Minimising Transaction costs, maximising relational benefits and
OPTIMISING risk management - through Partnering
in Hong Kong projects
M. Motiar Rahman1 and Mohan
m. Kumaraswamy2
Department of Civil Engineering, The
Email addresses: 1
mmrahman@hkusua.hku.hk 2 mohan@hkucc.hku.hk
Abstract
An appropriate contracting
method, coupled with clear and equitable contract documents do not by
themselves ensure project success where people work together in the face of
uncertainty and complexity with diverse interests and conflicting agendas. This is particularly true for
KEYWORDS:
Introduction
Construction risks are allegedly allocated in the
conditions of contract. But contract
language alone is insufficient to clearly specify risk apportionment between
the contracting parties. Different
groups of contracting parties, as well as different members of the same group,
interpret contract clauses in different ways (Hartman et al 1997). A clear 'meeting of minds' of the different
parties appears necessary. Moreover,
construction risks are often project-specific.
As a project progresses, the nature and extent of risks may change, new
risks may emerge and existing risks may change in importance or be
re-allocated, as not all the risks are foreseeable at the outset. Some of these risks may also require the
combined efforts of both contracting parties for their effective
management. Flexibility in construction
contracts is therefore necessary.
Worldwide innovative initiatives to address these risks (e.g. partnering
and alliancing in
Furthermore, since all possible risks are difficult
to foresee at the outset, unforeseen risks would need to be dealt with, using a
'Joint Risk Management' (JRM) strategy that continues into the post-contract
stage (Rahman and Kumaraswamy 2001A).
Given the nature of the present construction industry as a very complex,
high-risk, multiparty business, conflicts between the diverse participants need
to be minimized through better relationships and co-operative teamwork
(Dissanayaka and Kumaraswamy 1999).
Transaction Cost Economics (TCE) and Relational Contracting (RC)
approaches can be mobilized to improve such relationships, team-working and
JRM. The TCE approach (Williamson 1979,
1987, 1996) provides a useful framework for analysing the inevitable
differences in interest between the different parties who are members of the
project coalition (Winch 1989); while RC encourages long term provisions and
introduces a degree of flexibility into the contract, by considering a contract
to be a relationship among the parties (Macneil 1974, 1978, 1980).
The objective of this paper is to integrate the
above approaches and to provide a conceptual overview of the resultant strategy
in the first instance. This firstly
demonstrates how transactionally efficient RC can improve JRM at the
post-contact stage in theory. This
integrated conceptual framework is then 'fleshed out' with overseas and local
partnering experiences. It is further
reinforced by an analysis of opinions obtained at interviews with some well
positioned
applying
Transaction Cost Economics Theory
Transaction Cost Economics
(TCE) combines economic and sociological perspectives on industrial
organizations. It is based on the fact
that, in addition to the cost of production, one must also consider the costs
of transactions between parties (Winch 1989).
Transaction costs are said to increase because of 'bounded rationality'
(i.e. a party to a transaction cannot always plan and monitor perfectly because
of the lack of information needed at the planning stage) in the face of
uncertainty and complexity; and 'opportunism' in the context of
small numbers relationships.complexity. This may well give rise
to 'opportunism' – the 'human condition' of an
economic agent pursuing self-interest in the project organisation. Parties therefore need protecting from each
other: (a) in order to counteract any such self-interest based pressures and
(b) because promises do not guarantee performance. The parties to the
transaction possess differing levels of
information and the cost of achieving information parity is highTCE
suggests that necessary measures are to be provided in the contract to counter
opportunism (Williamson 1979).
A transaction occurs when 'a good or service is
transferred across a technologically separable interface' (Williamson
1987). Marketing aims to promote such
transfers, for example by providing alternative incentives and minimising
transaction costs (TCs). TCs in
construction include costs of negotiation and writing contingent contracts;
costs of monitoring contractual performance; costs of enforcing contractual
promises; and costs associated with breaches of contractual promises -
including the costs of acquiring and processing of information, in all these
cases (Joskow 1985). On the other hand,
‘marketing’ embraces strategic marketing as part of business planning and the
business plan, business development, sales and selling, promotion and
advertising, public relations, and lobbying (Smyth 2001). As far as ‘construction marketing’ is
concerned, all these relate to construction, contracting and subcontracting,
consulting and consultancy, project management - including engineering and
building materials supply industries. In
this sense, a reduction in TCs may be achieved through reduced marketing costs,
and smoother transactions are enabled as effective marketing. Moreover, while the
main construction contract, while is initially a single
transaction, it usually incorporates a series of
subsequent transactions (like claims and variation orders) because TCs also
include the costs of 'effort to identify, explicate and mitigate contractual
hazards' (Williamson 1996). Furthermore,
the main construction contract in turn gives rise to a second level (and
subsequent levels) of transactions for subcontractors, materials, equipment and
personnel procurement. Therefore, a
reduction in numbers of claims, variation orders and disputes, their smoother
and earlier settlements, smoother interfaces, and smoother appointments of
subcontractors and suppliers, may be treated as contributing to reduced TCs in
general, and also to reduced marketing costs in particular. This is in turn also expected to smoothen the
marketing of such goods (by suppliers) and services (by subcontractors) for
example.
TCE considers a 'transaction' as the basic unit of
analysis and any problem that can be posed directly or indirectly as a
contracting problem is usefully investigated in transaction cost economizing
terms. TCE also considers contracts as
'governance structures', i.e. as frameworks for conducting transactions in a
changing world (Williamson 1987). These
structures may be of different degrees of formality and flexibility, the
optimal choice of which depends on the characteristics of the transaction. Construction projects
involve many complex processes, interfaces and numerous uncertainties. In order to achieve
transient market benefits in the face of these uncertainties and complexities,
contracts may need adapting from time to time. Different types of
contract are therefore required to support efficient trading relations, where
the type of contract is contingent upon the characteristics of the transaction. Thus, before entering into a contract, the ‘transactors’
(contracting ‘transactors’parties)
need to determine: (1) their requirements and objectives; (2) the
characteristics of the proposed transaction(s); and (3) the factors that cause
transactional difficulties. They must
next select the most appropriate project procurement systems - including contract
types and organizational arrangements (governance structures), risk management
and contractorproper
selection strategies - that will minimise total costs – in order to streamline
the marketing of these construction services and increase overall efficiencies.
Fundamentals of Relational Contracting
Relational (or Relationship)
Contracting (RC) is a subject that originally attracted attention in legal
research in the 1960's (McInnis 2000). At
the core of RC, the legal mechanisms offered by specific contracts are not
strictly followed, but the parties themselves govern the transaction within
mutually accepted social guidelines (Macaulay 1963). RC embraces a wide and flexible range of
approaches to managing the contractual relationship based on a recognition of
mutual benefits and win-win scenarios through cooperative relationships between
the parties. RC principles can be
recognized as underpinning various approaches, such as partnering, alliancing,
joint venturing, long term contracting and other collaborative working
arrangements (Jones 2000). Essentially,
RC seeks to emphasize points of convergence between the respective interests of
contracting parties, and in so doing, parties may find that they have arrived
at solutions to areas traditionally characterized by a divergence of their
interests.
