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Partnering Partnership Contractors
In recent years Partnering as received significant attention within the construction industry because of the purported benefits this approach brings to the parties involved. Furthermore partnering is a means through which the recommendations of the (1998) Egan Report, a client driven, target focused and integrated approach that is based on alliances rather than confrontation. Partnering also is a mechanism through which Best Value may be achieved.
This dissertation focuses on a specific public sector partnering project (the Midlothian New Housing Construction Partnership). The Partnership was initiated by Midlothian Council, during 2003, to carry out £105 million worth of work on a new social housing programme over 5 years. The overall partnership includes client project team, four project management teams alongside Design Teams and Contractors working on individual sites in a collective beneficial manner.
The study designed to provide a narrative account of this stage that explains how partnering was established and developed. Furthermore is to highlight strengths and weaknesses of the Midlothian Partnership compared to suggested practice.
Partnering was investigated by the use of a web-based survey questionnaire method. The Questionnaire design was based on an extensive review of the literature dealing with partnering. The opinions of parties involved were assessed in relation to the success factors, major difficulties and benefits of partnering.
Partnering is acknowledged within the literature reviewed as delivering a number of tangible benefits. This study confirms a number of these assertions since the findings indicate a broad agreement tat both the process and the outcomes of partnered projects are beneficial.
Respondents believe that partnering can bring significant benefits, including fewer adversarial relationships and increased end-customer satisfaction. However, the risks and barriers are real and must be considered. If all parties work together to control risk events and prevent barriers occurring, then partnering projects should succeed. In sum, partnering can and does work, but all project participants must re-think their attitudes and work to make projects more efficient, successful and free of conflict.
BAA - British Airports Authority
BV- Best Value
CBPP- Construction Best Practice Programme
CCT- Compulsory Competitive Tendering
CIB- Construction Industry Board
CII- Construction Industry Institute
CT- Construction Team
ECI- European Construction Institute
EU- European Union
F & CM- Facilities & Construction Manager
GPD- Gross Domestic Product
HFVN- Housing for Varying Needs
HTML- Hyper Text Mark-up Language
IRP- Issue Resolution Protocol
KPIs- Key Performance Indicators
LA- Local Authority
MSc- Master of Science
M4I- Movement of Innovation
MNHCP- Midlothian New Housing Construction Partnership
NAO- National Audit Office
NEC- New Engineering Contract
P21- NHS ProC21ure
PPC- Project Partnering Contract
PPP- Public Private Partnership
UK- United Kingdom
Chapter 1.0 – Introduction
Rationale for the Research
The Construction industry is a very competitive and risky business. It is faced with many problems such as little co-operation, limited trust, and ineffective communication often resulting in an adversarial relationship among all project stakeholders. This type of adversarial relationship is likely to result in construction delays, difficulty in resolving claims, cost over runs, litigation, and a win-lose climate (Moore et al, 1992).
In recent times, there has been a growing awareness that accepting the lowest priced bid does not always provide the best value for money. Over the past decade, partnering as been acknowledged in UK as an innovative and non-adversarial approach to the procurement of construction services in the industry. Successive UK construction industry review reports (namely the Latham Report, 1994; the Egan Report, 1998; NAO Report, 2001) rightly emphasised the importance of the partnering arrangements in order to facilitate team working across contractual boundaries.
The use of partnering is becoming more frequent in UK Public Sector construction projects because of the potential benefits that can be achieved from the effective implementation of the project partnering arrangement. In theory, the benefits Partnering brings to a project are straightforward and simple:
Projects are done on time and within budget;
Problems are pro-actively solved and individuals work together to minimise road blocks;
People walk away from a project feeling great about what they have accomplished;
There are no residual disagreements or litigation claims after project completion.
However, despite this, many organisations are still reluctant to embark on the partnering route or are failing to apply a structured approach to lead to major value enhancements in timelines; quality and lower costs and project partnering is not always successful.
This study examines the strengths and weaknesses of partnering in practice and explores the factors that promote or inhibit the development of partnering relationships.
The partnering approach and process will be examined through a case study of relatively large-scale partnering project currently undertaken by Midlothian Council. This study concentrates upon this particular project because it offers a chance to explore the very different approach used and to investigate partnering benefits; critical success factors; partnering relationship and communication; as well as major difficulties in partnering implementations.
The UK construction industry has attracted a great deal of criticism in recent years for its inability to meet the needs of its clients. Seminal reports by Latham (1994) ad Egan (1998) both identified a pressing need for change. Subsequently, the UK construction industry has embarked on a sustained campaign to overcome its perceived performance problems through a number of initiatives and radically different approaches to the procurement and management of construction projects.
