Procuring service innovations: Contractor selection for partnering projects

INTERNATIONAL JOURNAL OF

PROJECT MANAGEMENT International Journal of Project Management 25 (2007) 375–385 www.elsevier.com/locate/ijproman

Procuring service innovations: Contractor selection for partnering projects Anna Kadefors a

a,*

, Emma Bjo¨rlingson

b,1

, Andreas Karlsson

b,1

Department of Technology Management and Economics, Chalmers University of Technology, 412 96 Go¨teborg, Sweden b Skanska Sweden, 405 18 Go¨teborg, Sweden

Abstract Collaborative inter-organizational relationships often require new skills and sometimes also new attitudes from those involved. Contractor procurement for partnering projects differs from most contractor procurement in two related ways: that the service procured is partly new to many contractors and that this service is strongly related to skills, dispositions and commitment of individuals. In more traditional contractor procurement non-price criteria are often assessed on the basis of past performance, and most research has dealt with the selection phase. The aim of this study is to show how procurement practice is influenced by goals of innovation and collaboration, and to discuss implications for the spreading of new practice in this area. The study is based on a review of public clients’ bid documents from Swedish partnering projects as well as on interviews with the clients. The collaboration content led to a focus on assessing attitudes and teamwork potential of individuals, but past performance information was downplayed. It is concluded that tools and procurement advice for relationship contracting should have a development focus and be designed to involve local competence on both sides. Also, procurement in this context should involve a conscious effort to inspire change and commitment among potential bidders. Ó 2007 Elsevier Ltd and IPMA. All rights reserved. Keywords: Contractor selection; Service; Partnering; Project; Standardization; Innovation

1. Introduction Organizational innovations and technological innovations are not always connected. In many cases, however, technological innovation entails changes in organization and procedure, while in others organizational innovations are pre-requisites for technological developments [27]. Construction is often considered an example of the latter situation, where the lack of innovation is attributed to the fragmented organizations and adversarial relations. Thus, collaborative inter-organizational relationships are often seen as a key to improved efficiency and enhanced innovation in construction (for a review of the partnering discourse, see [5]). *

1

Corresponding author. Tel.: +46 31 7721950. E-mail address: [email protected] (A. Kadefors). Tel.: +46 31 7711000.

0263-7863/$30.00 Ó 2007 Elsevier Ltd and IPMA. All rights reserved. doi:10.1016/j.ijproman.2007.01.003

Construction contracts comprise a combination of services and tangible products [19]. The task of a construction contractor consists of the service of organizing the production of and, to varying extents, also designing the building, almost always combined with a transfer of risk from the client to the contractor. Buildings are inevitably prototypes, produced outdoors at sites with imperfectly known geotechnical conditions and further exposed to changing user and owner preferences, political interventions and strong market variations. Despite the considerable uncertainty that has to be handled in a client–contractor relationship, contractor procurement has traditionally focused on the tangible product dimension. Effort has been directed towards developing comprehensive specifications of the finished building prior to commissioning a contractor. Product quality thus assumed to be completely defined, price often becomes the main discriminator. In many projects, this traditional approach results in costly and adversarial

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negotiations about how to price changes and additional work. In a partnering relationship, the role of a contractor is different from that in a traditional project. Since the contractor is typically involved at an earlier stage and participates in the design, the service aspect is more pronounced. Contractors are then members of the design team, specialized in buildability and cost estimation. Their service is coproduced in close contact with customers, users and other specialists and trades, and the price of the finished building is the result of a team effort. The building contractor may also have an important role in the overall management of the partnering process. When selecting a contractor for this kind of project, clients need to consider not only technical competence but also organizational culture and personal traits of the contractor’s personnel, such as trustworthiness, commitment, openness, and ability to communicate. To sum up, contractor selection in a relational contracting environment differs from traditional contractor procurement in two ways: 1. the service aspect of the relationship is stronger, with a specific focus on the individuals’ ability to participate in and manage collaborative innovative processes; 2. the type of service that the client demands is partly new to many contractors, why there is an innovation dimension. The aim of this study is to investigate how procurement practice is influenced by these two differences, in individual projects as well as on the industry level. In for example the UK and Denmark, central government has issued policies to encourage and sometimes require public clients to use partnering approaches in their projects. In these countries, official partnering guidelines and toolkits have been developed [10,21,22]. The Swedish government has been more passive in advocating collaborative approaches and up to today most initiatives stem from individual companies. The term ‘‘partnering’’ was introduced to a broader industrial audience only in 2003 when one of the large contractors (NCC) started to market the concept, inspired by their Danish subsidiary. After a slow start, interest grew in 2004 when a number of projects were started. Rather unexpectedly, many of these were rather small (down to 1MEUR) public sector projects undertaken by municipal clients. The empirical basis of the paper consists of a review of some of these pioneering Swedish public clients’ bid documents, as well as of interviews with clients. As will be outlined below, most research on contractor procurement is concerned with identifying selection criteria and developing tools for decision-making, while research on relational contracting in general mainly focuses on the development of long-term business relations in the private sector. There are few deeper studies of how buyers go about to identify and select suppliers for collaborative, innovative business relationships. Since the buyers in this study are forced by public procurement regulations to for-

