building procurement the partnering paradigm

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Watts, N, Watson, P A and Griffith, A (1999) Building procurement: the partnering paradigm. In:

Hughes, W (Ed.), 15th Annual ARCOM Conference, 15-17 September 1999, Liverpool John MooresUniversity. Association of Researchers in Construction Management, Vol. 2, 667-74.

BUILDING PROCUREMENT: THE PARTNERING

PARADIGM

Norman Watts1, Paul A Watson

1 and Alan Griffith

2

1School of Construction and 2Centre for the Built Environment, Sheffield Hallam University, Sheffield,

S1 1WB, UK

This paper forms part of the first stage of a three year doctorate research project that

focuses upon partnering down the supply chain and it draws upon an in-depthliterature review on project partnering concepts. Partnering is reviewed in terms ofthe various construction procurement options available to clients and contractors.Many within the construction industry see partnering itself as a procurement option.However, this paper explores the possibility that partnering and the partnering paradigm should be considered as a methodology for establishing a non-contractualworking relationship in tandem with an established procurement route or contractual

relationship. This paper highlights the need for a change in culture and approach tooptimize partnering applications.

Keywords: culture, partnering, procurement, supply chain.

THE RESEARCH STUDY

The purpose of this research study is to investigate the owner/contractor/specialist

trade contractor relationship within the sphere of construction project managementand to undertake a detailed case study in order to determine which factors

significantly effect the relationships. The data will aid in the development of a

conceptual model which will have application in a construction operational

environment with its main aim of maximizing the effectiveness of partnering down the

supply chain.

Methodological approach

The first stage of the research will identify the rationale behind the partnering

paradigm through an in depth literature review relating to project management and the

inter-organizational relationships associated with teamwork and co-operation. A case

study will form the next stage of the research. This will be an investigation with keysite management in order to collect data to determine which factors significantly effect

the involvement of specialist trade contractors. It is envisaged that using statistical

analysis, a best practice model will be developed to aid project teams in partnering

down the supply chain.

INTRODUCTION

The UK Construction Industry is characterized, in the main, by projects such as

buildings and structures that require thorough planning and effective control to aid

successful realization for both public and private sector clients. Managing a

construction project is a complex process and managers are responsible for bringing


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together expertise and resources, through the various phases and in particular the

construction phase of the project life cycle to achieve defined objectives.

Projects are temporary undertakings (British Standards Institute 1996) in which a very

broad range of companies and individuals are employed to deliver on time, within

budget and to the required specification certain tasks within the project and, given

then that most tasks are interdependent, each dependent on the performance of all

those who contribute. Construction is at times fraught with identifiable problems and

ineffective procurement strategies throughout the value chain. Specialists and trade

contractors are the project’s producers, their contribution of technological expertise

and skills to the construction process enables solutions to be developed to meet clients

expectations. Research relating to sub-contractors confirms that problematic issues

exist which often leads to; poor quality construction, an adversarial culture and cost

and programme overruns (National Contractors Group 1992).

Economic and technological factors impact on customs and management styles of the

day, for example the 1970s saw a general shift away from direct employment of a

construction workforce by a general contractor to the use of specialist sub-contractors(Gray and Flanagan 1989). The economic recession of the early 1990s saw a more

assertive management approach. This ‘crisis’ or ‘macho’ management style greatly

influenced the adversarial nature of construction. A number of key reports (Latham

1994; Egan 1998) highlighted key issues and fragmentation within the UK

construction industry, advocating a number of key drivers of change. The drive

towards developing strategic alliances has seen clients acknowledge that long term

relationships could produce significant and continuous improvement in project

performance.

With case studies for example Bennett and Jayes (1998) showing partnering between

client and designers and contractors that purport to deliver benefits in terms offinancial saving and reduced project times. However, not all parties to the project are

acknowledged as contributors to project success nor are all the real or perceived

benefits passed down the supply chain. Given that specialist trade contractors can at

any one time account for as much as 80% of contract expenditure, Jones and Saad

(1998) identified the need for specialists to play a more significant role. Advocates of

the partnering ethos are now beginning to acknowledge that partnering down the

supply chain bringing the minor specialists into the ‘team’ can greatly influence

project success.

PROCUREMENT SYSTEMS

The selection of an effective building procurement strategy is essential to achieving

the client’s objectives (Royal Institution of Chartered Surveyors 1996). Latham

(1994) noted that the failure in the selection of an effective strategy had too often

resulted in reduced time, cost and quality performance criteria. Figure 1 presents the

most common forms of classification and traditional choices available to clients

showing their potential advantages and disadvantages (adapted from Royal Institution

of Chartered Surveyors 1996). Procurement systems, like most other systems have

unique strengths and weaknesses and certain attributes that make them ideal in any

given situation. No one method is therefore best in all circumstances, rather they are

simply more appropriate.

