Success of Supplier Alliances for Capital Projects
Publication: Journal of Construction Engineering and Management
Volume 131, Issue 9
Abstract
Energy sector capital projects typically cost hundreds of millions and even billions of dollars. Managing the engineered equipment is important not only because of their high dollar value but also because the long manufacturing lead times often drive the overall project schedules. In recent years, several supplier alliances have been successfully implemented on such projects leading to initial price savings in the range from 6 to 10%. This paper presents the result of a study to assess the opportunities and barriers with such partnerships. Interviewed company executives perceived that time savings and quality improvements, mostly due to the suppliers’ specialized expertise, are of much greater value than a lower bid price. Most surprisingly, very few companies use metrics to measure performance, thus leaving them in the dark on the question of how well an alliance worked or why it failed. The relevance of the presented work is in the amount of actual field data that has been generated and processed.
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Acknowledgments
The writers would like to acknowledge the support by Dr. Handfield, director of the Supply Chain Resource Consortium at N.C.S.U. as well as the cooperation of the 16 companies in being available for interviews and to encourage their experts to fill out yet another questionnaire: ABB, BAA, Bechtel, ChevronTexaco, Duke Energy, Duke/Fluor Daniel, Elliott Turbomachinery, Fluor, GE, Hyundai Heavy Industries, Newport News, Nisho Iwai American Corporation, Shell, Solar Turbines, Technip, and Toyo USA.
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Information & Authors
Information
Published In
Journal of Construction Engineering and Management
Volume 131 • Issue 9 • September 2005
Pages: 979 - 985
Copyright
© 2005 ASCE.
History
Received: Mar 16, 2004
Accepted: Mar 10, 2005
Published online: Sep 1, 2005
Published in print: Sep 2005
Authors
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