Driving Forces behind and Barriers to Relational Transaction Practices in Public Construction Projects
Publication: Journal of Professional Issues in Engineering Education and Practice
Volume 140, Issue 1
Abstract
Relational transactions, comprising relational contracts and network strategies, could contribute to better outcomes for general construction projects. However, public projects seem to face more constraints when adopting relational transactions because of the fear that close relationships may be construed as corruption. The aim of this study is to identify drivers of and barriers to relational transaction practices in public projects. A questionnaire-based survey of public projects was administered to construction professionals in Singapore. It is found that the adoption of relational transactions in public projects is motivated by (1) increased value proposition, (2) improved business competitiveness, and (3) improved project time and cost performance. Meanwhile, contracting parties attempting to adopt relational transactions are restricted by (1) a lack of capabilities, (2) ethos of public service, (3) a lack of continuity, and (4) institutional constraints. The implication is that with a better appreciation of the drivers and barriers, contracting parties could customize effective relational transaction strategies in public projects. It is recommended that contracting parties pay more attention to the institutional environment, as this affects the effectiveness of relational transactions.
Get full access to this article
View all available purchase options and get full access to this article.
Acknowledgments
The research is supported by Singapore ministry of education’s academic research fund tier 2 funding (grant number MOE2009-T2-2-067) for the project entitled ”Boosting public construction project outcomes through relational transactions.” Dr Yongjian Ke’s assistance in the research and commenting on the earlier draft are acknowledged with grateful thanks.
References
Akintoye, A., and Main, J. (2007). “Collaborative relationships in construction: The UK contractors’ perception.” Eng. Constr. Archit. Manag., 14(6), 597–617.
Akintoye, A., McIntosh, G., and Fitzgerald, E. (2000). “A survey of supply chain collaboration and management in the UK construction industry.” Eur. J. Purch. Supply Manag., 6(3/4), 159–168.
Azoulay, P., Repenning, N. P., and Zuckerman, E. W. (2010). “Nasty, brutish, and short: Embeddedness failure in the pharmaceutical industry.” Admin. Sci. Q., 55(3), 472–507.
Beach, R., Webster, M., and Campbell, K. M. (2005). “An evaluation of partnership development in the construction industry.” Int. J. Proj. Manag., 23(8), 611–621.
Becker, G. S. (1976). The economic approach to human behavior, the economic approach to human behavior, Univ. of Chicago, Chicago.
Black, C., Akintoye, A., and Fitzgerald, E. (2000). “An analysis of success factors and benefits of partnering in construction.” Int. J. Proj. Manag., 18(6), 423–434.
Bresnen, M., and Marshall, N. (2000). “Partnering in construction: A critical review of issues, problems and dilemmas.” Constr. Manag. Econ., 18(2), 229–237.
Chan, A. P. C., Chan, D. W. M., Fan, L. C. N., Lam, P. T. I., and Yeung, J. F. Y. (2008). “Achieving partnering success through an incentive agreement: Lessons learned from an underground railway extension project in Hong Kong.” J. Manag. Eng., 128–137.
Chan, A. P. C., Chan, D. W. M., and Ho, K. S. K. (2003). “An empirical study of the benefits of construction partnering in Hong Kong.” Constr. Manag. Econ., 21(5), 523–533.
Chan, A. P. C., Ho, D. C. K., and Tam, C. M. (2001). “Effect of inter-organizational teamwork on project outcome.” J. Manag. Eng., 34–38.
Construction 21 Steering Committee. (1999). Reinventing construction, Singapore National Printers, Singapore.
Cook, E. L., and Hancher, D. E. (1990). “Partnering: Contracting for the future.” J. Manag. Eng., 431–446.
Crowley, L. G., and Karim, M. A. (1995). “Conceptual model of partnering.” J. Manag. Eng., 33–39.
Di Vincenzo, F., and Mascia, D. (2012). “Social capital in project-based organization: Its role, structure, and impact on project performance.” Int. J. Proj. Manag., 30(1), 5–14.
Drexler, J. A., and Larson, E. W. (2000). “Partnering: Why project owner-contractor relationships change.” J. Constr. Eng. Manag., 293–297.