Procurement systems used in conjunction with a project manager or other clientrepresentative in consultation with the design team and consultants can select the most


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appropriate procurement option to meet the client’s needs and distribute the correctallocation of risks with all parties that will have certain contractual obligations within

the given project. The use of a project manager has the natural advantage where an

effective partnering arrangement between parties can be facilitated.

The common choices available are primarily indicative of the structure of the industry

and how it reacts in recessions and booms, and as Rougvie (1987) opines, as a

response to the limitations in use of existing procurement methods. Systems are

continually being redefined to take into account new socio-economic factors. All

projects are unique (BS 6079: 1996) in terms of time, geography and physical

properties consequently preferred procurement methods most appropriate for any

given client will depend on those factors that will contribute to project success.

PROCUREMENT OF SPECIALIST TRADE CONTRACTORS

Specialist sub-contractors, suppliers and the minor sub-contractors and suppliers

would normally be procured initially through general enquiries then through the use of

standard or non-standard contracts (which would include standard contracts with

amendments). However, authors such as Huxtable (1988, 1994) and Ridout (1996,

1997) have noted the problems with contract abuse has been wide spread over recent

times. With the lack of any real case studies available and research in this field it is

questionable whether the partnering ethos is being passed through the value chain.

Although Ndekugri (1988) argued that great care should be exercised in the selection

of sub-contractors as all other control actions have little effect once a totally

unsuitable sub-contractor has been chosen. Fryer (1997) goes on to note the

limitations on site managers influencing and supporting sub-contractors performance

levels when their effort would be of little value when the sub-contractors own

management made little effort. Briscoe (1988) recognized that the quality of

construction management throughout the firm is normally indicative of project

success.

PARTNERING METHODOLOGIES

Partnering, establishing better relationships, can be defined as: “a management

approach to establishing better relationships between two or more organizations toachieve specific business objectives by maximizing the effectiveness of each

Figure 1: The advantages/disadvantages of procurement methods available to clients


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participant’s resources. It is based on mutual objectives, an agreed method of problemresolution and an active search for continuous measurable improvements”

(HM Treasury 1997).

Other reports (Construction Industry Board 1997; Construction Industry Institute

1991, National Economic Development Council 1991; Baden-Hellard 1995) offer

other working definitions that all share two primary factors, ‘mutual objectives’ and

‘continuous measurable improvement’. Alignment of organizational and project

objectives together with a tangible benchmarking system provide the essential basis of

any proposed partnering arrangement.

The partnering process model advocated by CIB (1997) summarized as a linear

model, yet sequential in terms of the processes involved from the initial decision to

partner through to project completion, the five case studies the report highlighted

Client'sneeds

identified

Architect /consultants prepare:

•

Brief

• Drawings

• bill of quantities

•

alternatives

Tenders

sent

Tenders accepted.Builder enters into

contract with client

Builder entersinto contract with

subcontractors

Work carried out to

completion

Partnering arrangement Inclusive partnering arrangement Strategic

Partnering

Figure 2: Traditional system

Strategic

partnering..

Client'sneeds

identified

Architect /consultants

prepare:• Brief

• Drawings

• Bill of quantities

• Alternatives

Tenders

sent

Successful management

contractor joins design team.

Work carried

out to

completion

Partnering arrangement Second partnering arrangement

Work packages

developed

and tenders

sent

Successful

subcontractors carry

out work under supervision of

management contractor

Inclusive partnering arrangement

Figure 3: Management systems

Client's

needs

identified

Client's advisors

prepare & develop

requirements.

Requirements

submitted to

tender

Work carried

out to

completion

Partnering arrangement Second

partnering

arrangement Strategic

partnering....

Proposals

accepted

Work designed and constructed by contractors

team including subcontractors.

Inclusive partnering

arrangement

Figure 4: Single source system


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identified distinct developed procurement routes each incorporating the partnering

process. Although Crane et al. (1997) identified a partnering process model

consisting of five phases, viewed in terms of owner, partner, alliance, project and

work process alignment. The model identifies project objectives as the penultimate

phase. However, project management theory on the other hand advocates defining

project objectives as the foremost criteria in achieving project success.

PROCUREMENT SYSTEMS/PARTNERING MODELS

Traditional systems

Figure 2 shows the partnering system implemented in tandem with the traditional

procurement option. Inclusive partnering would consist of contractor and specialist

sub-contractors and suppliers. Strategic partnering may develop amongst partners.

Management systems

Figure 3 shows the partnering system implemented in tandem with construction

management or management contracting procurement option. Each tier would meanan increase in potential partners.

Single source systems

Figure 4 shows single source systems include design and build packages Private

finance Initiative (PFIs) and other hybrids. Partnering runs in tandem with the

procurement option and becomes more inclusive after each primary stage. Strategic

partnering may develop amongst partners after work has completed.

Because of the complexity of non-linear dynamic systems such as procurement where

each route in reality would have subtle differences between similar objectives and

associated issues, it is stressed that the processes identified within each of the above

procurement systems are merely indicative of such systems. Therefore simple

modelling is used to identify the possible parallel relationship between different

procurement systems and partnering.

