LIST OF ABBREVIATIONS AND ACRONYMS
2.8 OVERVIEW OF SUPPLY CHAIN RELATIONSHIP MODELS
41
procedures. Collaborative project networks increase the capabilities of small contractors, and benefit large contractors by minimizing direct workforce employment, promoting specialized technologies, facilitating competitiveness and improving overall capability (Alvarez and Barney, 2001; Arslan et al., 2008). Project networks have also been found to facilitate organisational learning (Barringer and Harrison 2000), enable efficient knowledge transfer (Uzzi, 1997), and increase firm performance (Matinheikki et al. 2016).
A large body of literature has recognised the importance of project networks and quality of relationships in business-to-business conditions (Fruchter and Simon, 2005; Grönroos, 2011;
Grönroos and Helle, 2012; Harker and Egan, 2006), as well as in project management context (Zou et al., 2014). Toor and Ogunlana (2010) contend that project success should include the project's impact on relationship quality as additional metrics, and should be evaluated after project completion (as cited in Williams et al., 2015). Williams et al. (2015) highlighted that effective agile project management is based on high levels of interaction, collaboration, responsiveness, and joint problem solving. Mir and Pinnington (2014) also found that inter- organisational teamwork was an important project success factor, and Zou et al. (2014) reported that active client relationship management leads to better project performance as the relationship changed across project phases. Jelodar et al. (2015) and Meng (2012) found that systems, procedures, and methods thrive in suitable levels of relationship quality. Moreover, the quality of relationship between project organisations play a key role in enabling the formation of strong ties and willingness to develop cooperation (Holmlund, 2008) which has been found to have a direct impact on value-creation such as knowledge and resource sharing, and skills transfer (cidb, 2013; Lechner et al., 2010). Relationship quality has also been identified as a long-term orientation that leads to more collaboration and coordination (Ahola et al., 2008; Holmlund, 2008), where are central aspects of project execution.
42
review of extant literature are: the Client-Contractor Working Relationship Model (Larson, 1995), the Model of Partnering (Ellison and Miller, 1995), the Construction Industry Institute’s (CII) Partnering Continuum (Thompson and Sanders, 1998), the Best Practice in Partnering Group’s (BPiPG) Partnering Positioning Matrix (Jones and O’Brien, 2003), the Strategic Forum for Construction’s (SFfC) Supply Chain Maturity Assessment Grid (SFfC, 2003), the Supply Chain Position Matrix (Hines, 1994), and the Supply Chain Relationship Maturity Model by Meng et al. (2011) (as cited in Adediran and Windapo, 2017b). Table 2.5 provides a summary of the comparison of these seven models.
Six of the models are all related to the construction industry, while Hine’s Supply chain position matrix is a comprehensive model developed in the purchasing and supply sector that provides a good comparison with construction-specific models (Adediran and Windapo, 2017b). Three of the construction-oriented models focus on the relationships between clients and main contractors, and have not paid attention to downstream relationships where majority of SMEs in the construction industry are clustered (Adediran and Windapo, 2017b). Except for Meng et al.’s supply chain relationship maturity model, the other three models that try to examine the supply chain as a whole have limited use in practice as they are only applicable to integrated supply chains, which makes them difficult to use when different types of relationship quality exist in different parts/tiers of the supply chain (Adediran and Windapo, 2017b). Three of the models (Ellison and Miller’s, CII’s, and BPiPG’s model) are further characterised by either inappropriate definition of relationship quality levels, and/or biased towards the collaborative end of the relationship quality spectrum by establishing one level for a traditional relationship and three levels for different partnering (Adediran and Windapo, 2017b; Meng, 2010; Meng et al., 2011). However, evidence shows that most contracting relationships in the construction industry are still very traditional, as partnering is yet to be fully entrenched in construction practice (Briscoe and Dainty, 2005; Meng et al., 2011). Hine’s, Larson’s and Meng et al.’s model establishes two levels each for traditional relationship and collaborative relationship.
43
Table 2.5: Comparison of supply chain relationship models Larson (1995) Ellison and
Muller (1995)
CII (1998) BPiPG (2003) SFfC (2003) Meng, Sun and Jones (2011)
Hines (1994)
Focus Working
relationship in construction
Problem-solving in construction
Partnering practice in construction
Partnering practice in social housing
Construction Supply chain management
Construction Supply chain management
Generic customer- supplier relationship Scope Client-contractor Client-contractor Client-contractor Whole supply
chain
Whole supply chain Any customer supplier relationship
Any customer supplier relationship Type of
relationship
One-to-one One-to-one One-to-one Multiparty Multiparty One-to-one One-to-one
Number of relationship quality levels
4 4 4 4 3 4 4
Criteria descriptions
General descriptions at each level
General descriptions at each level
General descriptions at each level
General descriptions at each level
Detailed
descriptions of 20 criteria at each level
Detailed
descriptions of 24 criteria at each level
Detailed
descriptions of 29 criteria at each level CII: Construction Industry Institute; BPiPG: Best Practice in Partnering Group; SFfC: Strategic Forum for Construction
Source: Adapted from Meng et al. (2011)
44
In comparison to the other six models, Meng et al.’s supply chain relationship maturity model builds on the inherent weaknesses of the other models such as the incomplete coverage of key criteria. For example, Larson’s model does not include communication as a key criterion, while SFfC’s model does not cover trust and problem-solving. Meng et al.’s model is a robust systematic model that explores the specific characteristics of the construction industry project network for example, the existence of different types of relationships at different tiers of the project supply chain. Developed in the UK construction industry based on literature review and expert group discussion, the model adopts the capability maturity approach (Paulk et al., 1993), and establishes four relationship quality maturity levels in matrix format with 24 assessment criteria in eight categories at each of the four maturity levels (see Meng et al., 2011). Based on this comparison, Meng et al.’s (2011) model is best suited for assessing construction supply chain relationships, and it will be adapted in this study to measure. For this study, thirteen assessment criteria in seven categories at each of the four maturity levels are proposed (see Table 2.6).