Dubios, A., and Gadde, L. (2000). “Supply strategy and network effects-purchasing behavior in the construction industry.” Eur. J. Purch. Supply Manag., 6(3–4), 207–215.
Dyer, J. H., and Nobeoka, K. (2000). “Creating and managing a high-performance knowledge-sharing network: The Toyota case.” Strategic Manag. J., 21(3), 345–367.
Eccles, R. G. (1981). “The quasi-firm in the construction industry.” J. Econ. Behav. Organ., 2(4), 335–357.
Economic Strategies Committee. (2010). “Economic Strategies Committee Key Recommendations.” 〈http://www.ecdl.org/media/Singapore%20Economic%20Committe_2010.pdf〉 (Nov. 19, 2011).
Eriksson, P. E., Atkin, B., and Nilsson, T. (2009). “Overcoming barriers to partnering through cooperative procurement procedures.” Eng. Constr. Archit. Manag., 16(6), 598–611.
Eriksson, P. E., and Laan, A. (2007). “Procurement effects on trust and control in client-contractor relationships.” Eng. Constr. Archit. Manag., 14(4), 387–399.
Eriksson, P. E., Nilsson, T., and Atkin, B. (2008). “Client perceptions of barriers to partnering.” Eng. Constr. Archit. Manag., 15(6), 527–539.
Glagola, C. R., and Sheedy, W. M. (2002). “Partnering on defense contracts.” J. Constr. Eng. Manag., 127–138.
Granovetter, M. S. (1985). “Economic action and social structure: The problem of embeddedness.” Am. J. Sociol., 91(3), 481–510.
Gultai, R., Nohria, N., and Zaheer, A. (2000). “Strategic networks.” Strat. Manag. J., 21(3), 203–215.
Hair, J. F., Anderson, R. E., Tatham, R. L., and Black, W. C. (1998). Multivariate data analysis with readings, International Ed., Prentice Hill, New Jersey.
Hayford, O., and Utz, C. (2002). “Paying the price under project alliances.” Aust. Constr. Law Newsl., 84, 22–25.
Jounes, D. S. (2002). “Procurement practices in the Singapore civil service: Balancing control and delegation.” J. Public Procure., 2(1), 29–53.
Kumaraswamy, M. M., Ling, F. Y. Y., Rahman, M. M., and Phng, S. T. (2005). “Constructing relationally integrated teams.” J. Construct. Eng. Manag., 131(10), 1076–1086.
Larson, E. (1995). “Project partnering: Results of study of 280 construction projects.” J. Manag. Eng., 30–35.
Leung, M. Y., and Chan, H. K. L. (2007). “Antecedents of commitment in construction management.” Constr. Manag. Econ., 25(2), 113–127.
Ling, F. Y. Y. (2004). “Key determinants of performance of design-bid-build projects in Singapore.” Build. Res. Inf., 32(2), 128–139.
Ling, F. Y. Y., and Kerh, S. H. (2004). “Comparing the performance of design-build and design-bid-build building projects in Singapore.” Archit. Sci. Rev., 47(2), 163–175.
Little, R. J. A., and Rubin, D. B. (1986). Statistical analysis with missing data, Wiley, New York.
Love, P. E. D., Irani, Z., Cheng, E., and Li, H. (2002). “A model for supporting inter-organizational relations in the supply chain.” Eng. Constr. Archit. Manag., 9(1), 2–15.
Lu, S. K., and Yan, H. (2007). “An empirical study on incentives of strategic partnering in China: Views from construction companies.” Int. J. Proj. Manag., 25(3), 241–249.
Macneil, I. R. (1978). “Contracts: Adjustments of long-term economic relations under classical, neoclassical and relational contract law.” Northwest. Univ. Law Rev., 72(6), 854–906.
Macneil, I. R. (1983). “Values in contract: Internal and external.” Northwest. Univ. Law Rev., 78(2), 340–347.
Macneil, I. R. (2000). “Contracting worlds and essential contract theory.” Soc. Leg. Stud., 9(3), 431–438.
Minchin, R. E., Henriquez, N. R., King, A. M., and Lewis, D. W. (2010). “Owners respond: Preferences for task performance, delivery systems, and quality management.” J. Construct. Eng. Manag., 136(3), 283–293.