Macneil (1974) argued that
the world of contract is not a world of discrete transactions; rather it is a
world of relations, an ongoing dynamic state, all segments of which - past,
present, future - are interrelated. It
is not a world entirely of segmental personal engagements; rather it is one
tending to engage many aspects of the total personal beings of the participants. Macneil (1980) described contract broadly as
'the relationship among parties, to the process of projecting exchange into the
future'. Because not all the events can
be 'presentiated' (perceived or realized or quantified at
present), and as all the information needed cannot be ‘presentiated’ at the
time of contracting, mutual future planning is required (Campbell 1997). This leads parties to negotiation, because
negotiation costs are less than higher premiums that may otherwise be
incorporated in the bids of contractors, and also less costly than terminating
contracts. RC principles thus reinforce
the marketing theories in explaining and promoting the smoother transactions
required to improve productivity levels in construction scenario.
It needs trust and
trustworthy behaviour to counteract opportunism among the parties.
However, no real life human cooperation will be found
entirely transactional and lacking some whole personal relations, some diffuse
communication and some non-economic personal satisfaction. Nor will contractual relations be found
entirely lacking in transactional discreteness.
Accordingly, Macneil (1978) classified contracts into three types:
classical, neoclassical, and relational.
Lyons and Mehta (1997) summarised 5 key elements of RC as: (1) The
identities and personal attributes of parties are crucial, (2) Normally of
indeterminate duration, (3) Norms of behaviour, or shared codes of conduct,
inform responses to new developments as they unfold (4) Written documentation
is treated as a record of what has been agreed, and (5) Norms of behaviour, or
shared codes of conduct, overrule written documents in settling disputes.
disputes. RC thus provides the
means to sustain ongoing relations in long and complex contracts by adjustment
processes of a more thoroughly transaction-specific, ongoing administrative
kind. This may or may not
include an original agreement, and if it includes an agreement, that may not
influence the relationships between the contracting parties. From a marketing viewpoint, this can be
compared to a wider and longer-term business development strategy (in the
construction industry).
Practice of Relational Contracting
Problems of 'presentiation' in RC that relate to
'bounded rationality' of TCE lead parties to future mutual planning, which may give
rise to 'opportunism' - a 'strategic behaviour' of an economic agent (Campbell
1997) - translating into a behavioural risk of encountering actions that
benefit one party at the expense of other(s) (Lyons and Mehta 1997). This needs trust and
trustworthy behaviour (to counteract opportunism) among the parties. A party is
‘trustworthy’ if it is refrained from opportunism, and ‘trusting’ if it
believes the other party is trustworthy. Mutual trust is a
social relation characterized by both parties being both trusting and
trustworthy. Two
types of trust work as safeguards against opportunism: self-interested trust
(SIT) and socially oriented trust (SOT). SIT is forward looking
in expecting direct rewards from cooperation in the form of continuing business. On the other hand, SOT
is backward looking, and based on a history of working relationships and social
relations that create shared values, moral positions and friendships that
discourage opportunism, even if the probability of future trade is low. SOT is nurtured on a
daily basis by face-to-face contact, and firms invest in activities to promote
it (Lyons and Mehta 1997).
In the context of marketing, all these in turn relate to the way day to
day business is done in the business fraternity.
However, SIT or
‘calculative trust’ (Williamson 1996) is seen as developing from the strategic
interaction of self-interested economic agents and is maintained as long as it
serves their interest. By
contrast, trust in terms of personal or social factors (i.e. SOT)
see goodwill trust, in particular, as counter-posed to rationality,
self-interest, and contract.
This trust is developed over a period of time by providing quality
services within the specified time and in return for a fair price. Building such trust is very important for
effective marketing. In this respect Sako
(1992) argues that trust rests on shared principles of fairness and convergent
mutual expectations about informal obligations. Fukuyama (1995) asserts
that the most effective organisations of business trust are based on
communities of shared ethical values. These communities do
not require extensive contract and legal regulation of their relations, because
prior moral consensus gives the members of the group a mutual trust. This is generated
through individual motivation and attitudes, and also through individual and
inter-organizational relationships – that considerably influences the project
outcomes and is critical to the relationships of the contracting parties
(Drexler and Larson 2000). The
more effective this framework of trusting relationships is in increasing
information flows and reducing the elements of conflict, monitoring, and risk
from the individual relationship, the greater will be the potential for
trust-building within the wider organizational and institutional framework (i.e.
the
contractual environment in the industry) (Deakin et al 1997)
and thereby effective marketing. Such
trust can sustain cooperative behaviour and the envisaged JRM in the face of
unforeseen problems. Results
from recent studies (discussed in latter sections) show that this motivation
and attitude is present in the industry.
But the goodwill trust
arises only where the parties to a contract have a pre-existing shared morality. This is arguably highly
unrealistic in the context of many business relationships. In fact, each trading
partner has some power to pursue and protect its own interests, but it also has
interests in common with others that may be damaged by excessive pursuit of
self-interest. Every
business relationship, by its nature, involves both rivalry and co-operation. But there may be a
trade-off. In fact, each
business relationship has elements of immediate self-interest and of mutuality
and reciprocity, the expected benefits from which are enhanced by trust (Deakin
et al 1997). This is seen
in day to day business, as an important element of effective marketing. On the other hand,
Lyons and Mehta (1997) found that organisations display an acute awareness of
the costly hazards of opportunism and of the difficulties of organising
exchange when the legal system is perceived to provide inadequate support for,
and protection of, their interests. More informal
relational contractual arrangements supply a reasonably efficient solution
where recurrent transactions (e.g. claims, variation
orders) require investments of specific assets (i.e. mutual
fairness, in the context of marketing) and are accompanied by
a high level of uncertainty.
However, while non-legal enforcement mechanisms
clearly play a major role in relational contracting of bilateral governance,
legal mechanisms may also play a part in such exchange arrangements. Equally, more formal (i.e.
classical
and neoclassical) contractual arrangements are accompanied by an armoury of
supportive non-legal mechanisms. This is seen in the
present construction industry in practicing RC (e.g. through partnering):
Project partners work as a team on the basis of a 'charter' that is not legally
binding and if there is any problem the original contract will take precedence.
RC approaches appear useful in achieving the overall
objective, which is to reduce the sum of production and transaction costs
(Walker and Chau 1999) in general, and to reduce marketing costs in particular,
as well as to promoting marketing. RC
offers a cost-effective means of encouraging collectively beneficial behaviour,
when transactions are exposed to opportunism, but a fully contingent contract
is too costly (if not impossible) to specify.
RC is characterized by the subordination of legal requirements and
related formal documents, to informal agreements in commercial transactions
such as verbal promises, or partnering 'charters'. This mode of governance firstly calls upon
both parties to recognize the positive gains from maintaining the business
relationship, and secondly, for the parties to transcend the anonymity
associated with market transactions and to improve overall efficiency through
effective marketing. Disagreements are then
negotiated towards solutions that do not jeopardize the relationship between
the parties. Such objectives and
approaches also provide an ideal framework for the joint management of risks
that cannot be foreseen or clearly allocated to one party at the outset.
partnering experiences in other countries
Partnering is one practical approach towards RC that
has been tried and tested, e.g. in the
Hospital and Housing Authorities, the MTRCMass
Transit Railway Corporation, and is now being strongly recommended
in Hong Kong in the Henry Tang Report (CIRC 2001). Partnering is a recognized method of
improving communication and cooperation, responding faster to innovative
construction processes, and reducing both stress and transaction costs that
result from uncertainty, competition and information asymmetry (Liu and Fellows
2001). Partnering leads to increased
returns for all parties. For the owner,
it leads to a quality product at a good price, with few (if any) disputes in
the shortest reasonable time. For the
contractors, it leads to a pleasant working atmosphere with minimum change
orders and wastage, and maximum freedom to get the job done on time at a higher
profit margin (Barrington 2001).
