Aminian, E; Kirkham, R and Fenn, P (2011) Contracting strategies in construction industries. In: Egbu, C and Lou, E C W (eds.) Proceedings of 27th Annual ARCOM Conference, 5-7 September 2011, Bristol, UK.
Abstract
Despite a rich literature on procurement management in construction industries, which stemmed from the long history of the industry and strategic value of procurement, the industry is still accused of using inefficient contracting strategies. Traditional approaches in this field try to find out how clients could ensure that contractors are forced to operate in a highly competitive market and how clients could govern their procurement-related transactions with suppliers rigorously through contracts. High levels of adversarial behaviour in construction industries led researchers to explore approaches which had supported successful projects in the Japanese car industry. Consequently, researchers suggested relational approaches for construction industry. However, more recent studies try to highlight the danger of out-of-context use of relational approaches. This paper presents a critical review of the literature on contracting strategies in construction industries. The purpose of this paper is to demonstrate how the approaches toward competence in procurement within the construction industry are distinctively based on different schools of thought and how the client is left alone in selecting the strategy which brings more value. To validate the need for tailoring the procurement strategies for each project, the paper draws on the body of knowledge known as Transaction Cost Economics. The three elements of Contingency Factors, Behavioural Factors and Context, elaborated in Transaction Cost Economics, present a conceptual framework which facilitates understanding of the causal relationship between project characteristics and the cost inherent in each procurement strategy.
| Item Type: | Conference Paper (Paper) |
|---|---|
| Uncontrolled Keywords: | contracting strategies; relational contracting; transactional approach; transaction cost economics |
| Index terms: | competence, conceptual framework, history, body of knowledge, construction industry, transaction cost, adversarial behaviour, relational contracting, procurement strategy, strategy, procurement management |
| Subjects: | knowledge management, contractual arrangements, architectural and construction history, procurement strategy, industry analysis, financial analysis, conflict resolution, personnel development, management, theoretical framing |
| Topics: | Business Strategy, Cost Management, Research Practice, Information Management, Stakeholder Management, Procurement, Human Resources |
| Descriptive scope: | 4 PCTA |
N.B. Descriptive scope is a count of how many of the five facets of empirical research are indicated by the words used in title, abstract and keywords. It is not intended as a judgement on the research; merely a count of the kind of word we would expect to indicate Phenomenon, Concepts, Theoretical framing, Empirical techniques, Analytical techniques. If all five are present, then a code of “5 PCTEA” will indicate this. If you feel the coding for this record is questionable, we welcome discussion around the terms we matched or the way we categorized them. The facet you would expect may not be coded, or a facet may be coded inappropriately. This can also bear on a larger question, of which facets should be treated as defining in construction management research. Please get in touch, and we will look at it. More details here