malize and explicitly articulate preferences and decision processes to fulfill requirements of transparency, fairness and accountability, this study may provide insight into processes that otherwise often remain tacit and intuitive. The paper is organized as follows: first, literature on supplier selection in relational contracting is briefly summarized, followed by a review of research on construction procurement for partnering projects. Then, the case study findings are presented and discussed. 2. Research on supplier selection in relational contracting The literature on relational contracting is vast, but the process of identifying a partner has gained little attention compared to later stages of negotiations and relationship development. An important aim of the field of research on inter-firm cooperation and network governance has been to empirically demonstrate the existence and value of close collaboration in long-term buyer-supplier relations (e.g. [15,14]). Often, the main considerations in the prerelationship stage are associated with the decision to terminate an existing supplier relationship and start a new one [13]. Dwyer, Schurr and Oh [9] identify an initial ‘‘awareness’’ phase, which refers to ‘‘party A’s recognition that party B is a feasible exchange partner’’, and the model of Ring and Van de Ven [25] starts with a negotiations phase. ˚ hlstro¨m and Nordin [1] study problems in establishing A service relationships, but do not deal with supplier identification and selection. These early stages in partnership or alliance formation are often informal, and partners are generally sought among suppliers who have a long history of doing business with the buyer, or in the wider personal networks of the managers involved [2,12,26]. Characteristic of research focusing specifically on supplier selection is a concern with developing tools and formal methods supporting the selection process. DeBoer, Labro and Morlacchi [8] showed that these models mainly deal with the choice phase of the procurement process, while problem definition, criteria formulation and qualification receive far more limited attention. Further, almost all support models were found to be developed for supplier selection in manufacturing (and not services). There is some research of this kind also for supplier selection for strategic relationships (see e.g. [28]) and cooperative relationships [20]. However, as pointed out by Ellram [11], the focus in selection of strategic suppliers is often on quantifiable characteristics and known performance measures intended to assess the suppliers’ ability to meet the buyer’s need on a short term basis. She argued that in a strategic partnership, it would be natural to pay more attention to the supplier’s development potential and future plans. Thus, despite the growing interest in collaborative interfirm relationships from both researchers and practitioners, the area of partner selection seems to be lagging behind. According to Ring [26], one reason why the search and evaluation processes per se have not been much studied is that research has generally focused on existing alliances.

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3. Research on contractor selection Similar to research on supplier selection, research on contractor selection often aims at developing methods and tools. As for more descriptive studies, there is some emphasis on investigating the criteria used by clients in contractor prequalification and selection. Based on a literature review and interviews with clients, Hatush and Skitmore [16] found considerable variety in how criteria for contractor selection were expressed, but that these could be classified into five categories: financial soundness, technical ability, managerial capability, safety and reputation. Other studies of this kind are [31,23,29]. From theses, it is clear that criteria intended to capture technical and managerial competence are common in projects not specifically emphasizing collaboration, and that also attitudinal requirements are sometimes mentioned. Palaneeswaran and Kumaraswami [23] found that claims performance and management for continuous improvement appeared as prequalification criteria, and factors such as the competence of individuals and the contractor’s ability to deal with unanticipated problems came up as important aspects in the study by Wong et al. [31]. The evidence used for evaluating bidders’ performance on the various non-price criteria is not discussed in detail in any of these papers, but past performance and experience of individuals as well as companies are clearly important bases for selection, together with work plans. This emphasis on past performance is perhaps even more pronounced when it comes to selecting suppliers of professional services [7]. There are no broader studies of what criteria are actually used in procurement of contractors for partnering projects, although several surveys, e.g. [24,18], investigate which criteria are considered important by various actors. Also, there are a few case studies of contractor selection in partnering projects which describe the formulation of criteria and selection process more in detail [6,4,17,30]. A third type of literature is handbooks and guidelines for partnering, for example, [3,10,21,22]. From these studies and handbooks it may be concluded that clients in partnering projects use many criteria that are common in ordinary projects, such as capacity and technical competence, performance in economic terms, and quality and safety performance, but put greater weight on attitudinal aspects and collaborative competence. Examples of the latter type of criteria are ‘‘understanding of the partnering concept’’, ‘‘response to partnering’’, ‘‘enthusiasm for the project’’ [17], ‘‘attitudes towards the involvement of contractors in the design process’’ [4], ‘‘team composition and attributes of individuals’’, ‘‘models for evaluation and conflict management’’ [10], ‘‘commitment to collaborative working’’, ‘‘senior management commitment’’, ‘‘supply chain teamworking and management’’ [22], and ‘‘corporate culture’’ [3]. There is also emphasis on innovative proposals, ability to bring value to the project, risk analysis and performance mea-

