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A model for evaluating the applicability of partnering in construction
INTERNATIONAL JOURNAL OF
PROJECT MANAGEMENT International Journal of Project Management 25 (2007) 164–170 www.elsevier.com/locate/ijproman
A model for evaluating the applicability of partnering in construction Shaokai Lu a
a,b
, Hong Yan
c,*
School of Economic and Management, Southwest Jiaotong University, Chengdu, China b College of Civil Engineering, Shenzhen University, Shenzhen, China c Department of Logistics, The Hong Kong Polytechnic University, Hong Kong, China
Abstract Different partnering arrangements have been advertised as means to solve hurdles in successfully accomplishing projects in construction industry. However, not all partnering projects meet their targets in prior. It is therefore suggested that a planning assessment of partnering use is implemented before partnering procurement. As such, this paper conducts a through literature review of those factors influencing the partnering use. We then present a model named Applicability Assessment Model of Partnering (AAMP) that supports a systematic process to evaluate the applicability of partnering use. This model involves steps that help to determine partnering use by evaluating management mechanism, organizations involved and project dimensions. The model is given in a step by step approach, and its significance is discussed based on the findings of an empirical study in China. Ó 2006 Elsevier Ltd and IPMA. All rights reserved. Keywords: Partnering; Evaluate; Construction
1. Introduction Many researchers and empirical studies show that partnering in construction can benefit all stakeholders involved in a project mainly due to its ability on changing the adversarial attitude between parties. The adoption of different partnering arrangements in construction has become more common in recent years, especially in developed countries such as the USA, UK and Australia [7,22,38]. Meanwhile, some follow-adoptions in other regions like Hong Kong also achieve tremendous success [4]. Thus, it is certain that the application of partnering in construction should be advertised in more regions for further advantages. On the other hand, the use of construction partnering may not always be a master key to success. Researchers point out that some projects under partnering arrangement do not achieve their original targets [8,9]. The empirical research of Ng et al. [38] indicates that lack of continuous and honest communication, lack of a ‘‘win–win’’ attitude,
*
Corresponding author. Tel.: +86 852 2766 7365. E-mail address: [email protected] (H. Yan).
0263-7863/$30.00 Ó 2006 Elsevier Ltd and IPMA. All rights reserved. doi:10.1016/j.ijproman.2006.09.009
unwillingness to compromise, etc., can cause for ineffective construction partnering. In sum, construction partnering indeed shows many advantages, but it may not be applicable in certain situations. This paper aims to address this issue by presenting a model for evaluating the applicability of partnering in construction scenarios. The rest of the paper is organized as follows. First, a brief section on construction partnering principles frames the paper into a construction partnering setting for analysis. Second, the factors of affecting partnering use are summarized through literature review within this field. Third, an evaluation model is presented and its application is discussed. Lastly, we report upon results obtained from a pilot study conducted to investigate the key elements of the evaluation model in the Chinese mainland construction companies. We believe that this evaluation model is helpful for clients, contractors and construction professionals as a guideline when deciding whether to utilize partnering. This is particularly important to those who may not be familiar or experienced with construction partnering. This evaluation model should provide answers for what the limitations of partnering use are as well as why and how it should be used.
S. Lu, H. Yan / International Journal of Project Management 25 (2007) 164–170
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2. Partnering in construction
3. The factors affecting partnering use
In reviewing literature on construction partnering, there are many different principles. Bennett and Jayes [6] state that partnering has witnessed three stages, each of which are slightly different in concept partly due to their evolution. While most researchers in construction take the term ‘‘partnering’’ to represent an alliance within the supply chain, terms of ‘‘strategic partnering’’, ‘‘alliance’’ and ‘‘strategic alliance’’ are also used in depicting such relationship. In general, partnering is mainly defined as a working relationship between stakeholders through respect, trust, teamwork, commitment and shared goals. Such a relationship is often determined by good faith rather than a formal contract. Meanwhile, terms with ‘‘strategic’’ are usually associated with long-term relationships [17,18] and are not only based on the principles of partnering, but also with the additional values of sharing of resources, knowledge, risks and profits or losses. Cheng et al. [13] say that alliances in construction usually create an informal rather than a formal relationship. Naoum [37] gives an overview of the concepts of partnering and summarizes the common features of partnering definitions as follows: mutually agreed goals, inter-organizational trust, a mechanism for problem resolution, and continuous improvement related to benchmarking process. All these features can be observed by objective behavior in some extent. For example, the adoption of popular partnering tools, such as partnering charters, often refers to a written agreement signed by all involved parties to show their commitment. The agreement also indicates the trust and common objectives among parties. Moreover, a partnering charter can help reduce disputes originated from distortion of the memory of involved parties because the united team would monitor the common goals written down [13]. Further more, Larson [28] takes a series of single activities such as team building sessions, problem-solving process establishing and workshop etc., as aids to partnering. With respect to different partnering arrangements in practice and various principles, ‘‘partnering’’ in this paper refers to, unless indicated otherwise, ‘‘a structured sequence of processes initiated at the outset of a project that is based on mutual objectives and utilizes specific tools and techniques such as facilitated workshops, a charter, a dispute resolution system, and continuous improvement techniques’’ [5]. The partnering concepts adopted in this paper are also used in the work of Koraltan and Dikbas [27], which provides an assessment of the applicability of partnering in the Turkish construction sector. This paper focuses on partnering approach rather than partnering philosophy, the latter usually refers commitment, trust and good faith between parties. Moreover, with consideration to the topic of evaluating the applicability of partnering in construction, we pay more attention to partnering at the outset of a project, before the procurement phase that focus on project execution.