Partnering also provides the means for process improvement and risk
sharing (Cowan et al. 1992).
Larson (1995) found in a study in USA, that partnered projects achieved superior results in controlling costs (i.e. reduced transaction costs), in technical performance, and in satisfying customers (i.e. evoking elements of RC) compared with those projects managed in an adversarial, guarded adversarial, and even informal partnering manner. One interesting finding of this study was that, whether the contract was awarded on a low-bid or non-low-bid basis did not affect the relationship between partnering and project success. Instead, it stresses the need for positive attitudes of the project participants. Based on a study of US Army Corps projects, Weston and Gibson (1993) reported an average cost growth of 2.78% for the partnered projects, which was 6% less than those for the non-partnered projects (i.e. reduced overall costs). This difference was attributed to the reduction of change orders (i.e. reduced transactions and therefore reduced marketing costs), fewer claims (i.e. reduced transactions and therefore reduced marketing costs), and more value engineering in partnered projects. Intangible benefits of partnering were found to include: (1) reduced administrative paperwork, (2) more enjoyable project work environment, (3) reduced communication barriers, and (4) less adversarial relationships. These can be identified with RC, as well as with ways to empower the marketing of ‘partnered’ services. A particular advantage in the context of marketing would be in the greatly enhanced probabilities of encouraging ‘repeat orders’ from a satisfied client, hence reducing marketing costs.
A study on partnering in Australia (Lenard et al 1996) revealed that (1) good communication and high levels of trust (further elements of RC) between parties obviated much of the conflict (i.e. reduced transactions) and divisiveness that leads to a litigious outcome. (2) Partnering had reduced delays, claims and disputes (i.e. reduced transactions and therefore reduced marketing costs), as well as the need for reworking, while improving safety and profit margin. (3) Technology transfer was seen to promote innovation diffusion when partnerships were established early on in the project life cycle. The impact of partnering, in the UK, has seen a large reduction in costs with substantial waste being sliced from the supply chain through the integrated approaches enabled by the partnering. Costs are expected to be driven down by up to 30% with waste reduction by up to 20% UK contractors using partnering; thereby encouraging many large client organisations to support this approach and set the procurement agenda - mainly from a cost saving perspective (Green 1999).
The Australian National Museum design and
construction project was contracted under a pioneering 'alliance' agreement
(Walker et al. 2000) that went beyond partnering in contractual terms. Furthermore, it is more ‘all encompassing’
and also goes beyond co-operation, in that the alliance partners 'coalesce'
(merge) into a virtual company and jointly share risks and rewards according to
an agreed formula. In this case, some 12
non-price attributes were given priority over cost in selecting the alliance
partners. Those include performance and
ability on complex design, quality, safety and environmental management;
affinity and attitude to be a member of the alliance, workplace relation,
innovation, and commitment to exceed project objectives; financial ability to
work in an 'open book' approach, industry recognition and even public
relations. An 'Alliance Leadership Team'
(ALT) was then formed with representatives of all partners, including the
owner, for executing the project, who then agreed on a target 'turn out cost'
(TOC) of the project, followed by a risk and reward structure. This structure was made up of 4 components -
cost, time, design integrity and quality - of which cost and time are very
important. If the project is brought in
under TOC, contractors would get an agreed percentage of the savings. If the project runs over TOC, then the
contractors would share in the cost overrun - up to an agreed limit. Except for time, the other three components
had a 'pain/ gain' dimension. There was
no reward for early finishing, but there was to be significant financial pain
to the contractors for any delay.
Alliancing, like partnering, provides a vehicle for driving RC and
deriving associated benefits. The
particular modality (vehicle) to be used depends on the circumstances, project
priorities and potential participants.
Partnering experiences in Hong Kong
Some examples of early 'partnering' approaches in Hong Kong can be found in the Housing Authority's 'Private Sector Participation Scheme' (PSPS), where private developers are invited by the government to participate in the development of public housing estates (Liu and Fellows 2001). The estates are then available for sale or rental, as the case may be, and the private developer retains an equity stake in the development. Another example is the development of the Convention and Exhibition centre phase I. The Trade Development Council jointly developed the piece of land with a private developer, where the private developer had the hotel development rights above the Convention Centre (Moss 1994). ‘Construction project specific’ partnering in Hong Kong was initiated in a lump sum fixed price Design & Build (D&B) hospital contract (Dissanayaka and Kumaraswamy 1999). The approach was initiated during the tendering stage and negotiated before award of the contract. A structured programme helped to identify common goals and objectives to develop a method of 'issue resolution' and a mechanism for timely monitoring of the performance of the partners. Issue resolution strategies included resolution of issues at the lowest possible level, establishing a simple hierarchy of communication and submission of significant cost impacting issues to the corresponding authorised level for decision. No major disputes arose in this project (so reducing transactions), especially in comparison to some other similar projects where there was no such 'partnering'. Some key participants, by themselves, identified a few key areas for further development - selection of champions, establishment of benchmarks to monitor performance, ‘in house’ partnering and involvement of subcontractors.
Bayliss (2000) reported on an ongoing partnering
initiative that has been adopted by the Mass Transit Railway Corporation (Mass
Transit Railway Corporation (MTRC)MTRC) in
all of its 13 civil, 4 building services and 17 E&M contracts, on its
Tseung Kwan O Extension (TKE) project.
Civil contracts are mostly on Engineer's design and all others are
D&B. MTRC first developed a
partnering culture internally. Contract
specific partnering workshops established (1) cooperative working
relationships, (2) mutual objectives, (3) an agreed process for addressing and
resolving problems, (4) an agreed mechanism for performance appraisal, and (5)
an outline of specific joint tasks and action terms. Parties have agreed on a target final account
on three contracts, under pain share/ gain share arrangement where savings or
cost overruns will be shared between the parties. MTRC's 'steering group' and 'project
management group' is managing the TKE partnering process at macro (policy and
strategy) and micro (project) level respectively. Partnering is reviewed on each contract in
monthly meetings. A performance
monitoring system allows participants to gauge the progress being made and
identify the critical issues that need to be addressed. These meetings also review the partnership 'charter',
examine each other's needs and identify areas for waste reduction. Work improvement teams, comprising staff from
MTRC, contractors and subcontractors have been established at working level to
review how to improve efficiency, remove waste and reduce cost.
The TKE project is ongoing and savings are yet to be
quantified. Interviews with some project
'partners' reveal that reported savings have so far considerably outweighed the
costs (reduced overall cost). There have
been less claims (so reducing transactions); claims and commercial matters are
being dealt with in a professional manner; issues are being resolved quickly to
the satisfaction of both parties (evoking RC); and waste associated with
prolonged disputes and spurious claims is being largely avoided. There is less paperwork in general and more
face-to-face discussions (also evoking RC).
Designers and contractors are sharing the same office. Communications between the parties is better
with a clear understanding of each other's goals (as in RC). Submissions are discussed in advance,
resulting in shorter response times, quicker approvals, sometimes as little as
one day, a higher approval rate and less rework associated with re-submission. There have been less interface problems
between contracts (so smoother transactions), because the partners are more
prepared to consider the needs and expectations of other parties (as in
RC). Most of the works are expected to
complete early. Earlier access to track
and building services are expected, saving
up to 10 and 8 weeks respectively on the original schedule. With anecdotal record of good project
management and leadership, MTRC is now changing its contract conditions and
selection strategies to suit more flexible RC approaches, that streamline
marketing and reduce transaction costs.