CULTURE SHIFT

There are a number of definitions of culture, Tayeb (1988) defines it as a set of

historically evolved learned values, attitudes and meanings shared by members of a

given group. Lavender (1996) identifies the culture of an organization as: “simply the

philosophy by which it operates”. Strong cultures inherent within many firms are

double edged (Lansley and Riddick 1991) that is to say culture can help provide

consistency and meaning, it can also stifle recognition of new and unfamiliarsituations hence ineffective organizational response to new situations. Pokora and

Hastings (1995) saw a need for a change of culture within organizations from an

adversarial to partnering if there was to be any realistic and successful expectations.

Kubal (1994) stresses that partnering attempts are made under contracts and that by

their very nature are adversarial and negative relationships cannot be overcome simply

by bringing the team together for pre-contract sessions. He states: “Partnering has

not and will not be successful with the contracts, contract methods and contract

clauses in use today. The Industry, having failed at resolving these issues of

professional responsibility and risk, has chosen to depend on legal assistance to

develop one-sided, protective contracts”. Partnering however, requires trust andopenness, Hutton (1996) notes that: “the relationship of trust, for example between a


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banker and an entrepreneur; the belief that a supplier can meet an order; the capacity

to sustain a team of people around a business objective: all require trust, commitment

and co-operation”.

Egan (1998) advocated continuous and sustained improvement through a number of

key drivers, including an integrated process and a commitment to people. The report

also identified partnering with participants within the supply chain given the

opportunity to share in the rewards of improved performance, advocating a radical

culture shift as the only way forward in which all participants can increase efficiency

and quality with the construction environment.

CONCLUSIONS

Clients embarking on the procurement of a project are offered by advisers and

representatives such as project managers the best option from the various methods or a

bespoke hybrid. There is no one best method to suit all situations and to a greater or

lesser degree all have identified potential advantages and disadvantages.

The number of firms engaged in the construction procurement process provides

inherent difficulties in creating a unified temporary organization that can deliver for

the client project success and at the same time be equitable for all parties within to

achieve the ‘win-win’ scenario advocated by Latham (1994). This potential mismatch

stemming from cultural ignorance and the historical adversarial nature of the UK

construction industry through the incorrect allocation of risks, often results in ‘project’

failures for some firms within the supply chain and at times for the client.

‘Partnering’ used as a methodology for aligning mutual, organizational and project

specific objectives and the development of methods in establishing continuous

measured improvements, should be considered by project managers not as a separate

procurement system as advocated by others, but used in tandem with an established procurement route.

This paper has highlighted the way in which partnering should be considered as a

methodology for establishing a non-contractual working relationship used in

conjunction with an established procurement route or contractual working

relationship. It has also focused upon a literature review and satisfied the first stage of

an ongoing research project and is coherent with the objectives defined within the 3

year doctorate programme. The issues identified will now provide a focus mechanism

for the second stage by aiding the development of a case study. Overall, the outcomes

from this PhD study may contribute usefully in the wake of and in addressing the

requirements of the Egan report (1998).

REFERENCES

Baden-Hellard, R. (1995) Project partnering principle and practice. London: Thomas

Telford.

British Standards Institute (1996) BS 6079: Guide to Project Management . London: HMSO.

Bennett, J. and Jayes, S. (1995) Trusting the team: the best practice guide to partnering in

construction. London: Thomas Telford.

Bennett, J. and Jayes, S. (1998) The seven pillars of partnering: a guide to second generation

partnering. London: Thomas Telford.

Briscoe, G. (1988) The economics of the construction industry, London: Mitchell.


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Crane, T.G., Felder, J.P., Thompson, P.J. and Thompson, M.G. (1997) Partnering process

model. Journal of Management in Engineering. 13(3), 57–63.

Construction Industry Board (1997) Partnering the team: a report by working group 12.

London: Thomas Telford.

Construction Industry Institute (1991) In search of partnering excellence (special publication

17-1), CII, Austin.

Egan, J. (1998) Rethinking construction: report of the construction task force on the scope for

improving the quality and efficiency of UK construction, London: Department of the

Environment, Transport and the Regions.

Fryer, B. (1997) The practice of construction management. 3ed. Oxford: Blackwell Science.

Gray, C. and Flanagan, R. (1989) The changing role of specialist and trade contractors.

Ascot: Chartered Institute of Building.

HM Treasury (1997) Government construction procurement guidance: No. 1 essential

requirements for construction procurement. London: HMSO.

Hutton, W (1996) The state we’re in. London: Vintage.

Huxtable, J. (1994) Late payment of commercial debt, A response to the DTI Consultative

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Huxtable, J. (1988) Remedying contractual abuse in the building industry. Technical

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Lansley, P. and Riddick, J. (1991) The implications of small group interactions for

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Tayeb, M. (1988) Organizations and national culture. London: Sage.

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