LIST OF ABBREVIATIONS AND ACRONYMS
2.7 SUPPLY CHAIN RELATIONSHIP QUALITY IN THE CONSTRUCTION INDUSTRY
Characterised as a labour-intensive, project-based and location-specific industry within which individual projects are custom-built to the specifications of clients (Loosemore, Dainty and Lingard, 2003; Wild, 2002), the construction industry requires not only the setting up of temporary organisational structures at sites but also the employment of professionals,
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technicians and skilled and unskilled workers to form project teams to execute projects (Debrah and Ofori, 2001a; Fellows et al., 2002). Atkins and Gilbert (2003) note that a construction project environment is characterised by groups of individuals working together for short periods of time before being disbanded and redeployed elsewhere within the organisation. In addition, the industry is considered to be often filled with crises, uncertainty and suspense, and the short-term interaction of project teams requires the combined and effective use of superior technical knowledge, skills and expertise with appropriate behaviour and co-ordination.
In the construction industry, most working relationships usually start at the beginning of projects, and they are governed by standard forms of contracts formulated to assign responsibilities and liabilities to the contracting parties. Such working relationships are usually transactional contracts, and they do not always facilitate good working relationships because the goal is to place blame where there is liability (Jelodar et al., 2016). As a result, construction projects are often characterized by a highly fragmented supply chain (and a less fragmented demand side) that is organized and linked via supply chain relationships (Oyegoke et al., 2009).
Consequently, this has led to the introduction of pro-collaboration contracts known as relational contracts to stimulate better quality of relationships (Cox and Thompson, 1997; Hong et al., 2012). Relational-based contracting has relationship quality attributes (based on principles of good faith, commitment and mutual trust) that represent measures of assessment of the relationships in a project organisation (Jelodar et al., 2016), and it has been found to be particularly important in project partnering and project alliances (Suprapto et al., 2014).
Projects are dynamic systems requiring agile and reciprocal relationships between stakeholders (Davis, 2014; Svejvig and Andersen, 2015). Pryke (2006) held that the construction project is a network of relationships between firms that make up the project supply chain. The project- based nature of construction procurement (Meng, 2012) suggest that firms are often required to manage complex and usually unfamiliar, temporary networks and relationships (Sedita and Apa, 2015). A number of industry reports (for example, cidb, 2004a; DPW, 1999; Egan, 1998;
Latham, 1994; Wolstenholme, 2009), particularly in the UK, have documented the fragmented organisational structure of the construction industry, which has inhibited the development of efficient supply chain relationships and an impediment to industry development. Emuze and Smallwood (2014) opined that fragmentation usually starts upstream of the supply chain and extends downstream with prime contractors mainly engaged in supervision of their subcontractors and suppliers.
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The construction industry has been described as one which is driven by short-term profit maximisation where opportunism is prevalent, communication is minimal, relationships are adversarial and characterised by a lack of trust, and this has been largely attributed to the use of traditional procurement systems (Ren et al., 2012; Zuppa et al., 2016). Akintoye and Main (2007) attributed the primary causes of the current poor relationships to a lack of communication, lack of trust, misaligned business cultures, poor attitudes and lack of management support. Similarly, Zuo et al. (2013) reported that poor communication, lack of trust and low co-operation levels are common problems in the industry that have led to adversarial relationships among project stakeholders.
Insufficient literature on supply chain relationships exists in South Africa. Emuze and Smallwood’s (2014) study assessed the level of collaborative working among project partners in South African construction and explored relationship quality elements such as trust and risk allocation among contractors and subcontractors. They reported that collaborative working is still at best a ‘work in progress’ in South Africa, with collaboration-related issues similar to those in the UK; characterised by short-term objectives, price-oriented approach, and the existence of poor problem-solving mechanisms between project partners. They further attributed the prevalent adversarial relationships on project teams to a lack of trust, cumbersome contract conditions, unfair risk allocation and tender selection processes. The cidb (2013) also reported poor working relationships between subcontractors and prime contractors in South Africa driven by tight profit margins, unfavourable payment practices, and lack of continuous work.
The use of project procurement and contracting methods that promote collaborative working relationships for construction industry development is well-documented in literature (Cox and Thompson, 1997; Jelodar et al., 2016). Although the use of traditional procurement methods is still being adhered to (Akintoye and Main, 2007; Eriksson and Laan, 2007; Kashwagi and Byfield, 2002; Windapo et al., 2016), there is an increasing shift towards strategies that focus on building and managing relationships which positively impacts project performance.
Eriksson and Laan (2007) reported that effective relationship management through building trust, respect, commitment and communication enhances project quality, improves conflict resolution and minimizes time and cost overruns. Bennet and Jayes (1998) suggested that a wide range of performance criteria (for example, costs, time, quality, buildability, and fitness- for-purpose) can be improved if project organisations adopt more collaborative working
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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.