Thompson and Sanders (1998) observed that benefits
from partnering increase with a migration of teamwork attitude from competition
to cooperation, through to collaboration and finally to coalescence; and if applied properly,
partnering can work in almost any environment.
On the other hand, the principal dimensions of transactions are asset
specificity, uncertainty, and frequency (Williamson 1987). On the presumption that uncertainty is
present in sufficient degrees leading to post contractual adaptive, sequential
decision requirements, Williamson (1987) concentrated on asset specificity and
frequency. He identified three asset
specificity classes - nonspecific (e.g.
purchasing standard equipment, material), mixed (purchasing customized
equipment, material) and highly specific (e.g.
constructing a plant); and three frequency classes - one-off, occasional
and recurrent. As few transactions have
total isolated and discrete character, the difference between one-off and
occasional transactions is not apparent.
Accordingly, only occasional and recurrent frequency distinctions were
considered. He then formulated an
efficient match of governance structures with Macneil’s (1974, 1978)
contractual classification: specifically, classical contracting is described as
market governance, neoclassical contracting involves trilateral governance
(where third-party ‘assistance’ is employed in resolving disputes and
evaluating performance), and the relational contracts that Macneil describes
are organized in bilateral (where the autonomy of parties is maintained) or
unified governance (where the transaction is removed from the market and
organized within the ‘firm’ subject to an authority relation i.e. vertical
integration) structures. These three
classifications by Williamson, Macneil and Thompson & Sanders, are now
compared in Table 1.
Formulators
|
Governance structure/ Form of contract/
Partnering continuum
|
|||
|
Williamson |
Market governance |
Trilateral governance |
Bilateral governance |
Unified governance |
|
Macneil |
Classical |
Neoclassical |
Relational |
Relational |
|
Thompson & Sanders |
Competition |
Cooperation |
Collaboration |
Coalescence |
Partnering in Hong Kong, as discussed in the last section, has usually been introduced at the post contract stage; has often involved only owners and contractors, but used with different contractual arrangements (e.g. design-bid-build, D&B); and either trilateral or bilateral governance structures. Benefits include early or on-time project completion, acceptable quality, reduced waste, early and quick resolution of issues, and more importantly - satisfaction of the contracting parties. These benefits are expected to increase substantially if contractors are 'brought in' at the very outset of the projects, so that they can contribute their expertise from inception to closure of the project, more understanding can be achieved and collaborative efforts would be more effective. The following example, as presented by Ho (2000), strongly supports this argument.
A major contractor in Hong Kong was brought in at
the very outset of a Grade 'A' office building project in Hong Kong, where the
prestigious private sector owner adopted a non-traditional Guaranteed Maximum
Price (GMP) approach. The contractor
contributed ‘his’ experience on construction methods and buildability aspects,
thereby improving the design.
Suggestions on cost savings were incorporated with further inputs from
the sub-contractors. The project was
completed on time and the outturn cost was HK$9,679/m2. In comparison, the costs of other similar
buildings constructed by the same contractor around the same time using the
traditional procurement system were: (1) $10,739/m2 (+11%), (2)
$12,149/m2 (+26%), (3) $12,413/m2 (+28%), and (4)
$13,333/m2 (+38%). The
governance structure of this project may be considered to be somewhat
‘unified’, whereas that for the Australian National Museum project is much
closer to the theoretical ‘unified’ model.
Cross-referring back to Table 1, it may be said that this Hong Kong
project was more 'collaborative', whereas the alliancing team on the Australian
project is more 'coalescent'. Moreover,
such type of RC is strongly related to the premise that no party can make extra
profit by shifting costs to another party (as would have happened in a ‘zero
sum game’). This motivates parties to
cooperate in a way that is not typically found in the construction industry
(Scheublin 2001). This also inspires
them to seek incentive-linked risk management (gain share - pain share
arrangements) for their own benefit, and in turn smoothens the marketing of
such RC-type approaches.
It is expected that extending the partnering
approach to the subcontractors and suppliers, and ensuring their participation
at the early stages of projects, can further increase benefits. In this context, Kale and Arditi (2001) in
USA found that maintaining a high quality relationship with subcontractors is
positively and strongly associated with the perceived performance of general
contractors. General contractors’
relationships with subcontractors are therefore a strategic asset. Kumaraswamy and Matthews (2000) found 10%
tender pricing reductions by subcontractors based on savings anticipated in a
partnering (i.e. RC-type) approach in the UK.
What is critical is the motivation and attitude of the project
participants, particularly the owners, to embrace partnering. The present research confirms the presence of
both this motivation and attitude in the local construction industry.
Table 2 presents a profile of average perceptions on
joint risk management (JRM) desirability that are extracted from a summary of
relevant responses from 47 respondents to a recent Hong Kong based
questionnaire survey (being part of an overall survey that included interviews
and ‘literature review’). The table also
shows the un-weighted average perceptions of the total sample, as well as of
different groups of respondents. This
focuses on risk management in construction projects in general. Here, it is evident that considerable
percentages of many of the 41 identified common construction project risks were
perceived to be more suited for JRM, despite relatively small divergences
between different groups. It indicates
that out of 41 risk items, 11 to 40 percent of 29 (i.e. 13 + 10 + 6) risk items
are generally perceived to need JRM.
Table 2: Average Perceptions on Joint Risk Management
(JRM) based on
groupings of 'working organisation' and 'nature of
present job'
|
Percentage of risk that should be jointly managed |
Number of risks (out of 41, used in the survey) in each category* |
||||||
|
Total (47) |
Working organisation |
|
|||||
|
CSL (14) |
CTR (8) |
OWN (15) |
Nature of present job |
||||
|
ACAD (10) |
ENGG (18) |
MGRL (19) |
|||||
|
0 |
0 |
0 |
7 |
1 |
0 |
0 |
1 |
|
1 - 10 |
12 |
15 |
6 |
13 |
4 |
18 |
10 |
|
11 - 20 |
13 |
13 |
17 |
8 |
20 |
12 |
12 |
|
21 - 30 |
10 |
9 |
5 |
8 |
13 |
6 |
8 |
|
31 - 40 |
6 |
3 |
4 |
6 |
3 |
5 |
7 |
|
41 - 50 |
|
1 |
1 |
3 |
1 |
|
1 |
|
51 - 60 |
|
|
1 |
1 |
|
|
2 |
|
More than 60 |
|
|
|
1 |
|
|
|
|
Total No.: |
41 |
41 |
41 |
41 |
41 |
41 |
41 |
|
Av. % for JRM** |
16.16 |
15.41 |
15.93 |
21.29 |
19.46 |
14.41 |
20.98 |
Notes: CSL - Consultants CTR - Contractors OWN - Owners ACAD - Academics
ENGG - Engineering MGRL - Managerial
* Figures in parentheses ( ) indicate the numbers of respondents in each group
** Figures are not weighted
Within the groupings under 'working organization', academics believe that 11 to 50 percent of 37 risk items should be managed with a JRM approach. In comparison to this, consultants think that 11 to 50 percent of 26 risk items should be managed jointly. Contractors think that 11 to 60 percent of 28 risk items are suitable for JRM. By contrast, the owners group recommended 27 risks for JRM of more than 10 percent. But the range of percentages that they considered suitable, exceeds 50% for JRM of two of these risks. This may indicate a change of attitudes from previous observations that Hong Kong owners are risk evasive (Ahmed et al 1999). Moreover, in the percentage range slots of 31-40 and 41-50, the owners recommended a greater number of risks for joint management than the consultants and the academics. Furthermore, in each of the percentage range slots of 21-30, 31-40 and 41-50, the owners recommended a greater number of risks for joint management than the contractors. This may indicate that owners are now more ready than other groups to approach JRM. This is encouraging because arrangements for collaborative teamwork are usually expected to be initiated by the owners as they are the 'formulators' and main beneficiaries of the project and the most important stake holders in the project teams; and also because they effectively control the governance structure/ contractual form, consultant and contractor selection process, contract content and overall project organisation. ‘Marketing’ or ‘selling’ the new JRM modalities (in procurement systems) to owners thus appears to be easier than may have been previously expected.
