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WS65 - Workshop Selecting partners & organizing collaboration
Chair: Leentje Volker
BALANCING BETWEEN FEASIBILITY AND RELATIONSHIP
Louis H.M.J. Lousberg
Abstract: BALANCING BETWEEN FEASIBILITY AND RELATIONSHIP
INTERVENTIONS TO PREVENT DYSFUNCTIONAL CONFLICT
IN PUBLIC PRIVATE PARTNERSHIP PROJECTS.
Research shows that there are many bottle-necks in Public Private Partnership (PPP) Projects in Dutch spatial development. Due to the specific properties of Public Private Partnerships, these bottle-necks can lead to dysfunctional conflicts which are damaging the project. Hence the question is: how to prevent these conflicts?
Literature doesn’t answer this question on an operational level in the context of a PPP project in spatial development. So ten cases of PPP in spatial development are selected in which a conflict escalated in a way that the existence of the project was on the edge. The research strategy is to compare cases in a cooperative climate with cases in a competitive climate. Data are collected by interviewing representatives of the public side as well of the private side. Analyzing the data, several interventions are found. Analysis shows that in a cooperative climate a rich variety of interventions is used, while in a competitive climate the interventions are limited. The analysis also shows that in a competitive climate interventions are more focused on the relationship between the partners than on feasibility, while in a cooperative climate both aspects are equally attended.
Regardless of a cooperative or a competitive climate, the interventions found are concerning the feasibility of the project or the relation between actors. One moment it proves to be necessary to emphasize feasibility and the other moment the relationship. Therefore it is concluded that in spatial development dysfunctional conflicts in PPP projects can be prevented by balancing between feasibility and relationship.
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FORMAL AND INFORMAL CONTRACTING WITH THE COMPETITIVE DIALOGUE PROCEDURE
Mieke Hoezen, Hans Voordijk, Geert Dewulf
Abstract: The combination of increased project complexity (Baccarini, 1996; Laufer et al., 1996; Alderman et al., 2005; Walker, 2007), changed role of the government (Blanken, 2008) and the sector’s poor professional functioning (Latham, 1994; Egan, 1998; National Audit Office, 2001; Dorée, 2004) form the context in which several changes in the construction industry are embedded. These changes are twofold: on the one hand they are aimed at new structures (formal processes and contracts) and on the other at new working relationships (informal processes and understandings).
Formal tasks and roles of the market and of government have changed. Public clients have less influence on the contents of works and confine themselves to monitoring and checking the public’s interest. Conversely, market organizations have, alongside the executive, also more substantive tasks. Stemming from these changing tasks and roles, structures have been amended and are continuously developing. Integrated contract forms, PPP constructions and active discussions on aspects such as prices, risks and contractual terms are becoming more common during the procurement of construction projects. Further, there is also growing attention paid to the ‘soft’ aspects of construction. The call for new cooperative forms, increased mutual trust, improved communication and mutual understanding becomes louder.
In this context, the Competitive Dialogue (CD) was introduced by the European Commission in 2004. This procurement method consists of several discussion rounds between the principal and potential suppliers, during which all aspects of the tender can be discussed. The CD procedure aims to align complex demands of principals with possible solutions that contractors have to offer (Hebly and Lorenzo van Rooij, 2006). It is, however, unclear how formal and informal structures and processes in the CD are interrelated and are determining its effectiveness. In essence, there are two perspectives. In the first perspective, formal and informal structures and processes in the CD are serving as alternatives: what is arranged in a contract does not need to be discussed informally and vice versa. In the second perspective, formal and informal structures and processes are considered as complementary. Formal contracting processes can lead to informal processes such as the development of mutual expectations and social relationships.