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surement, as well as on tools for financial control and proposals for incentive arrangements. The material and evidence used for assessing performance on these criteria are generally not described in detail, but the case-based literature provides examples of different approaches to assess contractor performance:  prequalification questionnaires followed by interviews with two contractors ([17]; subcontractor selection);  pre-qualification: for each (of 12) criterion contractors are asked to list examples (most often three) of completed projects that demonstrate the contractor’s abilities and performance. This is followed by interviews with the four short-listed contractor teams, and further by a two day workshop with each of three of these ([30]; large museum project);  two prequalified contractors work separately with the design team in a concurrent engineering process, and the final selection of contractor is based on a cost/quality assessment of the resulting design alternatives ([4]; large bridge project). In a study of nine partnering projects, the majority with values over £20m, Bresnen and Marshall [6] found that selection procedures comprising interviews and presentations were used in most of these. The importance of attitudinal criteria varied, as well as how formalized the assessment was. Clearly, much research on contractor selection as well as on supplier selection in general focuses on identifying ‘‘best practice’’ and developing straightforward tools and methodologies. That such tools and guidelines have a positive influence on selection is taken for granted. The importance of considering supplier attitudes and abilities is emphasized, but the cues that buyers use ‘‘as surrogate indicators of such intangible, subjective attributes as ‘expertise’ or ‘competence’’’ [7, p. 45] have not been much studied. In practice, personal encounters in the form of interviews, presentations and workshops seem to be important in assessing attitudes, but what actually takes place in these meetings has not been the subject of much systematic research. Further, in research as well as in practice, the focus is on selection more than on attracting the interest of potential partners. The perspective seems to be largely static, so that supplier attitudes and competences are seen as stable personality or cultural variables. Especially in relational contracting, however, performance is the outcome of an interactive process where the clients’ own attitudes and competences are as important as the contractor’s for how the relationship evolves. In the present study, the procurement process is seen in the context of such a dynamic relationship of co-production. 4. Methodology Data on what projects can be considered partnering projects are not available from general Swedish project

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databases. Therefore, several sources were used to identify case projects. Some projects the authors already knew of. Further, all regional managers of Sweden’s largest contractor company, Skanska, were contacted by email and telephone and asked to list the recent public partnering projects within their region. This way, some 20 projects were identified. Bid documents from these projects were obtained either from the Skanska contacts or from the client organization. From these, a total of 8 clients were selected for further studies and interviews. For three of these clients, two projects were included in the study to see how the bid documents developed with experience. It should be noted that many of the projects are small, but that the total value of one project (A2) is estimated to more than 70 MEUR. Due to the absence of officially sanctioned guidelines and change initiatives these clients are not strongly influenced by any guidelines or partnering handbooks. Thus, the findings represent a period of experimentation in which clients learn from each other. In reviewing the bid documents and analysing the interviews, the focus has been on the following questions:  What is the ‘‘style’’ of the bid documents in terms of background information, presence of client vision, departure from standard models, language, types of criteria, etc?  What information is required from contractors as a basis for evaluation and selection?  How do practices and experiences develop and spread between projects?

5. Case studies Below, the clients’ approaches are described and briefly commented. The main points and requirements relating to partnering in each project are summarized. In most cases, text is quoted directly from the bid documents. Writing skills and style vary between clients, and the ambition has been to preserve the style of the original text in the translation. The model of Client A is described in more detail than the other models. There are two reasons for this: that the two bid documents from this client are the most complex and non-traditional ones, and that Client A has influenced many of the other clients in the study. To provide detailed information on criteria and required information would be too space consuming, but a summary showing a selection of variables for all projects is included (see Table 1). The order is chronological, based on the date when each client’s first (studied) project was procured. 5.1. Client A Client A is a social housing company in a medium-sized town. In the same town, there was a major partnering pro-