Within the groupings under 'nature of present job'
and in comparison to the academics, the respondents who are engineers believe
that 11 to 40 percent of 23 risk items need JRM. On the other hand, the 'managerial'
respondents recommend 11 to 60 percent of 30 risks to be considered for a JRM
strategy. This is important in the
context that managers are expected to drive and motivate the project team
comprising many disciplines/ professionals towards better performance in terms
of cost, time and quality, and in achieving owner satisfaction without disrupting
relationships between the contracting parties.
This is also very relevant in that JRM needs non-adversarial teamwork,
where cooperation and pain/ gain sharing relations among the contracting
parties are preconditions. This finding
also highlights the potential for (1) future cooperation in post commencement
planning and during actual operations, (2) anticipating potential risks/
conflicts through open interactions, (3) resolution of issues including claims
through negotiations, and (4) management of residual risks and conflicts
through cooperative restorational techniques.
All these in turn are expected to lead to cost and time minimization,
optimised risk management, and most issues being resolved within the project
team - that in turn will also foster long-term relationships and align with RC
objectives. Most importantly the
managers are probably in the best position to persuade the owners to embrace RC
and JRM modalities and thereby smoothen the marketing of such concepts and
practices.
Translating industry enthusiasm into action for non-traditional RC-type approaches (like partnering) in the case of government/ public sector clients will not be as easy as with private sector clients as has been seen in the above survey i.e. more ‘marketing’ is needed to convince them of the overall and longer term benefits. Public/ government clients need to follow some pre-set rules and procedures. This means that a well-performing contractor may usually not obtain any degree of improved chances for winning the next contract with the same public client. The pre-set rules and regulations restrict the public officials in some activities and require a behaviour pattern that militates against any kind of trusting relationships with other contracting parties (an important element of RC). This scenario pushes either party back towards a traditional approach. The situation becomes more acute when the economy is in recession – with less contracts to be awarded, and contractors are starved for work. Moreover, the public sector is also characterized by a tedious step-wise decision making system, which also stifles smoother ‘marketing’ and affects project delivery.
Government/ public policy as discussed above, of
course has a legitimate objective to ensure that public money is not wasted and
could be accounted for in a transparent manner.
As a result, certainty of price, value for public money, and timely
completion are seen to be the overriding objectives of public works contracts. But the actual cost of a contract cannot be
finalised by merely obtaining a certain tender price. As observed by Kumaraswamy (1997), resources
spent for lengthy and large claims and disputes; efforts and time spent on
settling trivial claims; and time extensions on a considerable number of
projects - neither give certainty of price, nor ensure ultimate value for
public money. The actual cost can only
be computed after settling all claims and disputes that may continue for long
time, even after completion of construction works. Present policy therefore needs serious
reconsideration (Rahman and Kumaraswamy 2001B).
It is in the public interest that public works projects be executed
efficiently and that they not be bedevilled by contractual disputes and by an
adversarial and negative approach in their administration (Marriott 2000). Being the single largest client, the
government should also take the lead in any change initiative and guide the
industry (CIRC 2001).
Evidence has been noted of widespread dissemination of successes of worldwide partnering and alliancing attempts in general; and of private sector Guaranteed Maximum Price (GMP) contracts and Mass Transit Railway Corporation’s (MTRC’s) incremental partnering effort in the public sector in Hong Kong in particular. These demonstrate clear high-margin benefits to all parties concerned, and may motivate local policy makers and officials to design and market a system that can deliver similar benefits even within a public sector framework. This may include, for example, (a) more relationally driven and performance oriented contractor selection that would encourage an amicable RC environment and more collaborative teamwork (Rahman et al 2001); (b) re-engineered contractual systems to demonstrate holistic RC oriented cultural change (Rahman et al., accepted for publication); (c) specifying ‘partnering’ (experience or readiness/ commitment) as a precondition for contractor prequalification (UDT 1997); and (d) introduction of post contract partnering-type arrangements (ECI 1997, Loraine and Williams 2000, Scott 2001), that will also include proper restorational techniques (Rahman and Kumaraswamy 2001C). This in turn will also compel contractors, and subsequently other members of the project team, to develop a culture of partnering that will help to propagate RC in general (and partnering in particular) on a broader scale i.e. through the whole supply chain, as a standard way of doing business.
Issues of culture, RC and JRM - a Case Study
Much of the success of RC-type approaches has been
attributed to national culture, for example in Japanese construction (Bennett
et al. 1987) and automotive industries
(Womack et al 1990), whereas the Hong Kong construction industry is very much
'international' and 'multi-cultural'. It
is therefore sometimes argued that the success of RC approaches is unlikely in
Hong Kong. Critics also claim that the
mere success of partnering in Anglo-Saxon regions does not mean it will work
well in Hong Kong, pointing to an allegedly long tradition of adversarial attitudes
here (Barrington 2001). But
recommendations in various government reports regarding improving industry
culture and minimising disputes, by themselves, point to the adversarial
attitudes that still exist in those other countries too. It is therefore not the national culture, but
the attitudes of project participants that affect the success of such RC-type
approaches.
Hofstede (1980) describes 'culture' as the collective programming of the mind that distinguishes the members of one human group from another. This concept is usually applied to societies or nations or for ethnic or regional groups, but it can be equally applicable to other human collectivities or categories: an organization, a profession, or a family. Culture in construction project scenarios is therefore the culture of the project team comprising different contracting parties in the supply chain and also including company-wide inter-departmental members and others who contribute in some way to the final product or service to be delivered (Mackay 1993). A project culture is thus built up from a number of sources - national, ownership, sectoral and style differences. At the project level, there are also other issues that affect the culture of the project. These arise from key variables flowing in from multiple organisational cultures, individualistic subcultures, professional subcultures and operational subcultures (Kumaraswamy et al 2001).
It is therefore vital to recognize the team
approach, although the individuals in the project team are also extremely
important in building an appropriate and a win-win project culture by marketing
non-traditional RC-type approaches.
What is needed is an understanding of how to structure, develop
and reward both teams and individuals without detriment to either, while also
shedding costs, improving margins, and being extremely client-responsive –
through effective marketing. These imply
doing things effectively and efficiently at the first time (Mackay 1993). This also relates to the previously discussed
‘trust building’ in RC-type approaches.