Major question in this study is how formal and informal processes are interrelated in interorganizational contracting by the CD procedure. Insights of both formal and informal contracting processes are combined in a theoretical framework. The aim of this theoretical framework is to study how processes of formal and informal contracting affect each other and the effectiveness of the CD procedure. Basis of the framework to be developed in our study is the process model of Ring and Van de Ven (1994). This model gives an overview of how both formal and informal processes are involved in relationship development. However, in order to understand how these processes are interrelated, especially during the contracting process, a more detailed overview is needed. To make the model of Ring and Van de Ven (1994) useful for our study of (in)formal contracting with the CD procedure, the model is expanded with the models of Ring and Van de Ven (2000) and Vlaar et al. (2006). These three relationship development models are combined to one model for studying formal and informal contracting processes in procurement by the CD procedure.
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LEGAL ASPECTS OF BIM
Monika Chao-Duivis
Abstract: Working with BIM has three different legal aspects.
The contractual relationship between parties will need to be adjusted. The usual general conditions have not taken into account the aspects of working at the same time in one model by different parties. Nor can they. New contractual documents need to be developed for this aspect of the contract.
Than there are aspects concerning procurement law: is it possible to demand that tenderers work with BIM? What does this mean for tenderers who don’t work with BIM? Can they be excluded?
Thirdly: there are many laws regarding non-contractual aspects such as the copy right law, legislation on electronic communication, the electronical signature etc. etc.
In this paper all these legal aspects will be dealt with from primarily a Dutch point of view, but secondly also from a European point of view.
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THE INTERPLAY BETWEEN PUBLIC PROCURING AUTHORITY AND PRIVATE COMPETITORS: EXPERIENCES WITH THE COMPETITIVE DIALOGUE
Sander Lenferink, Mieke Hoezen
Abstract: Keywords: competitive dialogue, trust, innovation, competition, road infrastructure projects
ABSTRACT
In 2002 the European Commission introduced the competitive dialogue as a procurement procedure to enable for an open public-private dialogue leading to more innovation, increased competition and more trust. Over the last years this procedure has been increasingly applied in complex Dutch road infrastructure projects. This article aims to analyze the experiences from practice in order to assess whether the goals of the European Commission are met. Additionally, it aims to provide recommendations on how to improve public-private interaction in general and the competitive dialogue specifically. On the basis of interviews and in-depth case study research, the experiences of involved public and private actors in several road infrastructure projects were investigated. Subsequently, the results were validated during expert meetings with contract managers.
Results indicate that the competitive dialogue can lead to more innovation. However, this innovation mainly consists of process improvements as involved actors get more experienced with the procedure and with the processes involved. Product innovation on the other hand proves to be more difficult to achieve. A reason for this is the reserved attitude and risk avoidance at the public procuring authority’s side. This attitude is reflected in strict planning and tender documents which limit the room for innovative solutions and in a strong focus on maintaining the level playing field, limiting the possibilities for open dialogue (just say nothing, so that there is no risk of saying something wrong). The dialogue has proven to increase competition in Dutch procurement. In fact, the procedure is more influenced by competition than expected beforehand by the European Commission. The private competitors are only willing to be open on perceived risks and threats. The chances and opportunities which could be of added value to the project quality are only limitedly discussed and at a late stage in the dialogue. Although the public-private contact in the procurement procedure leads to increased trust, it is hard to maintain this in an environment driven by competition.
It can be concluded that although the competitive dialogue has proven to be a useful procedure to procure complex projects, the ideal situation of an open public-private dialogue has not yet been realised. Competition and risk avoidance limit the openness of current dialogues, strengthening the judicial character with a focus on maintaining the level-playing field and limited innovation possibilities. It is recommended for public authorities to provide more possibilities for innovation by not specifying the desired end-result in detail beforehand. Furthermore, openness of private competitors in the dialogue should be rewarded and the dialogue should be limited to the complex issues for which public-private interaction can lead to added value. This will lead to less (unwanted) strategic behaviour, decreased transaction cost and an open dialogue with a focus on seizing chances and possibilities.
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STIMULATION OF PROJECT COOPERATION BY PROCUREMENT PROCEDURES AND PROCUREMENT CLIMATE
Matthijs Kuhlmann, Mieke Hoezen, Albertus Laan
Abstract: Keywords: project cooperation, procurement procedures, procurement climate, project performance, coopetition.