ject conducted by another public client already in 1999. However, according to the managers of Client A, their procurement model was conceived in-house based on own experience and ideas, and there was no direct influence of the pioneering project. The manager responsible for developing the bid documents and the model was strongly committed to partnering. Project A1 was a project partnering case and A2 was a strategic partnering contract comprising up to 18 projects. The criteria and requirements in the projects of Client A are described in Table 2. Under item 1 in Table 2, we can see that the bidders are required not only to identify the individuals that are going to participate, but also to explain why these are suggested for this specific project. In A2, the contractors are further asked to explain ‘‘what is required from each person in different project phases’’. Moreover, Client A has identified aspects that they consider vital to a successful partnering relationship (see item 4). In the first project, these were formulated in terms of single words (trust, commitment, team spirit, etc), while in the second they have been developed into statements (‘‘There is curious listening in our dialogue’’, ‘‘All concerned parties are informed and engaged in problem-solving’’). Likewise, the client company has identified ten success factors (relating to social housing) (project A1) and ten ‘‘competence areas’’ (project A2) which they want the contractors to comment on. Bidders are required to describe what these words, statements and success factors mean to them, and what they intend to do meet the goals. Note also the paragraph in A1 stating that ‘‘the degree of understanding shown by the contractor and the perceived trustworthiness of the contractor’’ will be important in the evaluation, and the vision expressed in item 6 in project A2, both of which are picked up by other clients. The approach chosen by Client A is strongly based on bidders’ written accounts on rather abstract subjects (items 4 and 5). In the first project, nothing is said about who should develop these texts, while in the second project it is specified that one top company manager, the project manager and the site manager are all required to write their individual responses. In both projects, the schemes used to evaluate the responses are extensive and complex. They are based on the client’s previously existing system for evaluating and grading contractors on relationship-oriented performance criteria (efficiency, aesthetic feeling, craftsmanship, ability to communicate with all kinds of people, trustworthiness, feeling for time management, etc). In A2, the evaluation scheme is still more elaborated to account for how the responses of the three individuals would be weighted and evaluated in relation to each aspect and to the interviews and the company based material. Criteria for evaluating areas A, B and C are developed, typically expressed in terms of ‘‘degree of understanding’’. Also, questions to ask the referents are specified. In project A1 there were three contractors submitting bids, while in A2 only the company that had been awarded the first project chose to

Table 1 Summary of the cases A2

B1

B2

C

D

E

F

G1 and G2

H

Housing

Housing, new and refurb.

Community building, refurb.

Housing

Housing

Housing and nursery refurb.

Education, refurb.

Public swimming pool

Student housing

Size

108 flats

Small, less than 1 MEUR

32 flats in total

104 flats

60 flats

Small, below 5 MEUR

More than 5 MEUR

Type of partnering

EP

Up to 1800 refurb. flats and 200 new Strategic partnering

EP

Strategic partnering

EP

EP

EP

EP

Contract form

DB

DB

DB

DBB

DB

DBB

Non-standard, extensive Client vision in intro, extensive on criteria and evaluation Names of formally responsible

Non-standard longer than B1 Background and goals in introduction

Standard

Non-standard, similar to B1 No client vision, short and formal criteria

Standard

Standard

Standard

No

Very short

No

Names of formally responsible

Names of formally responsible

Names of formally responsible

Interview/tender presentation

Yes, but not formally evaluated

Yes, formally evaluated

Non-standard, short No client vision, short and formal criteria Steering group Names of project group members Yes, but not formally evaluated

To be jointly decided Non-standard, similar to A1 No explicit client vision, but extensive on criteria Names of formally responsible

DB

Info on client organization

Proposed by contractor Non-standard, short No explicit client vision, extensive on criteria and evaluation Names of formally responsible

Student housing and housing 104 flats (G1) 30 flats (G2) Project partn., no termination option DB

Information on grading

No

Yes, some

Yes, but not formally evaluated No

Yes, but not formally evaluated Yes

Yes, but not formally evaluated No

Character of bid documents Info on clients view of partnering

No

Yes, goals and many routines

Steering group and external PM. Names client CEO and internal PM Yes, formally evaluated

Names of steering group and project group members Yes, but not formally evaluated

No

No

No (?)

No

Names of steering group and project group members Yes, but not formally evaluated No

479 flats

EP

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A1 Type of project

Explanations: G1 and G2 did not differ in dimensions described in this table. EP = early procurement, where the contactor participates in design until cost/quality dimensions may be established; if project goals can not be fulfilled, the project is terminated.

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Table 2 Criteria and requirements in the projects of Client A Item

Criteria/requirements, project A1

Criteria/requirements, project A2

1

Describe organization (names), their geographical basis and why they were chosen for this project

2 3

Provide company references for partnering projects Describe ‘‘non-traditional’’ procurement methods, domestic and international, that you find suitable for this project Important aspects that have to function throughout the project are: trust, commitment, teamwork, conflict management, contracts and procurements, common view of project goals, choice of technology, continuous improvements. 1. For each aspect, describe your aims 2. For each aspect, how do we assure that all aspects function and the aims fulfilled? 3. How do we assure the overall performance of the project work and the finished building? 4. Are there other important areas? In that case, describe in the same way as the areas above

A: Organization Same text, but supplemented with: Describe the project organization and what is required from each person in different project phases Same text Left out, instead the client’s own view of partnering is stated in introduction Replaced with: B: Competence, construction process Describe how quality is assured in the areas ‘‘treatment’’ and ‘‘project execution’’. What do the following statements mean to you and how will you contribute to meeting them? Treatment:  There is curious listening in our dialogue  Disagreements are brought out to find better solutions  All concerned parties are informed and engaged in problemsolving  An ethically responsible conduct rules, where everyone is honest and trustworthy  The level of commitment and service quality is high internally and externally