This requires a commitment to change and teambuilding very different
from that of the past. Recent studies
show that such ideas are now emerging in the construction industry. The combined 'mind-set' of the project team
may need continuous and cooperative learning, in a direction that recognises
project requirements, as well as changes in customer demands and expectations
as seen in ordinary day to day business activities. Such collective 'culture acquisition' (or
transformation) also depends on the 'real event' in all its complexity of
place, people, atmosphere, and interactive responses that is derived from 'a
set of relations' (Pitman et al 1989) and thus relate well to the previously
discussed RC approaches in particular, and in the context of marketing
construction services more effectively in general.
Achieving such major cultural transformations after the various project participants are selected may not be easy. For example they would each bring their 'own baggage' (or 'preconditioning') with little incentive to change and also may be under pressure to 'get on with the work' in 'tried and trusted' ways. It is therefore frequently recommended to initiate the required cultural transformation by appropriate conditioning during the planning and 'selection stage' - by incorporating desired facets into explicit selection criteria and careful planning with insightful inputs from all such selected stakeholders (Rahman et al, accepted for publication). The Stave Falls Replacement Project in Canada, a finalist in the Project Management Institute’s 2001 International Project of the Year Competition, supports this school of thought (Bourne and Higginbottom 2001). The project was started by selecting a ‘champion’ project manager. A very strong commitment of the enlightened and culturally shaped client, and subsequently transformed project participants brought this challenging project with on-time completion and 21% under budget.
The cultural transformation towards 'one team' consisting of all stakeholders and a project culture that can facilitate the required productivity gains, as argued by Kumaraswamy et al. (2001) and Rahman et al. (accepted for publication), may even work on ongoing projects. In this context, the Heathrow Express Railway project will probably be an appropriate example of a completed successful teambuilding exercise in a changed culture (Lownds 1998). The project suffered an enormous setback when the tunnel in the central terminal area collapsed, yet the 'culture change' initiative of the client in the form of teambuilding and cooperation among 'all parties' concerned resulted in a reduction of 20% of costs it expected to carry after the collapse, made up critical construction time, and saw the opening date for the railway brought forward from early 1999 to June 1998. The change initiative by a ‘champion’ project manager began from ‘top’ of the project team. Regardless of their organisational affiliations, parties on this project had a slogan that they were not competing with each other but operating as 'one team' with overriding loyalty to the goal of delivering the railway. In fact, RC approaches, like partnering, are expected to work in almost any environment, if applied properly. However, this requires transforming traditional relationships towards a shared culture that transcends organisational boundaries (CII 1996). What are critical are the motivation and attitudes of the project participants – under the leadership of the clients. Such teamwork also inculcates a trust that facilitates faster and easier ‘re-marketing’ of services to the same clients i.e. for generating repeat orders.
In order to test the above arguments and to assess
the effectiveness of using transactionally efficient RC for JRM, a case study
was carried out on one of the largest joint venture projects in Mainland China,
where construction companies from different countries (China, France, Italy and
Germany) were working together. The
project was declared by the Chinese Government as a demonstration project for
Sino-foreign joint ventures and an 'education base' for good organization and
close cooperation. These features
inspired the authors to select the project for the case study in anticipation
that it may provide a useful example of one approach towards RC, JRM and the
cultural/ attitudinal issue mentioned above.
The provisions for dispute resolution and claims settlement in all three
'main works contracts' of the project (referred to here as C1, C2 and C3) were:
the Engineer's decision, amicable settlement and arbitration. In spite of the stated aim of demonstrating
close cooperation, there was no provision for partnering or any other such
arrangement in the signed contracts.
One of the contracts was ‘kicked off’ with a claim
for ‘unforeseen site conditions’ even before excavation commenced. Following this event, the owner with strong
encouragement from the World Bank (co-financier of the project) was proactive
in post contract formulation of a 3 member Dispute Review Board (DRB) to
anticipate and minimise conflicts. Over
a period of more than two years and almost at the closure of the project, only
5 claims (and no variation cases) were brought to the notice of the DRB (so
reducing 'transactions'). As shown in
Table 3, there were 52 variations and 15 claims in C1; and 49 variations and 35
claims in C3. Only one claim was sent to
the DRB under C3, and that was successfully negotiated after the first hearing
of the DRB (indicating reduced transactions and elements of RC). Only one variation under C1 was neither
referred to the DRB nor settled. All
other variations and claims were amicably settled by the Engineer's decision
(suggesting elements of RC). The parties
to C1 were hopeful of negotiating the unsettled variation amicably, since
almost all the works were completed, and they were considering potential work
in future projects. They did not wish to
enter into any confrontation, specifically after having built up a successful
track record and good relations. It was
also noteworthy that the works under these two contracts (i.e. C1 & C3)
were always on or ahead of schedule. The
successful settlement of conflicts under C1 and C3 is mainly attributed to the
'attitude' of the project participants (relating to RC). The owner itself declared its own attitude
towards the stated aim of close cooperation by introducing a DRB, and the
contractors in turn reflected their attitudes by working in cooperation with
the Engineer. This resulted in early and
amicable settlement of almost all the claims and variations, through the
mechanism of the Engineer's decision.
Table 3: Status of Claims and Variations Raised by
Contractors (up to April 2000)
|
Contract No. |
Item |
Total No. |
Settlement level |
||||
|
Engi neer |
C - O Negotiation |
After DRB Hearing |
Not settled After DRB hearing |
Not Settled & not submitted to DRB |
|||
|
C1 |
Variations |
52 |
51 |
|
|
|
1 |
|
Claims |
15 |
15 |
|
|
|
|
|
|
C2 |
Variations |
149 |
80 |
|
|
|
69 |
|
Claims |
50 |
20 |
|
1 |
3 |
26 |
|
|
C3 |
Variations |
49 |
49 |
|
|
|
|
|
Claims |
35 |
34 |
|
1 |
|
|
|
|
Total |
|
350 |
249 |
0 |
2 |
3 |
96 |
C - O: Contractor - owner
On the other hand, among 149 variations and 50
claims in C2 (more than the total of other two contracts, and therefore more
transactions), 80 variations and 20 claims were settled by the Engineer's
decision. One claim was negotiated after
the first hearing of the DRB, but 3 claims were not settled even after DRB
hearings. These three were forwarded to
arbitration. There were still 69 variations
and 26 claims that had neither been referred to the DRB nor yet settled. This contract experienced delays but the
owner took proactive steps towards delay recovery by providing local
construction crews as labour subcontractors.
A large number of unsettled variations and claims in this contract can
be attributed to the 'negative attitude' and apparent 'claims consciousness' of
the contractor, which was reflected through lodging a notice of claim for
unforeseen ground conditions even before excavation work began. Consequential apprehensions and mistrust of
apparently hidden agendas may have thereby disrupted the administration and
performance of the works and contributed to the delays experienced on this
contract.
The main outcome of this
case study corroborates the general hypothesis and conceptual thrust of this
paper. It was seen how the attitudes of
the project participants, irrespective of their nationality, affect project
outcomes. These attitudes may be
attributed to the project culture that may have developed from the sum total of
individual attitudes of the key team members, along with other contributory
sub-cultures, i.e. organisational, operational and professional
sub-cultures. Developing a proper
partnering culture before contracting with the external parties is therefore
necessary. Moreover, most of the project
participants in the above case study opted for resolution of the conflicting
issues among themselves - by mobilising the advantages of some facets of both
RC and JRM in the form of future cooperation in post commencement planning and
during actual operations, and by anticipating potential problems/ conflicts
through 'good' relationships, resolving most of the claims and variations
through negotiations; and by dealing with residual problems/ conflicts through
cooperation and restorational techniques.
