to develop dedicated IT services and facilitate information exchange and efficiency
Barriers and pitfalls for framework agreement
To get the best results out a framework agreement the numerous projects need to be close from a technical point of view (such as the McDonald restaurants)
Change of mentality from Win - Lose thinking to Win - Win thinking, it may require major investments in terms of training and team building.
Privilegiate a long term thinking, not focusing on the loss on a particular project but on the win of the whole program
A client with a strong project and program management knowledge may facilitate the process (Winch, 2010)
Performance based specifications
Features of different specification types
Features of method specifications
Method specifications, also known as prescriptive specifications,are specifying both the material and the construction method (Guo et al., 2005).
The main principle for adopting method specification is, 'if the contractor follows the prescription, then the work product has a high probability of being accepted by the agency and of performing in service' (TWG, 2003 cited in (Guo et al., 2005)).
Features of performance specifications
The TWG cited in (Guo et al., 2005), define performance specifications as a specification using a level of quality to predict the performance and life cycle cost of a project and provide the basis for rational acceptance and pay adjustment. They can be used as a bridge to connect design, materials, and construction quality to long-term product performance.
The main features of performance specifications as defined by TWG include:
• They detail the AQC levels demanded by the owner rather than actual, real-time performance requirements.
• Performance models may be developed to predict product performance using the measured AQC quality.
• LCC models may be developed to estimate the as-designed (target) and as-constructed LCC of the product. These can be used as the basis for pay adjustment. Pay adjustment can be based on the difference between the as- constructed LCC and the as-designed (target) LCC.
• Contractors focus on minimizing the as-constructed LCC of the products. The optimal level of quality rather than the highest quality is the goal under performance specifications.
Performance specifications offer the following advantages (Darter et al., 1993):
• May use mathematical models to predict performance and corresponding LCC to compute an overall pay adjustment, compared to QA specifications, which use engineering judgment to establish individual AQC pay adjustments.
• Are able to identify desirable levels of AQC that provide a desirable performance.
• Minimize the LCC of the project.
• Establish incentive/disincentive pay adjustment based on the estimated LCC of the product.
• Encourage contractor innovation.