The abundant existing partnering literature offers many factors that may affect its successful application. Identifying these elements from literature review can be a good first step to formulating an effective evaluation model of the applicability of partnering in construction. The essential reason for utilizing partnering is to meet the goals of involved parties, which are associated with various incentives and benefits. It is a common belief that partnering should lead to a profitable job for both contractors and subcontractors, quality and on time job completion for the owner [23,30,31]. This may be the most obvious reason for parties involved to consider using it. Prior empirical researches have provided deep insights into the incentives and benefits of using partnering in construction. Using data collected from 30 international construction industry executives, Badger and Mulligan [3] give a summary of incentives for partnering and the benefits gained from it. Based on their findings, Cheng et al. [13] also point out that strategic alliances in construction should help involved construction companies to gain certain benefits at the project, business and corporate levels. These include reduced risks, improved quality, reduced cost, on time completion, reduced rework, increased profits, increased market share, enhanced competitive position, competitive bidding, broadened client base, cost effectiveness, increased labor productivity, improved efficiency, increased opportunity for innovation, continuous improvement of quality products and services, and increased cultural responsiveness. Though most incentives are closely tied to benefits, there remain some differences between them. Lazar [29] states that the early trying of partnering may only because the early-adopter wants to try the latest innovation first, and their success in economics then become the main motivation for the follow-adopter. The early-adopter does not perceive the substantial benefits associated with partnering, but just want to try a new way to change the outcomes caused by traditional project delivery methods. Then, the following-adopter is attracted primarily by the promise of better economic benefits perceived. On the other hand, some researchers believe that involved parties with partnering experience and top management support will help for the smooth execution of partnering [10,40]. Conley and Gregory [16] suggest that the owner’s representatives familiar with partnering principles will help for implementing an informal version of partnering. It seems that factors under organizations should be taken into consideration when deciding whether use partnering or not. Ensuring that all parties are willing to participate is important, as the partnering effort will not work without top management support from all involved parties [16]. Moreover, the potential obstacles of partnering use may be attributed to inadequate technological knowledge, lack of education and training program in partly.
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Those construction firms involved in international constructions are implementing many requirements of partnering, not only they are suitable of management approach but also through implementing current approaches such as TQM [27]. Schultzel and Unrub [40] emphasize that partnering organizations should provide unique contributions to alliances. Construction companies must grasp the ability to satisfy the demands of a project to build. When asked about familiarity with partnering knowledge and skills, those who have partnering experience would be preferred over those without experience when faced with partner selection. Meanwhile, large developers can provide a whole series of projects to facilitate long term cooperation among partners and thus can aid the success of partnering use [44]. The successful partnering cases in the report of Egan [22] are bonded with major clients such as British Airport Authority, Railtrack, major supermarket chains, and similar organizations. Fig. 1 summarizes the relationships between goals of organizations, capabilities of organizations and partnering use. Cheng et al. [12] formulates a framework that uses management skills and contextual characteristics to identify critical success factors for construction partnering, they suggest that partnering can become successful by using appropriate management mechanisms which include partnering tools, individual measures etc. To formulate a successful partnering team, the prior arrangement should include systematic mechanisms. As mentioned by Bresnen and Marshall [10], an airport company took at least a year to select a suitable contractor for an airfield civil engineering services project worth 150 million. The process was executed using tools such as questionnaires, presentations, interviews, site visits and sample pricing of jobs. In the project of the Tseng Kwan O Extension of subway in Hong Kong, before adopting partnering, a small working group was set up to investigate the benefits that partnering could offer and how to introduce it into the project [4]. In the preparatory stage, the owner’s organization should ensure partnering is the best option for meeting business drives and assess its ability to partner based on
company cultural and work process [19]. Conley and Gregory [16] suggest that the process of partner forming should include the following steps: (1) ensure parties are willing to participate, (2) choose a facilitator, (3) determine who will attend the partnering workshop, (4) schedule the partnering workshop, (5) select and provide read-ahead materials and (6) set the agenda and hold the workshop. The methodologies of terrain scanning and quasi-Delphi study also can be used to help the development of effective partnering alliance [25]. On the other hand, more researchers are interested in the management mechanisms for maintaining partnering procurement. It is a common belief that the relationships between involved parties are of critical importance for success of partnering, such relationship is characterized as mutual trust, long-term commitment and compatible objectives etc. Black et al. [7] find that in UK, contractors and clients are more positive about partnering than consultants. The same result is also found in Netherlands, and it is indicated that consultants may lose more of project control under a partnering contract [39]. Further more, Li et al. [33] state that compatibility is much more important than similarity when considered as a factor in partner selection. Thus, many partnering tools are suggested for handling these obstacles in partnering procurement. Kaderfors [26] uses the general theory of trust to discuss factors that influence trust between clients and contractors and points out that trust can be achieved by using economic incentives for cooperation, formalized team building, joint goal formulation, systems for problem solving, and continuous improvement. Li et al. [32] suggest a cooperative benchmarking approach with an eight-stage process that can be used to improve the performance of parties entering into partnering agreements. Alternatively, the empirical studies of Bayliss et al. and Cheung et al. [4,15] indicate that tools like partnering charters, workshops, social functions and newsletters are all helpful for developing trust among involved parties, and that the most effective tools are monthly partnering, review meetings and the use of incentives. Meanwhile, some information technology-based tools are suggested for effective monitoring and evaluating the
Fig. 1. Relationships between factors under organization and partnering use.