They realized that most issues are best resolved by the construction
experts on site, who had more immediate control of the ever-changing scenarios
and unfolding events. All these were
initiated and led by the client. This also smoothened the marketing of
non-contractual concepts such as the formation of the DRB.
Hong Kong is an open market and probably unique in having such a wide-open ‘international’ construction market that has attracted so many major international contractors, consulting engineers and other professionals. The openness of the Hong Kong market to international influences is one of its great strengths and this policy is expected to preserve that advantage (Marriott 2000). But proper systems have not yet been established to consolidate the technology transfers and other gains, to empower more flexibility and speed in identifying and solving problems in construction contract. However, there is growing evidence of an increasing appreciation and movement towards non-traditional procurement approaches and selection strategies.
Effective partnering depends largely on the
collective attitudes of the contracting parties irrespective of their
origin. Developing a partnering culture
within each organisation is therefore necessary, prior to partnering with
external parties, because 'partnering begins at home' (Dissanayaka and
Kumaraswamy 1999). However, marketing
of such initiatives must be championed by the major clients e.g.
Government bodies and quasi-government organisations, as well as large
developers. If partnering becomes
virtually mandatory in contracting, other potential transactors will be forced
to fit into 'the system' in order to win work and survive. This in turn will also compel them to develop
a culture of partnering that will help to propagate RC in general (and
partnering in particular) on a broader scale, through the whole supply chain,
as a standard way of doing business. The
‘next generation’ of partnering in the construction industry is expected to
involve the building of vertically and horizontally integrated virtual
organisations through an entire supply chain to provide a complete service,
which is efficient, creative and innovative.
By marketing and using the above strategies, it is
possible to ‘mobilise’ RC-related benefits, reduce transactional ‘friction’ and
‘drive’ JRM through the ‘vehicle’ of partnering, in almost all kinds of
projects, irrespective of the contractual form.
The benefits of partnering increase substantially if contractors are
brought in earlier in the project scenario and subcontractors are selected
using a partnering approach. They can
contribute their experiential knowledge on constructibility, construction
methods and waste reduction strategies in order to minimise overall cost, improve
designs and specifications, and meet attractive time and quality targets. The trust, smoother communications and faster
problem solving achieved through partnering will considerably boost
transactional efficiencies and lay firm foundations for mutually beneficial
longer-term relationships. Jointly
identified overall common objectives and interactive operational strategies
will clearly enable: (a) the JRM that is awaited in the industry, as evidenced
in the reported survey and (b) the RC that can yield good results, as
demonstrated in the reported case study.
These aspects should be borne in mind in implementing the Henry Tang
Report (CIRC 2001), in achieving the much heralded 'culture'/ attitudinal
shifts and in moving the Hong Kong industry towards the long-awaited
win-win-win scenarios.
Construction projects should
not be football matches where teams score points to defeat the ‘opponents’ and
referees are needed to ‘police’ the process (Rahman and Kumaraswamy,
2001B). Instead they should be like a
well-choreographed ballet performance - where each dancer plays a synergistic
role in perfect harmony with each other, and 'in symphony' with the music,
lighting, props, back-stage/ support team and the overall environment – in a
perpetuated pursuit of superior performance levels and all-round excellence.
References
Ahmed, S.M.,
Ahmad, R. and de Saram, D.D. (1999). Risk Management Trends in Hong Kong
Construction Industry: a comparison of contractors and owners perceptions, Engineering construction and Architectural
management, Vol. 6, No. 3, pp. 256-266.
Barrington,
L. (2001). Partnering: the Way forward for Hong Kong? HKIA Journal,
Issue No. 27, pp. 20-23.
Bayliss, R.F.
(2000). Project Partnering - A Case Study on MTR Corporation Ltd's Tseung Kwan
O Extension, Proceedings of the
Millennium conference on Construction Project Management, HKIE et al.,
October, addendum, pp. 1-6.
Bennett, J.,
Flanagan, R. & Jayes, S. (1987). Capital and Countries Report: Japanese
Construction Industry. Centre for
strategic Studies in Construction, University of Reading, UK.
Bourne, R.
and Higginbottom, S. (2001). Powerful PM: The Stave Falls Replacement Project,
PM Network – The Professional Magazine of the Project Management Institute,
October 2001, Vol. 16, No. 10, pp. 44-48.
Campbell, D.
(1997). The Relational Constitution of Contract and the Limits of 'Economics':
Kenneth Arrow on the Social background of Markets. In Contracts, Co-operation and Competition, Studies in Economics,
Management and Law, ed. Deakin, S. and Michie, J., pp. 307-336, Oxford
University press.
CII (1996).
The Partnering Process - its benefits, implementation, and measurement. Construction
Industry Institute (CII), Bureau of Engineering Resources, University of
Texas at Austin, USA.
CIRC (2001). Construct for Excellence, Report of the
Construction Industry Review Committee (CIRC), Hong Kong, January
Cowan, C.,
Gary, C. and Larson, E. (1992). Project Partnering, Project Management
Journal, Vol. 22, No. 4, pp. 5-11.
Deakin, S., Lane, C. and
Wilkinson, F. (1997). "Contract Law, Trust Relations, and Incentives for
Cooperation: A Comparative Study" in Contracts, Co- operation and
Competition, Studies in Economics, Management and Law, ed. Deakin, S. and
Michie, J., Oxford University press, pp. 105-139.
Drexler,
J.A. Jr. and Larson, E.W. (2000). Partnering: Why Project Owner-Contractor
Relationships Change. ASCE Journal of Construction Engineering and Management,
Vol. 126, No. 4, pp. 293-297.
Dissanayaka,
S.M. and Kumaraswamy, M.M. (1999). Reconstructing Procurement Systems and Team
Relationships, International Journal of Computer Integrated
Design and Construction, Vol. 1, No. 2, pp. 10-19.
ECI (1997). Partnering in the Public Sector, ECI (European Construction Institute), 1997.
Fukuyama, F.
(1995). Trust: The Social Virtues and the Creation of prosperity, Hamish
Hamilton, London
Green, S.D.
(1999). In "Profitable Partnering
in Construction Procurement", ed. Ogunlala, S.O., CIB W92 and CIB
TG23 Joint Symposium, E&FN spon, London, UK.
Hartman, F.,
Snelgrove, P. & Ashrafi, R. (1997). Effective Wording to Improve Risk
Allocation in Lump Sum Contracts, J.
of Construction Engineering & Management, Vol. 123, No. 4, pp.
379-387.
Ho, O.S.
(2000). Enhancing Construction Technology through Strategic Partnering - A
Contractor's Perspective. Paper presented in the 'Quality Housing: Partnering Symposium 2000', Hong Kong October
19-20, 2000. http://www.info.gov.hk/hd/eng/events/conf00/day1.htm
Hofstede, G.
(1980). Culture's Consequences, SAGE Publications, London
Jones, D.
(2000). Project Alliances, Proceedings of Conference on ‘Whose Risk?
Managing Risk in Construction– Who Pays?’, Hong Kong, November 2000, pp. 1-24.
Joskow, P.L.