In The Netherlands, public works are contracted more and more in integrated ways. In recent literature, it is argued that procurement procedures will influence project performance. Even more, the procurement climate itself is found to influence the project performance by strengthening or altering the relationship between procurement procedure and project performance. In this paper, the relationship between procurement procedures and –climate and project cooperation is defined, project cooperation being an important indicator for project performance. The results of the literature study and the qualitative survey show a clear need for a procurement procedure not merely based on the project itself, but also on collaboration and soft parameters. In-depth case studies are used to analyze abovementioned relationships and find more detailed descriptions. The procurement procedure, procurement climate and project cooperation of three projects were assessed: KOSMOS STAKAN, 2nd Coen Tunnel, Houten-Castellum alliance. The added value of a collaborative procurement climate is emphasized by the in-depth case study results. Based on those results, suggestions for further research are given.
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GUIDELINE FOR PARTNERSHIP BETWEEN CLIENT AND CONTRACTOR IN INFRASTRUCTURE PROJECTS IN GERMANY
Konrad Spang, Stefan Riemann
Abstract: This paper deals with the current situation of large infrastructure projects in Germany. The result of a field study shows many of the main participants are dissatisfied with the current situation and wish for a change. For this reason at the chair of Project Management at the University of Kassel a guideline for partnership between client and contractor in infrastructure projects was developed by different working groups of practitioners and scientists. It contains beside a preamble seven elements referring to clear project specifications, defined processes for project changes, fair risk handling, common data systems, regulations for responsibilities and decisions, contractual alternative dispute solutions and contractual incentive regulations. At present this guideline is in the testing phase to improve it, if necessary, and to collect experiences for a possible binding implementation in complex infrastructure projects in Germany.
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PARTNERING AND THE TRADITIONAL: INSTITUTIONAL DETERMINANTS OF GOVERNANCE IN DANISH CONSTRUCTION
Stefan Gottlieb, Jens Jensen
Abstract: Projects have traditionally been constituted by contracts, whose enforcement is held in place by governance mechanisms that involve high degrees of surveillance. In this light, partnering is advocated as a project specific, communicative alternative to this traditional legal coordination process of the construction industry. In a Danish context partnering has, however, so far not been able to offer a well-defined alternative to this traditional regulatory governance frame. However, rather than providing a well-defined alternative, in this paper we argue that partnering can be seen as a nullification of the traditional, i.e. as a counter-concept to a juridico-discursive conception of project governance that otherwise has been instrumental in organizing and coordinating various aspects of the construction process according to a more or less taken-for-granted regulative schemata of institutional order. Accordingly, it is suggested that the effects of partnering in the first instance stem from a series of interventions in the institutional and regulative context of the construction process, and that future case studies could benefit by paying closer attention to the institutional determinants of management thinking and practice.
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SELECTION CRITERIA AND TENDER EVALUATION IN CONSTRUCTION PROJECTS: EQUIVALENT TENDER PRICE MODEL (ETPM)
Øystein Husefest Meland, Karl Robertsen, Gøril Hannås
Abstract: Several research studies have identified critical success factors and their impact on project success. Central to both success and failure is the issue of selection criteria, and the importance of incorporating qualitative factors when contracting for complex design and construction projects. Empirical findings suggest that price is still commonly used criterion for selecting a winner, even though tendering documents indicate that quality factors are part of the evaluation. In this paper we argue that tender competitions with high focus on price in complex design and construction projects deteriorate both incentives for collaboration and project outcome in terms of cost and quality. Thus, the lowest bid may paradoxically result in the most expensive project from both an investment and a life cycle cost perspective. We offer an alternative approach to evaluating tenders, based on the Equivalent Tender Price Model (ETPM). The aim is to increase the probability of avoiding project failure related to cost overrun, poor quality and lack of functionality, in addition to ensure more transparency in the tender evaluation process. Simulation tests of the model demonstrate that evaluation of tenders through an Equivalent Tender Price model makes selection criteria more transparent and quantifiable and therefore less at risk of manipulation.