S. Lu, H. Yan / International Journal of Project Management 25 (2007) 164–170
partnering status or results. Crane et al. [20] suggest a partnering measures model that can be used for measuring the partnering results, process and relationships among involved parties. Based on findings of Mohr and Spekman [36], Alarcon and Serpell [2], and Marosszeky and Karin [35], Cheng et al. [12] take a summary of both subjective and objective measures that can be used for determining the degree of success of partnering. Cheung et al. [14] then suggest an Internet based partner monitoring system named the Partnering Temperature Index (PTI) that was made to increase the effectiveness of partnering effort assessment. Other tools that make use of Internet technology and databases to share information among partners are not so unique [21]. Some, but not all, common management process and tools for helping the success of partnering use are included below in Table 1. The other factors affecting the successful partnering use can be attributed to the essence of project. Although partnering applications are adverted everywhere, it is rare in small construction projects. Despite various classifying methods, the common way is to determine project scale by cost. The empirical study of Gransberg et al. [24] show that projects over $5 million will accrue more benefits from partnering than smaller projects. Scott [41] also supports the opinion that partnering is more suitable to large scale construction projects, and points out that good use of partnering in a single project must have a value more than $150 million. However, this makes it hard to assess the applicability of partnering by absolute cost due to the large price gap among regions. Conley and Gregory [16] suggest a systematic model for using partnering in projects less than $3 million, but they also stress that the project must have a period of at least 6 months. This brings up another aspect of the intrinsic factors of partnering: duration. It is believed that partnering in con-
Table 1 Common management mechanisms for partnering use Management mechanisms Before partnering procurement
Choose a facilitator who familiar with partnering (those who get background of government or law are preferred) Formulate a partner selection system with multiple criteria Terrain scanning Quasi-Delphi study Training program for partnering procurement Questionnaires, presentations, interviews, site visits and sample pricing of jobs
Partnering procurement
Partnering charter Contract of economic incentives Problem-solving process Provisions for continuous improvement Workshop Partnering review meeting Objective and subjective measures Monitoring and evaluating tools by making use of information technologies
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struction is more suitable to programs which include several sequential projects. Thus, involved parties must take a strategic view for participating in partnering [13,32]. Li et al. [32] state that partnering may not be appropriate for a project because the development of trust often takes a long time. Turner and Simister [43] point out that partnering is more appropriate to projects with high uncertainty of the product and process, because the client and contractors can then share both project risk and uncertainty through an alliance. It can be then inferred that the complexity of project procurement is positively related to use of partnering. The uncertainty of a project is not only caused by restrictions in cost, time and quality, but may also relate to the function of a project. In China, most construction projects are mandated through competitive tendering on a lowest-bid basis, which can be an obstacle to partnering use [1,42]. However, in some special cases such as military construction projects, the owners may restrict the contractor selection in the selective tendering or negotiated contractors. This makes the use of partnering arrangements far more feasible. Moreover, in public projects of pivotal significance where the use of resources is flexible, a situation is created that helps construction companies gain commercial or social benefits through partnering. In sum, from the views of construction companies, the costs, profits, duration, complexity and reputation of a single project are considered to be important factors to consider when entering into partnering arrangements. 4. Applicability assessment model for partnering Thus, as illustrated in Fig. 2, the framework of an evaluation model should include the following factors at least: management mechanisms, involved organizations and project dimensions. It must be stressed that factors below these dimensions are not isolated, that the factors under project often represented in owner’s goals, and that the management mechanism is conducted for achieving these targets. For example, the target procurement cost of a project is planned based on the budget, and the partnering tools utilized in it should be positive to deliver project within cost.
Fig. 2. Framework of evaluation model.
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The Applicability Assessment Model for Partnering (AAMP) focuses on factors associated with management mechanisms, involved organizations and project dimensions. Members should know that not all projects with sufficient resources, experienced parties and effective management mechanisms to fulfill the whole partnering philosophy, but even use partnering in partly are also popular for achieving better results. It is thought that considering these factors helps when evaluating the applicability of partnering towards a single project, programs and strategy. The Applicability Assessment Model for Partnering (AAMP) is a process model that provides a systematic framework to evaluate whether and how utilize partnering in a certain situation. To ease the understanding of it, the AAMP process is elaborated as follows: Stage 1: Once use of partnering becomes an option, a detailed investigation should be undertaken to identify the factors associated with project dimension. The first critical process for the owner’s organization is to identify the functions of the project. The owner’s organization should provide answers for questions such as: why build the project? Is the project very important at strategic, business or operation levels for organization development? The owner’s organization should then cooperate with consultants to identify project’s scale, design, cost, duration and resource availability. Analysis of the motivations of potential participating partners in the project is particularly necessary. Can the project provide an opportunity for potential partners to gain commercial or social benefits? A follow up question would be whether these benefits are the potential partner’s real wants. In addition, all processes and results must be authorized by the top management of owner’s organization. Stage 2: Compare gains from partnering with the expectations of project. The partnering formed for a single project, program or strategy is determined by compatible outcomes at project, business or corporate levels respectively. It is stressed that comparing results will form the bases that will determine what management mechanisms should be used for future partnering arrangement. Results from the above process are then used for formulating the multiple evaluation criteria for partner selection. These may not only include traditional factors such as commercial stability and technical skills, but also others such as culture and process. Stage 3: Select partners. By using management mechanisms before partnering procurement, the owner’s organization or facilitator can get an understanding of potential partners’ capabilities and expectations for the project. These results should then be compared with corresponding outcomes investigated in the second stage. Compromises by negotiation may be necessary at this point. Thus, if partnering is still the final option, all involved parties should rectify their contributions and goals in prior planning. Despite the additional time