4

Project execution:  Work is performed with great professional competency where responsibility for environment, health, customer needs, and the maintenance phase is particularly attended to  We economize with resources  We have a good work environment  We have good logistics and planning 5

[Client A] works with 10 success factors. Provide short descriptions of what the following words mean to your organization: responsibility, foresight, health advancement, diversity, resource economy, collaboration, time for you, well-being, accessible, security

Replaced with: C: Competence, central business areas Describe very briefly what you perceive as important and what you intend to contribute with within the following areas for [client A] to obtain the best value product: 1. price, 2. delivery time, 3. maintenance cost, 4. quality, 5. aesthetic qualities, 6. functional quality, 7. technical performance, 8. competence support, 9. environmental impact, 10. company ethics The control instruments should be possible to tie to a vision, such as ‘‘We build homes in harmonious, timeless simplicity – when you take a closer look, such craftsmanship, what a quality’’

6

Authors’ comments are in italics.

submit a tender. Thus, the complex evaluation model was never tested in practice.

Table 3 Information requested for partnering-related aspects in project B1 1.

5.2. Client B Client B is located in another medium-sized town. In this case, the bid documents were developed by the client’s own staff together with a consultant, who had participated in several partnering projects before. Compared to those of Client A, the bid documents are significantly more concise. In the first project there is no expression of the client’s view of the process and goals, and the instructions describing what should be included in the bids are short (see Table 3). There is no indication of what aspects will be valued, except for a paragraph similar to the one in A1 stating that trustworthiness and shown understanding are important.

2.

3.

Working model: Describe a model for collaboration according to partnering principles. Explain what you aim to achieve and how the model will be applied in practice and in organizational terms Organization/references: Describe organization (names), including their experience from partnering projects. Explain why these persons have been chosen for this project and what criteria in the project execution that you find important Describe your experience from previous projects with partnering aspects

The requirement to explain why the proposed project staff has been selected is found also in the projects of Client B. As project A2, B2 is a case of strategic partnering, but comprising only four small projects. The bid documents are more extensive than in B1, and include a one-page

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account of what the client expected to achieve by using a strategic partnering concept. Several texts and principles from A2 are also found in B2. First, the vision about harmony, simplicity, craftsmanship, etc., stated in A2 is almost identically reproduced on the first page of the B2 documents. Further, B2 includes a request to describe ‘‘what is required from each person’’ in different project phases, as well as a paragraph about insight and trustworthiness being valued similar to that in A2. References and experience from partnering projects are required from a top manager, the project manager and the site manager. As in A2, these are asked to provide individually written texts describing their technical capacity and other relevant competencies. Thus, Client B has been inspired by Client A, but has chosen a less complex approach requiring less written material from the suppliers.

same selection criteria as for the main contractor, and that a list of potential subcontractors should be included in the bid.

5.3. Client C

5.5. Client E

This client is located in one of the larger cities in Sweden, and has been one of the champions of a regionally based project aiming at improving the performance of the construction industry. The studied project was the client’s first partnering project, and the bid documents were developed in-house, in collaboration with a project management company who also performed the evaluation of bids. In contrast with the cases previously described, these bid documents follow the general Swedish industry standard for regulating the administrative aspects of a project. This implies that the main document is more extensive; it comprises more than 30 pages and includes standard information on communication, decision-making and responsibilities. Compared to Clients A and B, Client C provides more information on how the interaction will be organized during design and construction as well as on the financial aspects of the contract. In the introduction, there is a description of the client’s goals and the relation to the regional development project. In this case, the contractor is not explicitly required to describe any partnering model. Instead, most emphasis is put on the contractor’s propensity to be innovative in different respects. The criterion ‘‘willingness to change’’ counts for 25%, and it is stated that the evaluation will be based on the contractors’ accounts describing:

This client is located in the same town as Client A, and has used the same procurement consultant as Client B. The bid documents are almost identical to those of B1, with only some difference in the criteria weighting. In the interview, the client emphasized the work methodology criterion. References were considered less important, as few contractors had previous experience from partnering. The client also found it essential to specify which people from their own organization that would participate in the project, so that the contractors had this information when they chose which of their own people to include in their bid.

 a general willingness to change and to come up with production innovations,  will to improve relations between workers and management,  will to improve work environment, for example by common eating facilities,  will to perform other activities to establish a team feeling on site between workers, sub-contractors and management.

5.4. Client D The bid documents of Client D are in large parts similar to those of project A1. The client, who is located in a small town in the outskirts of a large city, asked Client A for permission to use important parts of their bid documents. Thus, items 1–5 from the A1 project are taken directly into the bid documents of project D. Noteworthy is that also item 5, describing the company-specific success factors/core values of Client A, has been included. The evaluation criteria, however, have been simplified and more explicitly connected to the information required.