Keywords: Equivalent Tender Price, selection criteria, evaluation, LCC
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EXPLORING THE POTENTIAL TO DEVELOP COLLABORATION AND PARTNERS FOR SUSTAINABILITY DURING AUSTERITY
Hedley Smyth
Abstract: The last period of economic growth was characterised by continuous improvement initiatives in construction, of which alliances, partnering, integrated teams were advocated as a major component of facilitating improvement (e.g. Egan, 1998). This type of collaboration was a move away from adversarial markets towards markets theoretically underpinned relational contracting (e.g. Macneil, 1980; Williamson, 1985). The era could also be conceived in terms of a focus upon (service) differentiation (Porter, 1985) and opportunity to develop relational contracting experiences into embedded practices that form the basis for core competencies (e.g. Hamel and Prahalad, 1996) and dynamic capabilities (Teece et al, 1997). In practice, initiatives largely fell short of original expectations. Improvements generally remained project specific (Smyth, 2010), hence embedding these as owned by main contractors as part of market positioning and competitive advantage were lost opportunities.
The current market is austere and has shifted from being focused upon differentiation to focused upon cost. Cost savings and driving prices down are the primary client drivers. Whilst this is likely to remain the prevalent agenda, there are two significant underlying trends. First, some main contractors are minded to retain as many of the benefits, especially collaborative practices. These have shifted the culture and residual benefits remain in main contractors, absorbed as informal and formal routines (cf. Chambers et al, 2009; Nelson and Winter, 1982). Second, the sustainability agenda is long-term and in its various dimensions is likely to increasingly drive factors affecting construction in and beyond the current era of austerity (Edkins et al, 2009).
Linking these two trends – the residual routines of collaborative practice and sustainability as it affects construction – creates conceptual space to normatively theorise what could, perhaps should, occur to generate partnering and collaboration towards meeting future sustainability agendas, manifested at inter-organisational and project levels of construction operation. The paper theorises the potential by bringing together two conceptual areas. The first is relationship marketing and management, which has become established amongst some contractors (Smyth and Fitch, 2009) at the project front-end, whereby B2B relationships are forged to improve project execution. The second is the effectual marketing (e.g. Sarasvathy, 2001), which entrepreneurially builds alliances through a series of iterative commitments. It is through combining these conceptual principles in practice that contractors can add value to meet sustainability agendas. Marketing is the starting point as it takes time to develop relationships with substantive commitments at the contractor-client interface and at the contractor-supply chain interface (Keki and Smyth, 2010a; 2010b). The paper articulated the processes to achieve added value to meet the sustainability agendas.
The conclusion focuses upon the extent to which the building blocks are in place in practice, how these can be integrated and recommendations to industry to convert potential to reality. The reality is likely to impact certain market segments of clients and contractors, but these are also likely yield the greatest growth opportunities for leading contractors.
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ORGANIZING COLLABORATION IN CONSTRUCTION PROJECTS – FORMAL MODELS MEETING PRACTITIONER PERCEPTIONS
Anna Kadefors
Abstract: There is a call for new project management approaches that are able to deal with increased flexibility and put people aspects more in focus. In construction projects, formal models for relationship management are increasingly being used. However, these models are often applied and adapted to a specific context by project managers who are engineers with long experience from traditional contracting but little formal behavioural or leadership education. Based on case studies of Swedish partnering projects, this paper discusses how project managers approach this new challenge of integrating formal systems for relationship management with core project processes. Which aspects of the formal partnering models are stressed and implemented, and which are less focussed? How are general project processes affected by partnering goals? Which partners are involved and which models are chosen for incentivizing collaboration? What type of knowledge do project managers rely on in making choices about organization and contracts? The findings indicate that project managers have strong personal, experience-based perceptions of how collaboration is best enhanced and their own role in this process. The practices they introduce are often successful, but also tend to be patchy and related to collaboration problems in traditional contracts. The formal partnering processes, on the other hand, seem to be important in providing a basic structure for collaboration and to communicate collaborative intents, but are too general and infrequent to address more specific and pressing problems of process design and organization. We conclude that integrating relational and collaborative competence with project management knowledge still constitutes a significant improvement opportunity in many construction projects and discuss how these competencies may be merged.
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