Ng, S. T., Rose, T. M., Mak, M., and Eng, S. (2002). “Problematic issues associated with project partnering-the contractor perspective.” Int. J. Proj. Manag., 20(6), 437–449.
Nunnally, J. C. (1975). “The study of change in evaluation research: Principles con-concerning measurement, experimental design and analysis.” Handbook of Evaluation Research, E. L. Streuning and M. Guttentag, eds., Sage, Beverly Hills, CA, 101–138.
Ott, R. L., and Longnecker, M. (2001). An introduction to statistical methods and data analysis, Brooks/Cole, Pacific Grove, CA.
Palaneeswaran, E., and Kumaraswamy, M. M. (2000). “Benchmarking contractor selection practices in public-sector construction-a proposed model.” Eng. Constr. Archit. Manag., 7(3), 285–299.
Powell, W. W. (1990). “Neither market nor hierarchy: Network forms of organization.” Research in organizational behavior, B. M. Staw and L. L. Cummings, eds., Vol 12, JAI Press, Greenwich, CT, 295–336.
Pryke, S. D. (2004). “Analysing construction project coalitions: Exploring the application of social network analysis.” Constr. Manag. Econ., 22(8), 787–797.
Radziszewska-Zielina, E. (2010). “Analysis of the impact of the level of partnering relations on the selected indexes of success of polish construction enterprises.” Inzinerine Ekonomika-Eng. Econ., 21(3), 324–335.
Rahman, M. M., and Kumaraswamy, M. M. (2004a). “Potential for implementing relational contracting and joint risk management.” J. Manag. Eng., 178–189.
Rahman, M. M., and Kumaraswamy, M. M. (2004b). “Contracting relationship trends and transitions.” J. Manag. Eng., 147–161.
Rowley, T., Behrens, D., and Krackhardt, D. (2000). “Redundant governance structures: An analysis of structural and relational embeddedness in the steel and semiconductor industries.” Strategic Manag. J., 21(3), 369–386.
Rowlinson, S., and Cheung, Y. K. (2008). “Alliancing in Australia -a long term JV.” Clients driving construction innovation: benefiting from innovation, Kerry A. Brown, Keith D. Hampson, S. Peter, and J. Pillay, eds., Icon.Net Pty, Brisbane, Australia.
Starkey, K., Barnatt, C., and Tempest, S. (2000). “Beyond networks and hierarchies: Latent organizations in the UK television industry.” Organ. Sci., 11(3), 299–305.
Sydow, J., and Staber, U. (2002). “The institutional embeddedness of project networks: The case of content production in German television.” Reg. Stud., 36(6), 215–227.
Sydow, J., and Windeler, A. (1998). “Organizing and evaluating inter-firm networks: A structurationist perspective on network processes and effectiveness.” Organ. Sci., 9(3), 265–284.
Tabachnick, B. G., and Fidell, L. S. (1996). Using multivariate statistics, 3rd Ed., HarperCollins, New York.
Unsal, H. I., and Taylor, J. E. (2011). “Modeling interfirm dependency: Game theoretic simulation to examine the holdup problem in project networks.” J. Constr. Eng. Manag., 284–293.
Uzzi, B. (1996). “The sources and consequences of embeddedness for the economic performance of organizations: The network effect.” Am. Sociol. Rev., 61(4), 674–698.
Uzzi, B. (1997). “Social structure and competition in inter-firm networks: The paradox of embeddedness.” Admin. Sci. Q., 42(1), 35–67.
Williamson, O. E. (1975). Markets and hierarchies: Analysis and antitrust implications, Free Press, New York.
Xue, X., Shen, Q., and Ren, Z. (2010). “Critical review of collaborative working in construction projects: Business environment and human behaviours.” J. Manag. Eng., 196–208.
Information & Authors
Information
Published In
Journal of Professional Issues in Engineering Education and Practice
Volume 140 • Issue 1 • January 2014
Copyright
© 2013 American Society of Civil Engineers.
History
Received: Aug 3, 2012
Accepted: May 28, 2013
Published online: May 30, 2013
Published in print: Jan 1, 2014
Discussion open until: Mar 31, 2014
Authors
Metrics & Citations
Metrics
Citations
Download citation
If you have the appropriate software installed, you can download article citation data to the citation manager of your choice. Simply select your manager software from the list below and click Download.