According to London (2008) and Meng et al. (2011), relationship quality varies from project to project, and different types of relationships may exist at different tiers of the construction project supply chain. Table 2.6 shows that the relationship in a supply chain at one tier might be collaborative (RQ 4) while the relationship at another tier may be traditional (RQ 1), hence it is necessary to examine different detailed relationships (Adediran and Windapo, 2017b). The adopted relationship quality maturity model therefore focuses on specific one-to-one relationships between SMCs and other key parties of the construction supply chain rather than the whole supply chain. For example, between client and contractor if the SMC has a direct contracting relationship with the client, otherwise between main contractor and subcontractor, or one subcontractor and another supplier in the downstream supply chain. This will allow for a robust understanding of the nature and quality of these relationships.
Table 2.6 shows that the key component of the model that sums up the levels of relationship quality are the four maturity levels which describe the progression of relationship maturity or improvement from adversarial, through limited cooperation and short-term collaboration, to close and long-term collaboration. They are (Meng et al., 2011): Price competition (RQ 1), Quality competition (RQ 2), Project partnering (RQ 3), and Strategic alliance (RQ 4). Figure 2.1 illustrates the conceptual relationship quality model. The relationship quality at RQ 1 is
45
Table 2.6: Relationship quality matrix for the study Main criteria Sub-criteria RQ 1
(Price competition)
RQ 2
(Quality competition)
RQ 3
(Project partnering)
RQ 4
(Strategic alliance) Procurement Selection criteria Lowest price Cost and quality Multi-criteria (capability, experience,
performance, cost) from short-term perspective
Multi-criteria (capability, experience, performance, cost) from long-term perspective
Procurement method
Traditional single-stage tendering
Traditional two-stage or direct negotiated tendering
Integrated design and build Integrated joint venture partnering or strategic alliance
Form of contract JBCC® Principal Building Agreement (PBA)
General Conditions of Contract (GCC)
FIDIC Conditions of Contracts for Construction - The Red Book
NEC3 Engineering and Construction Contract (ECC)
Objectives alignment
Objectives alignment &
benefits
Only self-objectives leading to win-lose outcome
Mainly self-objectives leading to win-partial win outcome
Mutual objectives in the short-term leading to win-win short-term outcome
Mutual objectives in the long-term leading to win-win long-term outcome Continuity of work No prospect of future work Prospect of future work
exists through competitive tendering
Prospect of future work exists as preferred supplier
Future work is guaranteed
Communication Information exchange
Little information exchanged openly and timely
Some information exchanged openly and timely
Much information exchanged openly and timely
Most information
Learning and innovation sharing
No learning and innovation sharing
Limited learning and innovation sharing
Much learning and innovation sharing
Continuous learning and innovation sharing
Cost data transparency
No cost data transparency Limited cost data transparency
Open book cost data transparency Continuous open book cost data transparency
Collaboration Working relationship
Confrontational or arm’s- length relationship
Limited cooperation Collaboration Close collaboration and integration Risk allocation Risk sharing &
allocation
No risk sharing and risk 'always' allocated to weaker party
Limited risk sharing and risk 'often' allocated to weaker party
Increased risk sharing and risk allocated to the party best able to manage it short-term
Risk sharing is common practice and risk allocated to the party best able to manage it long-term
Balance of risk and reward
No rewards for taking risk Some rewards for taking risk Often appropriate rewards for taking risk
Always appropriate rewards for taking risk
Joint problem- solving
Problem-solving effectiveness
Problems often lead to disputes
Problems sometimes lead to disputes
Some problems are timely resolved at the lowest level
Most problems are timely resolved at the lowest level
Trust Type of trust Contractual trust leading to little confidence in others
Competence trust leading to some confidence
Short-term goodwill trust leading to much confidence
Long-term goodwill trust leading to full confidence in others
RQ: relationship quality
Source: Adapted from Meng et al. (2011)
46
characterized by self-interest, mistrust, lack of mutual objectives, and win-lose business philosophy that results in adversarial or arms-length relationships. RQ 2 is characterized by partial win-win benefits, and trust is mainly built on the capability of each party to execute quality work; this can be seen as a transition from traditional/separated to a hybrid of separated- collaborative contracting relationship to achieve project objectives. At RQ 3, mutual objectives are achieved on a single project, partners work together collaboratively as an integrated project team, goodwill trust and win-win attitude foster the project partnering relationship. At RQ 4, objectives are aligned over a series of projects, close collaboration is achieved across the whole supply chain, high degree of trust exist between parties, and an attitude of joint problem-solving and continuous improvement is adopted. The model presented in Figure 2.1 and the matrix in Table 2.6 will be adopted in obtaining information on SMCs’ experience on public-sector Targeted Procurement projects, using a questionnaire survey.
Figure 2.1: Relationship quality model for the study