and cost of negotiation, empirical evidence has proved that it is essential for increasing mutual trust and smoothing partnering running. Stage 4: The applied management mechanisms for partnering procurement should be taken into consideration. According to Larson’s study [28], partnering tools often differ significantly in affecting cost, time and other successful criteria at the project level. It is suggested that the selection of partnering tools should meet the common goals achieved in the third phase. Meanwhile, the management mechanisms established to monitor and measure partnering status and results should achieve all involved parties’ expectations. The abilities of employees to utilize the management mechanisms are another important factor that can affect the selection of partnering tools. If necessary, a program to introduce partnering philosophy and management mechanisms should be established. Furthermore, the choices of partnering management mechanisms are restricted in factors under project dimension. Those projects with limited budgets may be not able to offer enough resources to establish an automatic mechanism based on available information technology to helping partnering arrangement. Though how to perform the above stages in detail is beyond this paper, answers of this can be found in researches mentioned early. In conclusion, the use of partnering must be determined by factors associated with management mechanism, involved organizations and project dimensions, which are compatible. This implies that application of the evaluation model is a course of dynamic and interactive. 5. Reports on findings in China Besides universal partnering management mechanisms that can be translated into projects directly, the factors associated with project and organization dimensions are strongly culture and local business environment related. To understand the evaluation model mentioned above, an investigation was undertaken in China in 2005. After a discussion with 6 local experts in the field of construction industry, a questionnaire which focuses on partnering factors under project and organizational dimensions was formulated. Using the questionnaire, a survey was then conducted to explore various perceptions of factors towards project and organizational dimensions by two principal categories of the construction industry: contractors and consultants. Apart from questions intended to capture the background information of the respondents, the remaining questions in the questionnaire asked respondents to rate their degree of agreement with each of the identified factors. This is done according to a five-point Likert scale, where an answer of ‘‘1’’ indicates strong disagreement, ‘‘5’’ indicates strong agreement, and ‘‘0’’ indicates ‘‘no idea’’.
S. Lu, H. Yan / International Journal of Project Management 25 (2007) 164–170
The research survey adopted a ‘‘snowballing’’ approach of distributing questionnaires. Sixteen major cities in China including Beijing, Shanghai, Shenzhen and Chengdu are covered by the survey. With support from a number of experts in local construction industry who have good connections with other local construction practitioners, 200 questionnaires were delivered to potential respondents. Although the survey was limited to only 16 cities, the results can be regarded as representative of the whole country because of the geographic position and economic status of these cities in China [34]. Out of the 200 questionnaires, 116 valid responses were received, representing a response rate of 58%. This sample consists of 80 (69%) contractors and 36 (31%) consultants. Ninety-nine (85%) of the respondents have had longer than or equal to 5 years of construction related experience and 78 (67%) have more than 10 years. Both small and large size firms are represented in the sample. Twenty-four (21%) of the respondents report that they have worked for small firms with less than 100 employees, while 64 (55%) have worked for large firms with more than 1000 employees. The data collected was analyzed using the statistical package for social sciences (SPSS). The value of Cronbach’s coefficient a is 0.9241 (F statistic = 10.5796, P = 0.0000), which is much greater than 0.5, indicating that the five-point scale measurement of the questionnaire is reliable at the 1% significant level. The relative importance of factors by respondents is measured by the ‘‘mean score’’ method. Agreement among one group and between groups (contractors and consultants) is then tested using the ‘‘Kendall’s concordance analysis’’, ‘‘independent-one-sample T-test’’ and ‘‘Spearman rank correlation.’’ The results indicate that there is a significant amount of agreement among the respondents in general (at 0.05 level). As mentioned by Chan et al. [11], ranking exercises based on perception are a subjective assessment and do not provide any absolute ranking value. Thus, emphasis ought to be given to those factors that placed as most important in the ranking list. The results of the top 3 most important factors, as perceived by all respondents associated with project and organization dimensions, are summarized in Table 2.
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The whole process of the survey and analysis in detail is elaborated on in another paper forthcoming. Here we only discuss the results found. From the data showed in Table 2, both contractors and consultants in China share a common opinion about the critical partnering factors listed under organizational dimension. It is interesting to find that contractors and consultants have some differences in partnering factors listed under project dimension. Contractors are more conscious about getting continuous work, whereas consultants put greater emphasis on achieving economic profits. It is thus suggested that partnering with contractors in China is more suitable to projects with long term strategic considerations, while partnering with consultants in China is better used for projects with opportunities to achieve economic profit. All of these findings can be a help in easier usage of the evaluation model, and formulating effective partnering arrangements in China. 6. Conclusions Despite numerous successful partnering reports in the construction industry, not all partnering projects meet prior expectations. It is therefore argued that a systematic assessment of partnering use is necessary before partnering procurement. Based on literature found within this field, this paper presents a model which supports a planning process that will evaluate the applicability of partnering use in a given situation. This model embraces components that help to determine whether or not to use partnering by looking at factors listed under management mechanism, involved organizations and project dimensions. It supports that partnering use for a single project, program and strategy should be considered in a course of dynamic and interactive, which are used for determining compatibility between management mechanism, involved organizations and project dimensions. We also present a step by step approach for utilizing this evaluation model. Finally, for the purpose of emphasis on factors listed under project and organization dimensions, the significance of the findings of an empirical study in China is discussed.