5.6. Client F Client F is located in a smaller town, and the project was for a swimming hall. The client had already tried to get this project built using a non-partnering design-build approach, but the bids received were too high. The client asked the local contractors for advice on what could be done, and they proposed a partnering approach and also provided the client with examples of bid documents from other projects. A local authority lawyer and a partnering consultant were involved. The bid documents follow the standard model, but contrary to project C the partnering aspect is mainly visible in the evaluation criteria. Because of the constrained budget, the model for economic compensation, suggestions for how to achieve an open book approach and the system for cost control were considered particularly important in this case. The contractor should also describe a work methodology for the design and construction phases. Apart from references and previous experience from partnering, the contractors’ experience from technically similar projects was important, as swimming halls are specialized. 5.7. Client G

Also specific for this project is that names and CVs of all personnel, including the site workers, are required. It is further stated that subcontractors are to be procured using the

This client is based in a town not far from Client B, and due to the geographical proximity, Clients G and B deal

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with the same people on the contractor side. Client G has carried out two partnering projects before those included in this study. There have been contacts with Client B, but the main input comes from own experience and a consultant who was involved in the pioneering partnering project in the town of Clients A and E. The contractor is procured in an early phase in the projects of Client G, but there is no termination option. The contractors are required to state a target price and unit prices, and price is weighted by 45%. Both G projects use the criterion of ‘‘partnering model and working method’’, but the information required to assess it differs. In the first project, partnering models were requested but according to the interview, one local contractor provided very little information on this aspect and no important differences between the other two bids were found. So in the second project only descriptions of the partnering competence of the people involved were asked for, although the weight was higher. Moreover, the same information was required for subcontractors and consultants in the second project. However, it turned out that the difference between the (same two) contractors was not in terms of partnering-related aspects in this case either, but mainly in price. Contrary to most of the other clients, Client G provides information on what aspects will be attended to in the grading process. To achieve the maximum grade for the partnering criterion, for example, it is required that the ‘‘Partnering model is very well elaborated, and clearly establishes the advantages for the client and how the model underpins the client’s goals concerning low rents, low environmental impact and long-term performance’’ (first project), and ‘‘All or nearly all competences in own organization, with very extensive partnering experience’’ (second project).

6. Case summary

5.8. Client H

6.1.2. Working models/systems This category of requirements pertains to descriptions of systems and routines, either already established or developed specifically for this contract. Apart from quality management systems or environmental management systems, present in any project, the studied bid documents included requirements to provide partnering models, descriptions of purchasing routines and how financial transparency (‘‘open books’’) would be achieved. Most clients wanted the contractor to propose a model for cost reimbursement, often including a target cost approach where cost variations are shared between the client and the contractor. However, several clients complained that contractors tended to come up with rather similar, and not so creative, suggestions.

Client H is located in one of Sweden’s largest cities. The project is for student housing, and partnering was chosen to arrive at a project cost which would result in acceptable rents. It was the client’s third project using some kind of collaborative approach, and this model was based on experiences from the previous projects as well as on input from a project management consultant. This consultant had a model for how to run a collaborative project with close interaction between client, designers and contractors, which could explain why contractors were not asked to suggest any partnering model in this project. Instead, partnering competence was assessed exclusively on the basis of the competence, attitude and experience of the proposed personnel. There was no information in the bid documents on the collaboration model, but an information meeting was held with each bidding contractor. After handing in the bids, each contractor was also invited to present their proposal.

This section summarizes the main characteristics of the various client strategies and discusses differences. 6.1. Assessing partnering competence The competences and attitudes that the clients requested included some aspects which were perceived as relatively easy to specify, such as education and experience from similar projects. It was considered more difficult to handle requirements for ability to coordinate and communicate, willingness to change, commitment in problem solving, respect for other categories of people, social competence and trustworthiness. Also, there was considerable variation in the kind of material and information that the clients required the contractors to submit. Five methods for assessing partnering competence are found in the cases: 6.1.1. Asking for CVs of the individuals that are proposed to participate in the project All of the clients except one explicitly ask for this kind of information. Two clients require CVs also for subcontractors and consultants. One of these wants CVs for the construction workers, which is very out of the ordinary. A weakness in this approach, mentioned by several clients, is that most contractors have the same kind of construction experience while few of them have participated in partnering projects. Thus, clients found it difficult to distinguish between contractors on the basis of previous experience. One tentative solution used by Client A, and copied by Clients B, D and E, was to ask the contractors not only to provide information on education and experience, but also to explain the reasons why each person was chosen for this specific project.