(1985). Vertical Integration and Long-term Contracts: The case of Coal-burning
Electrical Generating Plants, Journal of Law, Economics, and Organization,
Vol. 1, No. 1, pp. 33-80.
Kale, S. and
Arditi, D. (2001). General Contractors’ Relationships with Subcontractors: a
strategic asset. Construction management and Economics, Vol. 19, No. 5, pp.
541-549.
Kumaraswamy,
M. M. (1997). Common Categories and Causes of Construction Claims, Construction
Law Journal, Vol. 13, No. 1, pp. 21-34.
Kumaraswamy,
M.M. and Mathews, J.D. (2000). Improved Subcontractor Selection Employing
partnering Principles, ASCE Journal of Management in Engineering,
Vol. 16, No. 3, pp. 47-57.
Kumaraswamy,
M., Rowlinson, S.M. and Phua, F.T.T. (2001). Origins and Desired Destinations
of Construction Project Culture. Proceedings of the CIB World Congress, TG23 Workshop on Culture in Construction,
New Zealand, April.
Larson, E.
(1995). Project Partnering: Results of study of 280 Construction Projects. ASCE
Journal of Management in Engineering, Vol. 11, No. 2, pp. 30-35.
Lenard, D.J.,
Bowen-James, A. Thompson, M. & Anderson, L. (1996). Partnering - Models for
Success, Construction Industry
Institute, Adelaide, Australia.
Liu, M.M. and
Fellows, R. (2001). An Eastern Perspective on Partnering. Engineering, Construction
& Architectural Management, Vol. 8, No. 1, pp. 9-19.
Loraine B. and Williams I. (2000). Partnering in the Social Housing Sector. ECI (European Construction Institute).
Lownds, S.
(1998). Fast Track to Change on the Heathrow Express, Institute of Personnel
and Development (IPD), UK
Lyons, B. and
Mehta, J. (1997). Private Sector Business Contracts: The Text between the
Lines. In Contracts, Cooperation and
Competition, Studies in Economics, Management and Law, ed. Deakin, S.
and Michie, J., Oxford Univ. Press, pp. 43-66.
Mackay, A.
(1993). Team Up for Excellence, Oxford University press
McInnis, A.
(2000). Review on "International Conference on ‘Whose Risk? Managing Risk
in Construction – Who Pays?’, Hong Kong, 2000". Asian Architect &
Contractor, Vol. 29, Issue 11, pp. 50-51.
Macneil, I.R.
(1974). The Many Futures of Contracts, Southern California Law Review, Vol.
47, pp. 691-816.
Macneil, I.R.
(1978). Contracts: Adjustment of Long-Term Economic Relations Under Classical,
Neoclassical, and Relational Contract Law,
Northwestern University Law Review,
Vol. 72, No. 5, Part 2, pp. 854-905.
Macneil, I.R.
(1980). The New Social Contract: An
Inquiry into Modern Contractual Relations, New Haven, NJ, Yale
University Press.
Marriott, A.
(2000). Introductory speech for the conference 'Whose Risk? Managing Risk in
Construction - Who Pays?', November 2000, Hong Kong.
Moss, A. (1994). "The Hong Kong Convention and Exhibition Centre
(HKCEC): an unusual but highly successful procurement example". East Meets West: Proceedings of CIB W92
procurement Symposium, ed. Rowlinson, S.M., pp. 213-220. University of
Hong Kong, Hong Kong, CIB publication 175.
Pitman, M.A., Eisikovits, R.A. and Dobbert M.L. (1989). Culture Acquisition: A Holistic Approach to Human Learning. Praeger Publishers, New York, USA
Rahman, M. and Kumaraswamy, M. (2001A). Appraising the Potential for Joint Risk Management. Proceedings of the 17th Annual ARCOM Conference, 5-7 Sept 2001, University of Salford, the UK, Edited by Akintola Akintoye, volume 2, pages 863-873.
Rahman, M. and Kumaraswamy, M. (2001B). Revamping Risk Management in Hong Kong Construction Industry. COBRA 2001 (Proceedings of the RICS Foundation, Construction and Building research Conference), 3-5 September 2001, School of the Built and Natural Environment, Glasgow Caledonian University, Glasgow, the UK. Editors: John Kelly & Kirsty Hunter, Vol. 1, pp. 61-73
Rahman M.M. and Kumaraswamy M.M. (2001C). Joint Risk Management Through Transactionally Efficient Relational Contracting. Journal of Construction Management and Economics, in press.
Rahman, M., Kumaraswamy, M., Rowlinson, S. and Palaneeswaran,
E. (accepted for publication). Transformed Culture and Enhanced Procurement:
Through Relational Contracting and Enlightened Selection. Accepted for the CIB
Joint Symposium of W092, W063, TG36, TG23 to be held in Trinidad & Tobago,
January 14-17, 2002
Rahman, M., Palaneeswaran,
E. and Kumaraswamy, M. (2001). Applying Transaction Costing and Relational
Contracting Principles to Improved Risk Management and Contractor Selection.
Proceedings of the International Conference on Project Cost Management,
Beijing, May 2001, pp. 171-181.
Sako, M. (1992). Prices, Quality and Trust: Inter-Firm Relations in Britain and Japan, Cambridge University Press, the UK.
Scheublin,
F.J.M. (2001). Project Alliance Contract in The Netherlands, Building Research
and Information, Vol. 29, No. 6, pp. 451-455.
Scott B.
(2001). Partnering in Europe – incentive based alliancing for projects. ECI
(European Construction Institute).
Smyth, H.
(2001). [as Editor] Frontpage, IJCM
(International Journal for Construction Marketing), ISSN 1463-7189, http://www.brookes.ac.uk/other/conmark/IJCM/
Thompson,
P.J. and Sanders, S.R. (1998). Partnering Continuum. ASCE Journal of
Management in Engineering, Vol. 14, No. 5, pp. 73-78.
UDT (1997). I - 15 Corridor Reconstruction Project:
Special Experimental Project 14 - Design/ Build Contracting, Initial Report, Oct. 1997, Utah
Department of Transportation (UDT), USA.
Walker A. and
Chau K.W. (1999). The Relationship between Construction Project Management
Theory and Transaction Cost Economics. Engineering,
Construction & Architectural Management, Vol. 6, No. 2, pp. 166-176.
Walker, D.H.T.,
Hampson, K. and Peters, R. (2000). Project Alliancing and Project Partnering -
What's the Difference? - Partner Selection on the Australian National Museum
Project - a Case Study. Proceedings of
the CIB W92 Conference, pp. 641-655, Chile.
Weston, D.C. and Gibson,
G.E. (1993). Partnering Project Performance in US Army Corps of Engineers, ASCE
Journal of Management in Engineering, Vol. 9, No. 4, pp. 410-425.
Williamson,
O.E. (1979). Transaction Cost Economics: The Governance of Contractual
Relations, Journal of Law and Economics, Vol. 22, No. 2, pp. 233-261.
Williamson,
O.E. (1987). The Economic Institutions
of Capitalism:
firms, markets, relational contracting. Free Press, New York,
USA. c1985.
Williamson, O.E. (1996). The Mechanisms of Governance, Free Press, New York, USA.
Winch, G.
(1989). The Construction Firm and the Construction Project: a transaction cost
approach. Construction Management and
Economics, Vol. 7, pp. 331-345.
Womack, J.P.,
Jones, D.T. & Roos, D. (1990). The
Machine that Changed the World. Free press, New York.