Table 2 The most important partnering factors perceived by construction companies in China Item
Contractor
Consultant
Mean
Rank
Mean
Rank
Significance level (T-test)
Project
For opportunity to get continuous projects For opportunity to increase reputation For opportunity to get high economic profits
3.86 3.68 3.47
1 2 4
3.74 3.80 4.06
4 3 1
0.58 0.58 0.02
Goals of organization
To increase bidding advantages To improved long-term competitive advantages To penetrate new market
4.25 4.10 4.03
1 2 3
4.24 4.34 3.97
2 1 3
0.95 0.16 0.75
Capabilities of organization
For partners can provide resources we hard achieve For partners of high reputation For partners are critical organization of our business
4.39 3.90 3.86
1 2 3
4.26 3.91 3.85
1 2 3
0.43 0.96 0.98
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PROJECT MANAGEMENT International Journal of Project Management 25 (2007) 164–170 www.elsevier.com/locate/ijproman
A model for evaluating the applicability of partnering in construction Shaokai Lu a
a,b
, Hong Yan
c,*
School of Economic and Management, Southwest Jiaotong University, Chengdu, China b College of Civil Engineering, Shenzhen University, Shenzhen, China c Department of Logistics, The Hong Kong Polytechnic University, Hong Kong, China
Abstract Different partnering arrangements have been advertised as means to solve hurdles in successfully accomplishing projects in construction industry. However, not all partnering projects meet their targets in prior. It is therefore suggested that a planning assessment of partnering use is implemented before partnering procurement. As such, this paper conducts a through literature review of those factors influencing the partnering use. We then present a model named Applicability Assessment Model of Partnering (AAMP) that supports a systematic process to evaluate the applicability of partnering use. This model involves steps that help to determine partnering use by evaluating management mechanism, organizations involved and project dimensions. The model is given in a step by step approach, and its significance is discussed based on the findings of an empirical study in China. Ó 2006 Elsevier Ltd and IPMA. All rights reserved. Keywords: Partnering; Evaluate; Construction
1. Introduction Many researchers and empirical studies show that partnering in construction can benefit all stakeholders involved in a project mainly due to its ability on changing the adversarial attitude between parties. The adoption of different partnering arrangements in construction has become more common in recent years, especially in developed countries such as the USA, UK and Australia [7,22,38]. Meanwhile, some follow-adoptions in other regions like Hong Kong also achieve tremendous success [4]. Thus, it is certain that the application of partnering in construction should be advertised in more regions for further advantages. On the other hand, the use of construction partnering may not always be a master key to success. Researchers point out that some projects under partnering arrangement do not achieve their original targets [8,9]. The empirical research of Ng et al. [38] indicates that lack of continuous and honest communication, lack of a ‘‘win–win’’ attitude,
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0263-7863/$30.00 Ó 2006 Elsevier Ltd and IPMA. All rights reserved. doi:10.1016/j.ijproman.2006.09.009
unwillingness to compromise, etc., can cause for ineffective construction partnering. In sum, construction partnering indeed shows many advantages, but it may not be applicable in certain situations. This paper aims to address this issue by presenting a model for evaluating the applicability of partnering in construction scenarios. The rest of the paper is organized as follows. First, a brief section on construction partnering principles frames the paper into a construction partnering setting for analysis. Second, the factors of affecting partnering use are summarized through literature review within this field. Third, an evaluation model is presented and its application is discussed. Lastly, we report upon results obtained from a pilot study conducted to investigate the key elements of the evaluation model in the Chinese mainland construction companies. We believe that this evaluation model is helpful for clients, contractors and construction professionals as a guideline when deciding whether to utilize partnering. This is particularly important to those who may not be familiar or experienced with construction partnering. This evaluation model should provide answers for what the limitations of partnering use are as well as why and how it should be used.
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2. Partnering in construction
3. The factors affecting partnering use
In reviewing literature on construction partnering, there are many different principles. Bennett and Jayes [6] state that partnering has witnessed three stages, each of which are slightly different in concept partly due to their evolution. While most researchers in construction take the term ‘‘partnering’’ to represent an alliance within the supply chain, terms of ‘‘strategic partnering’’, ‘‘alliance’’ and ‘‘strategic alliance’’ are also used in depicting such relationship. In general, partnering is mainly defined as a working relationship between stakeholders through respect, trust, teamwork, commitment and shared goals. Such a relationship is often determined by good faith rather than a formal contract. Meanwhile, terms with ‘‘strategic’’ are usually associated with long-term relationships [17,18] and are not only based on the principles of partnering, but also with the additional values of sharing of resources, knowledge, risks and profits or losses. Cheng et al. [13] say that alliances in construction usually create an informal rather than a formal relationship. Naoum [37] gives an overview of the concepts of partnering and summarizes the common features of partnering definitions as follows: mutually agreed goals, inter-organizational trust, a mechanism for problem resolution, and continuous improvement related to benchmarking process. All these features can be observed by objective behavior in some extent. For example, the adoption of popular partnering tools, such as partnering charters, often refers to a written agreement signed by all involved parties to show their commitment. The agreement also indicates the trust and common objectives among parties. Moreover, a partnering charter can help reduce disputes originated from distortion of the memory of involved parties because the united team would monitor the common goals written down [13]. Further more, Larson [28] takes a series of single activities such as team building sessions, problem-solving process establishing and workshop etc., as aids to partnering. With respect to different partnering arrangements in practice and various principles, ‘‘partnering’’ in this paper refers to, unless indicated otherwise, ‘‘a structured sequence of processes initiated at the outset of a project that is based on mutual objectives and utilizes specific tools and techniques such as facilitated workshops, a charter, a dispute resolution system, and continuous improvement techniques’’ [5]. The partnering concepts adopted in this paper are also used in the work of Koraltan and Dikbas [27], which provides an assessment of the applicability of partnering in the Turkish construction sector. This paper focuses on partnering approach rather than partnering philosophy, the latter usually refers commitment, trust and good faith between parties. Moreover, with consideration to the topic of evaluating the applicability of partnering in construction, we pay more attention to partnering at the outset of a project, before the procurement phase that focus on project execution.