6.1.3. References from previous clients A common way of assessing attitudes and personal qualities was to ask previous clients about their experience from working with specific individuals and contractor companies. References could also be used to obtain information on how the contractor’s management systems had been

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applied in practice. Some clients saw references as problematic, claiming that reference persons vary in competence and objectivity. Client A tried to account for this by multiplying the grade obtained by the reference person with a parameter indicating the quality/relevance of the reference person. Another view was that references tended to present the same kinds of problems with contractors having similar experiences as the CV approaches described above. 6.1.4. Written accounts and individual reflections Another way of eliciting information about attitudes and dispositions was to ask the contractors to write down their views on what partnering, partnering-related concepts, or a set of values relating to the client’s core business meant to them. Some clients put much weight on such descriptions, notably A (but also B and C), while other clients, such as G, F and H did not require any material of this kind. The clients were however concerned that such written material might not reflect actual attitudes of those involved, either because site managers and other contractor personnel lack the writing skills necessary to express their attitudes, or because the contractors involve central company units, borrow texts from other projects or provide standard company material. To avoid this, Clients A and B specifically asked for written accounts from individuals in their second projects. 6.1.5. Interviews and bid presentations Interviews, or meetings with contractors, were perceived as very important and were used by most clients. These personal encounters aimed at getting a feeling of the ‘‘personal chemistry’’ between the individuals on both sides and clarifying various issues, but also at giving contractors who were not so good at writing an opportunity to express themselves orally. Interviews were also a means to test if the people meant to work in the project had actually participated in developing the bid. However, clients seemed unsure about in how to conduct and evaluate interviews and presentations in a context of public procurement, and the bid documents include little information on the contents and details of these meetings. Also, it should be noted that many of the studied projects are much smaller than those described in the literature review [6,4,17,30]. These five methods are often used in combination. Further, in evaluating the bids, clients also looked for more general cues to partnering competence: ‘‘you can judge how committed the contractors are by the effort they put into preparing the bid’’. 6.2. Information on grading Swedish public procurement regulation states that goals of equal treatment and transparency require that clients provide as much information as possible considering what aspects they will value and in what way. Still, many of the clients in the cases studied clearly favoured a more open

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approach. For example, Client B said that it was important to give the contractors an opportunity to ‘‘show how clever they were’’, and that information on grading could ‘‘provide the contractor with the answers’’, leading to bids that were more similar to each other. Client G differs from the others in that they provide more precise grading information, which can perhaps explain why they in both their projects found it hard to distinguish between the contractors on partnering-related criteria. 6.3. Character of bid documents An aspect that differed strongly between clients was the character of the bid documents: to what extent these follow the general industry standard and how the partnering content is communicated. The standardized form results in thicker documents where information on partnering aspects appears under many headings, while in the more project-specific bid documents all information on partnering aspects and contractor evaluation is found on a few pages. Thus, a standardized approach follows a scheme with which the contractor is familiar, but it is not obvious where to find the partnering information. Also, it might be argued that standard documents fix a number of responsibilities in a premature stage and that both clients and contractors are not always careful in the project adaptation (both in writing and reading). In the studied cases, conventional approaches were used when the contract for the construction work was immediately binding (case G), or when the project had already been out for traditional procurement (case F), but also in cases C and H. The bid documents further varied in style, where the documents of Client A were the most colourful, listing a number of non-traditional criteria. In the documents of Client C relatively unconventional criteria and client vision were incorporated in a standard format. By contrast, the bid documents of some other clients (especially F and H) showed evidence of a partnering content mainly in the evaluation criteria. 6.4. Relations between projects It is clear that many of the clients and consultants included in the study have influenced each other, and contractors may also act as vehicles for spreading of practice. Especially Client A has been influential on a national level, having received many clients for study visits. The most ostensible borrowing is done by Client D from project A1 (including the part relating to the core values of the client organization) but there are many similarities also between other bid documents. Two texts from Client A have caught specific interest and are found in several projects: the requirement to explain why individuals have been chosen to participate in a project, and the statement that the insight shown by the contractor and the perceived trustworthiness of the contractor are most important in the evaluation.

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Clients A, B, D, E and G are located in two regions, close enough to use the same consultant and deal with the same contractor. One consultant has been involved in three of the projects, and the bid documents of the first two of these projects are almost identical. 7. Discussion A principal aim of this study was to investigate how procurement practice is influenced by a stronger focus on collaborative interpersonal service relationships as well as by a need for suppliers to develop new competencies. These two dimensions may be considered separately, but there are also combination effects. 7.1. The service dimension: focus on individuals In a service were the co-production/collaboration aspect is significant, it is important that the selected partners are competent to contribute to a collaborative process. In the cases studied, the focus clearly is more on evaluating individuals than companies. Also proposed partnering models are evaluated as cues to the behavioural and cultural characteristics of the bidding organizations and individuals, and not only in terms of their quality as instruments for project delivery. Thus, it might be more important for a contractor to demonstrate that much effort has been put in preparing the bid than to achieve quality in the systems proposed. An implication of the change towards an increased emphasis on the service dimension is that preparing a bid becomes a different type of process than in a traditional project. For the contractor, it is essential to ensure that the partnering skills and commitment is present in the actual project organization, and to show evidence that the material submitted in the bid is produced on a local level. In a partnering relationship, one would think that the same should apply to the client as well. However, despite that clients find it important that the contractors’ bids are produced by those who are going to be active in the project, they borrow texts and even entire bid documents from each other. 7.2. The innovation dimension: focus on potential performance