The abundant existing partnering literature offers many factors that may affect its successful application. Identifying these elements from literature review can be a good first step to formulating an effective evaluation model of the applicability of partnering in construction. The essential reason for utilizing partnering is to meet the goals of involved parties, which are associated with various incentives and benefits. It is a common belief that partnering should lead to a profitable job for both contractors and subcontractors, quality and on time job completion for the owner [23,30,31]. This may be the most obvious reason for parties involved to consider using it. Prior empirical researches have provided deep insights into the incentives and benefits of using partnering in construction. Using data collected from 30 international construction industry executives, Badger and Mulligan [3] give a summary of incentives for partnering and the benefits gained from it. Based on their findings, Cheng et al. [13] also point out that strategic alliances in construction should help involved construction companies to gain certain benefits at the project, business and corporate levels. These include reduced risks, improved quality, reduced cost, on time completion, reduced rework, increased profits, increased market share, enhanced competitive position, competitive bidding, broadened client base, cost effectiveness, increased labor productivity, improved efficiency, increased opportunity for innovation, continuous improvement of quality products and services, and increased cultural responsiveness. Though most incentives are closely tied to benefits, there remain some differences between them. Lazar [29] states that the early trying of partnering may only because the early-adopter wants to try the latest innovation first, and their success in economics then become the main motivation for the follow-adopter. The early-adopter does not perceive the substantial benefits associated with partnering, but just want to try a new way to change the outcomes caused by traditional project delivery methods. Then, the following-adopter is attracted primarily by the promise of better economic benefits perceived. On the other hand, some researchers believe that involved parties with partnering experience and top management support will help for the smooth execution of partnering [10,40]. Conley and Gregory [16] suggest that the owner’s representatives familiar with partnering principles will help for implementing an informal version of partnering. It seems that factors under organizations should be taken into consideration when deciding whether use partnering or not. Ensuring that all parties are willing to participate is important, as the partnering effort will not work without top management support from all involved parties [16]. Moreover, the potential obstacles of partnering use may be attributed to inadequate technological knowledge, lack of education and training program in partly.
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Those construction firms involved in international constructions are implementing many requirements of partnering, not only they are suitable of management approach but also through implementing current approaches such as TQM [27]. Schultzel and Unrub [40] emphasize that partnering organizations should provide unique contributions to alliances. Construction companies must grasp the ability to satisfy the demands of a project to build. When asked about familiarity with partnering knowledge and skills, those who have partnering experience would be preferred over those without experience when faced with partner selection. Meanwhile, large developers can provide a whole series of projects to facilitate long term cooperation among partners and thus can aid the success of partnering use [44]. The successful partnering cases in the report of Egan [22] are bonded with major clients such as British Airport Authority, Railtrack, major supermarket chains, and similar organizations. Fig. 1 summarizes the relationships between goals of organizations, capabilities of organizations and partnering use. Cheng et al. [12] formulates a framework that uses management skills and contextual characteristics to identify critical success factors for construction partnering, they suggest that partnering can become successful by using appropriate management mechanisms which include partnering tools, individual measures etc. To formulate a successful partnering team, the prior arrangement should include systematic mechanisms. As mentioned by Bresnen and Marshall [10], an airport company took at least a year to select a suitable contractor for an airfield civil engineering services project worth 150 million. The process was executed using tools such as questionnaires, presentations, interviews, site visits and sample pricing of jobs. In the project of the Tseng Kwan O Extension of subway in Hong Kong, before adopting partnering, a small working group was set up to investigate the benefits that partnering could offer and how to introduce it into the project [4]. In the preparatory stage, the owner’s organization should ensure partnering is the best option for meeting business drives and assess its ability to partner based on
company cultural and work process [19]. Conley and Gregory [16] suggest that the process of partner forming should include the following steps: (1) ensure parties are willing to participate, (2) choose a facilitator, (3) determine who will attend the partnering workshop, (4) schedule the partnering workshop, (5) select and provide read-ahead materials and (6) set the agenda and hold the workshop. The methodologies of terrain scanning and quasi-Delphi study also can be used to help the development of effective partnering alliance [25]. On the other hand, more researchers are interested in the management mechanisms for maintaining partnering procurement. It is a common belief that the relationships between involved parties are of critical importance for success of partnering, such relationship is characterized as mutual trust, long-term commitment and compatible objectives etc. Black et al. [7] find that in UK, contractors and clients are more positive about partnering than consultants. The same result is also found in Netherlands, and it is indicated that consultants may lose more of project control under a partnering contract [39]. Further more, Li et al. [33] state that compatibility is much more important than similarity when considered as a factor in partner selection. Thus, many partnering tools are suggested for handling these obstacles in partnering procurement. Kaderfors [26] uses the general theory of trust to discuss factors that influence trust between clients and contractors and points out that trust can be achieved by using economic incentives for cooperation, formalized team building, joint goal formulation, systems for problem solving, and continuous improvement. Li et al. [32] suggest a cooperative benchmarking approach with an eight-stage process that can be used to improve the performance of parties entering into partnering agreements. Alternatively, the empirical studies of Bayliss et al. and Cheung et al. [4,15] indicate that tools like partnering charters, workshops, social functions and newsletters are all helpful for developing trust among involved parties, and that the most effective tools are monthly partnering, review meetings and the use of incentives. Meanwhile, some information technology-based tools are suggested for effective monitoring and evaluating the
Fig. 1. Relationships between factors under organization and partnering use.