not vary between the bidders, past performance information is of little help in discriminating between bidders. A perceived risk of receiving similar responses from all bidders further makes many clients reluctant to describe more precisely their views of the relationship. However, this approach may have drawbacks when the client requests a type of service which is new to a local supplier market, as it should be important to encourage potential bidders to invest in developing these new competences and ways of working. For example, bid documents could be designed to communicate that the project will be an interesting and worthwhile experience, both for the company and for the individuals. Contractors should get the impression that the client is competent, serious and committed to partnering. For example, clients could describe their own company’s views and vision in relation to partnering, and provide CVs and other information communicating the partnering experience, commitment and willingness to change of the client representatives. Yet, most of the studied clients conveyed very little information on their own organization and employees, in some cases only the names of those formally responsible. It is a general observation in this study that clients do not seem to fully recognize their own role in a partnering relationship. Another aspect which should merit more interest in client strategy formulation, is that the process of formulating responses to the partnering requests may, in itself, promote change. As mentioned above, some of the requirements are far from what contractors are used to handle in pricefocused procurement processes. Consider, for example, the requirement in project A2 that contractor managers describe how they, as individuals, will contribute to various goals and processes. These persons then have to reflect on their own role and work, which may open up for more farreaching change in the contractor organization. However, too complicated requests may be intimidating, and clients need to match the degree of innovation in procurement criteria to the contractors’ maturity as well as to the size of the contract. Perhaps the requirement in project C to provide CVs also for site workers, which communicates that these are valued as individuals with specific skills and competences, is a good example of how to start a cultural change with simple means. 8. Conclusions

Compared to the approaches for contractor and supplier selection found in the literature, the role of past performance criteria is much less pronounced in the Swedish cases. Since most contractors lack partnering experience, neither references from earlier clients nor examples of previous projects are seen as reliable evidence of the contractors’ true attitudes and abilities. Further, there is a risk that contractors with no previous experience from explicit partnering projects are discouraged from submitting bids. In a market were competition is limited, clients can not afford to discard contractors on the basis of criteria which, in the end, may not be relevant. Also, when experience does

The findings of this study emphasize that selecting suppliers – the focus of much previous research – is only a part of the procurement process. This is especially true when procurement is concerned with services which are new to a supplier market. Much construction is very local, and the client’s role of a change agent with a long term perspective then becomes more pronounced. For larger and more complex projects the matter is more about attracting the best contractors from a wider geographical area. In both cases, however, being considered an interesting business partner and inspiring supplier commitment is vital.

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Evidence of past performance was found to be of limited importance in assessing contractors. This partly reflects an early phase in the development of a new practice, but also an awareness that commitment of both individuals and companies may vary between projects. There are disadvantages in standardizing and de-personalizing both bidding documents and bids, which also has implications for what mechanisms should be developed to support partnering procurement. To contribute to sustainable change, guidelines and handbooks need to assist the development of bespoke written and oral process input on both sides. For example, procurement manuals could specify procedures for involving local competence in preparing bid documents and bids. How to handle interviews and personal meetings in public procurement is another key area. Consultants should then focus on facilitating these organizational processes and avoid providing too much of the material and analysis themselves. The individual, (and not the organization), seems to become the more important when the service/collaboration dimension and the innovation dimension are combined. Another conclusion is that clients have much to gain by becoming more aware of how their own behaviour influences contractor strategies. This relationship is also an important area for further research. In terms of theory, a focus on long term but project-based relations on a local market increases the relevance of general theories on business networks to the construction sector. For the research on contractor selection for relational contracting, this study clearly points at the need for closer and systematic studies of how competencies and attitudes of individuals are attended to in formalized procurement processes. References ˚ hlstro¨m P, Nordin F. Problems of establishing service supply [1] A relationships: evidence from a high-tech manufacturing company. J Purchasing Supply Manage 2006;12(2):75–89. [2] Boughton PD, Nowak L, Washburn JA. Decision model for marketing research relationship choices. J Service Market 1996;10(1):56–9. [3] Bower D. Management of procurement. London: Telford; 2003. [4] Brown DC, Ashleigh MJ, Riley MJ, Shaw RD. New project procurement process. J Manage Eng 2001;17(4):192–201. [5] Bresnen M, Marshall N. Partnering in construction: a critical review of issues, problems and dilemmas. Construc Manage Econ 2000;18(2):229–37. [6] Bresnen M, Marshall N. Building partnerships: case studies of client– contractor collaboration in the UK construction industry. Construc Manage Econ 2000;18(7):819–32.

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