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partnering status or results. Crane et al. [20] suggest a partnering measures model that can be used for measuring the partnering results, process and relationships among involved parties. Based on findings of Mohr and Spekman [36], Alarcon and Serpell [2], and Marosszeky and Karin [35], Cheng et al. [12] take a summary of both subjective and objective measures that can be used for determining the degree of success of partnering. Cheung et al. [14] then suggest an Internet based partner monitoring system named the Partnering Temperature Index (PTI) that was made to increase the effectiveness of partnering effort assessment. Other tools that make use of Internet technology and databases to share information among partners are not so unique [21]. Some, but not all, common management process and tools for helping the success of partnering use are included below in Table 1. The other factors affecting the successful partnering use can be attributed to the essence of project. Although partnering applications are adverted everywhere, it is rare in small construction projects. Despite various classifying methods, the common way is to determine project scale by cost. The empirical study of Gransberg et al. [24] show that projects over $5 million will accrue more benefits from partnering than smaller projects. Scott [41] also supports the opinion that partnering is more suitable to large scale construction projects, and points out that good use of partnering in a single project must have a value more than $150 million. However, this makes it hard to assess the applicability of partnering by absolute cost due to the large price gap among regions. Conley and Gregory [16] suggest a systematic model for using partnering in projects less than $3 million, but they also stress that the project must have a period of at least 6 months. This brings up another aspect of the intrinsic factors of partnering: duration. It is believed that partnering in con-
Table 1 Common management mechanisms for partnering use Management mechanisms Before partnering procurement
Choose a facilitator who familiar with partnering (those who get background of government or law are preferred) Formulate a partner selection system with multiple criteria Terrain scanning Quasi-Delphi study Training program for partnering procurement Questionnaires, presentations, interviews, site visits and sample pricing of jobs
Partnering procurement
Partnering charter Contract of economic incentives Problem-solving process Provisions for continuous improvement Workshop Partnering review meeting Objective and subjective measures Monitoring and evaluating tools by making use of information technologies
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struction is more suitable to programs which include several sequential projects. Thus, involved parties must take a strategic view for participating in partnering [13,32]. Li et al. [32] state that partnering may not be appropriate for a project because the development of trust often takes a long time. Turner and Simister [43] point out that partnering is more appropriate to projects with high uncertainty of the product and process, because the client and contractors can then share both project risk and uncertainty through an alliance. It can be then inferred that the complexity of project procurement is positively related to use of partnering. The uncertainty of a project is not only caused by restrictions in cost, time and quality, but may also relate to the function of a project. In China, most construction projects are mandated through competitive tendering on a lowest-bid basis, which can be an obstacle to partnering use [1,42]. However, in some special cases such as military construction projects, the owners may restrict the contractor selection in the selective tendering or negotiated contractors. This makes the use of partnering arrangements far more feasible. Moreover, in public projects of pivotal significance where the use of resources is flexible, a situation is created that helps construction companies gain commercial or social benefits through partnering. In sum, from the views of construction companies, the costs, profits, duration, complexity and reputation of a single project are considered to be important factors to consider when entering into partnering arrangements. 4. Applicability assessment model for partnering Thus, as illustrated in Fig. 2, the framework of an evaluation model should include the following factors at least: management mechanisms, involved organizations and project dimensions. It must be stressed that factors below these dimensions are not isolated, that the factors under project often represented in owner’s goals, and that the management mechanism is conducted for achieving these targets. For example, the target procurement cost of a project is planned based on the budget, and the partnering tools utilized in it should be positive to deliver project within cost.
Fig. 2. Framework of evaluation model.
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The Applicability Assessment Model for Partnering (AAMP) focuses on factors associated with management mechanisms, involved organizations and project dimensions. Members should know that not all projects with sufficient resources, experienced parties and effective management mechanisms to fulfill the whole partnering philosophy, but even use partnering in partly are also popular for achieving better results. It is thought that considering these factors helps when evaluating the applicability of partnering towards a single project, programs and strategy. The Applicability Assessment Model for Partnering (AAMP) is a process model that provides a systematic framework to evaluate whether and how utilize partnering in a certain situation. To ease the understanding of it, the AAMP process is elaborated as follows: Stage 1: Once use of partnering becomes an option, a detailed investigation should be undertaken to identify the factors associated with project dimension. The first critical process for the owner’s organization is to identify the functions of the project. The owner’s organization should provide answers for questions such as: why build the project? Is the project very important at strategic, business or operation levels for organization development? The owner’s organization should then cooperate with consultants to identify project’s scale, design, cost, duration and resource availability. Analysis of the motivations of potential participating partners in the project is particularly necessary. Can the project provide an opportunity for potential partners to gain commercial or social benefits? A follow up question would be whether these benefits are the potential partner’s real wants. In addition, all processes and results must be authorized by the top management of owner’s organization. Stage 2: Compare gains from partnering with the expectations of project. The partnering formed for a single project, program or strategy is determined by compatible outcomes at project, business or corporate levels respectively. It is stressed that comparing results will form the bases that will determine what management mechanisms should be used for future partnering arrangement. Results from the above process are then used for formulating the multiple evaluation criteria for partner selection. These may not only include traditional factors such as commercial stability and technical skills, but also others such as culture and process. Stage 3: Select partners. By using management mechanisms before partnering procurement, the owner’s organization or facilitator can get an understanding of potential partners’ capabilities and expectations for the project. These results should then be compared with corresponding outcomes investigated in the second stage. Compromises by negotiation may be necessary at this point. Thus, if partnering is still the final option, all involved parties should rectify their contributions and goals in prior planning. Despite the additional time
and cost of negotiation, empirical evidence has proved that it is essential for increasing mutual trust and smoothing partnering running. Stage 4: The applied management mechanisms for partnering procurement should be taken into consideration. According to Larson’s study [28], partnering tools often differ significantly in affecting cost, time and other successful criteria at the project level. It is suggested that the selection of partnering tools should meet the common goals achieved in the third phase. Meanwhile, the management mechanisms established to monitor and measure partnering status and results should achieve all involved parties’ expectations. The abilities of employees to utilize the management mechanisms are another important factor that can affect the selection of partnering tools. If necessary, a program to introduce partnering philosophy and management mechanisms should be established. Furthermore, the choices of partnering management mechanisms are restricted in factors under project dimension. Those projects with limited budgets may be not able to offer enough resources to establish an automatic mechanism based on available information technology to helping partnering arrangement. Though how to perform the above stages in detail is beyond this paper, answers of this can be found in researches mentioned early. In conclusion, the use of partnering must be determined by factors associated with management mechanism, involved organizations and project dimensions, which are compatible. This implies that application of the evaluation model is a course of dynamic and interactive. 5. Reports on findings in China Besides universal partnering management mechanisms that can be translated into projects directly, the factors associated with project and organization dimensions are strongly culture and local business environment related. To understand the evaluation model mentioned above, an investigation was undertaken in China in 2005. After a discussion with 6 local experts in the field of construction industry, a questionnaire which focuses on partnering factors under project and organizational dimensions was formulated. Using the questionnaire, a survey was then conducted to explore various perceptions of factors towards project and organizational dimensions by two principal categories of the construction industry: contractors and consultants. Apart from questions intended to capture the background information of the respondents, the remaining questions in the questionnaire asked respondents to rate their degree of agreement with each of the identified factors. This is done according to a five-point Likert scale, where an answer of ‘‘1’’ indicates strong disagreement, ‘‘5’’ indicates strong agreement, and ‘‘0’’ indicates ‘‘no idea’’.
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The research survey adopted a ‘‘snowballing’’ approach of distributing questionnaires. Sixteen major cities in China including Beijing, Shanghai, Shenzhen and Chengdu are covered by the survey. With support from a number of experts in local construction industry who have good connections with other local construction practitioners, 200 questionnaires were delivered to potential respondents. Although the survey was limited to only 16 cities, the results can be regarded as representative of the whole country because of the geographic position and economic status of these cities in China [34]. Out of the 200 questionnaires, 116 valid responses were received, representing a response rate of 58%. This sample consists of 80 (69%) contractors and 36 (31%) consultants. Ninety-nine (85%) of the respondents have had longer than or equal to 5 years of construction related experience and 78 (67%) have more than 10 years. Both small and large size firms are represented in the sample. Twenty-four (21%) of the respondents report that they have worked for small firms with less than 100 employees, while 64 (55%) have worked for large firms with more than 1000 employees. The data collected was analyzed using the statistical package for social sciences (SPSS). The value of Cronbach’s coefficient a is 0.9241 (F statistic = 10.5796, P = 0.0000), which is much greater than 0.5, indicating that the five-point scale measurement of the questionnaire is reliable at the 1% significant level. The relative importance of factors by respondents is measured by the ‘‘mean score’’ method. Agreement among one group and between groups (contractors and consultants) is then tested using the ‘‘Kendall’s concordance analysis’’, ‘‘independent-one-sample T-test’’ and ‘‘Spearman rank correlation.’’ The results indicate that there is a significant amount of agreement among the respondents in general (at 0.05 level). As mentioned by Chan et al. [11], ranking exercises based on perception are a subjective assessment and do not provide any absolute ranking value. Thus, emphasis ought to be given to those factors that placed as most important in the ranking list. The results of the top 3 most important factors, as perceived by all respondents associated with project and organization dimensions, are summarized in Table 2.
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The whole process of the survey and analysis in detail is elaborated on in another paper forthcoming. Here we only discuss the results found. From the data showed in Table 2, both contractors and consultants in China share a common opinion about the critical partnering factors listed under organizational dimension. It is interesting to find that contractors and consultants have some differences in partnering factors listed under project dimension. Contractors are more conscious about getting continuous work, whereas consultants put greater emphasis on achieving economic profits. It is thus suggested that partnering with contractors in China is more suitable to projects with long term strategic considerations, while partnering with consultants in China is better used for projects with opportunities to achieve economic profit. All of these findings can be a help in easier usage of the evaluation model, and formulating effective partnering arrangements in China. 6. Conclusions Despite numerous successful partnering reports in the construction industry, not all partnering projects meet prior expectations. It is therefore argued that a systematic assessment of partnering use is necessary before partnering procurement. Based on literature found within this field, this paper presents a model which supports a planning process that will evaluate the applicability of partnering use in a given situation. This model embraces components that help to determine whether or not to use partnering by looking at factors listed under management mechanism, involved organizations and project dimensions. It supports that partnering use for a single project, program and strategy should be considered in a course of dynamic and interactive, which are used for determining compatibility between management mechanism, involved organizations and project dimensions. We also present a step by step approach for utilizing this evaluation model. Finally, for the purpose of emphasis on factors listed under project and organization dimensions, the significance of the findings of an empirical study in China is discussed.
Table 2 The most important partnering factors perceived by construction companies in China Item
Contractor
Consultant
Mean
Rank
Mean
Rank
Significance level (T-test)
Project
For opportunity to get continuous projects For opportunity to increase reputation For opportunity to get high economic profits
3.86 3.68 3.47
1 2 4
3.74 3.80 4.06
4 3 1
0.58 0.58 0.02
Goals of organization
To increase bidding advantages To improved long-term competitive advantages To penetrate new market
4.25 4.10 4.03
1 2 3
4.24 4.34 3.97
2 1 3
0.95 0.16 0.75
Capabilities of organization
For partners can provide resources we hard achieve For partners of high reputation For partners are critical organization of our business
4.39 3.90 3.86
1 2 3
4.26 3.91 3.85
1 2 3
0.43 0.96 0.98
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