Latham and Egan agendas have concentrated on improving interactions between clients and lead contractors, and in particular the formation of partnerships and strategic alliances (Himes, 1995; Barlow et al, 1997; Crane et al, 19975, Bresnen and Marshall, 1998). Partnering can be regarded as a strategic arrangement whereby a contractor is engaged in a series of projects with the aim of lowering costs and improving efficiency, or can be a short term single project arrangement (Harris and McCaffer, 2001).
Partnerships can operate independently of strategic alliances, where collaborators, having demonstrated, a commitment through previous behavioural attitudes, co-operate and share resources in pursuit of common goals. Thus, each team member is jointly anchored to the process (Walker at al., 2000). Alliances can range in scope from an informal business relationship to a joint venture agreement, the common feature being that collaborators work towards a joint goal.
Partnering represents perhaps the most significant development to date as a means of improving project performance, whilst offering direct benefits to the whole supply chain (Dozzi et al., Larson and Drexler, 1997).
Several other studies indicate that there is a little doubt about the positive aspects of partnering arrangements. Barrick (1998) identifies instances of comparable success: groups such as Esso, Sainsbury's and the British Airports Authority (BAA) are reported to have reached savings of 40% on costs and 70% on time. Other research is similarly optimistic in claiming that there is a desire to move beyond narrow self-interest towards a spirit of co-operation and trust (Wood and McDermott), 1999) and that partnering can indeed lead to benefits for all parties (Hamza et al., 1999).
Lamont (2001) even suggests empowered as a direct result of partnering and thereby work together more effectively. Indeed, as Bresnen and Marshall (2002) observe, the literature is replete with case study examples of successful partnerships. It comes as no surprise, therefore, that a considerable number of clients and contracting organizations are now adopting a partnering strategy within their relationships.
However, there is a less critical analysis of the nature of partnering in practice and whether the claims made for it are consistently justified. Much of the partnering literature tends to concentrate on success stories, which are largely anecdotal and focus on the experiences of exemplar organizations. Dainty et al. (2001) express related concerns in the sub-contract arena pointing to a fundamental mistrust and scepticism within existing supply chain relationships and a need for attitudinal change.
Greenwood (2001) concludes that typical contractor/subcontractor relationships are still cost-driven and potentially adversarial. Similarly, Packham et al (2003) suggest that partnering may not offer many tangible benefits to small construction enterprises and often has a detrimental effect upon the contractor/subcontractor relationship. At the same time, there is also a recognized need for more research into partnering (Bresnen and Marshall, 2000; Lazar, 2000; Li et al., 2000).
The aim of this dissertation is to provide a comprehensive study of construction partnering in general, and to specifically examine in detail a current case study of a major partnering housing project.
The following tasks are identified as specific dissertation objectives:
To review the relevant historic and current literature on partnering theory and practice and in so doing to
To review the relevant historic and current literature on partnering theory and practice and in so doing to
a. Examine the strengths and weaknesses of partnering;
b. Explore the factors that promote or inhibit the implementation of partnering;
c. Determine what barriers exist to the implementation of partnering;
2 To evaluate the Midlothian Council's adoption of partnering and in so doing to
examine the partnering arrangement used by the Council and compare it against best practice;
assess the current state of the project by evaluating the perceptions of the partners involved in the project;
identify the specific concerns, barriers, and other problems limiting its effectiveness and;
Identify the lessons learned so far and the critical factors that facilitate its successful adoption.
The following are the hypothesis, which need to be tested in this dissertation:
Partnering is beneficial to the public sector if the significant barriers can be overcome.
1.5 Research Methodology
The research adopts a combination of literature review, analysis of a case study of a current partnered project and a questionnaire survey. The research methodology has been developed as follows:
The first step of the methodology was to review the recent literature and examine the recent research findings on construction partnering. The information has been extracted from various sources. Published books and research papers have been used to develop the methodology.
Construction Journals, management journals, Government reports, and public releases of information from ongoing or completed partnering related studies have been used to compile information. The review is essential as it allows an overall knowledge and understanding of the subject and facilitates focusing on the aims and objectives of this research.
The second step was to examine and analyse a current case study to investigate the characteristics of both successful and unsuccessful partnering effort. The material for the case study mostly collected from Midlothian Construction Service project files. The partnering data was collected for comparing the partnering approach and processes used against recommended best practice (Identified in the Literature Review).
In order to accomplish the aims and objectives of the research, a questionnaire survey was used as the primary research method. The level of in-depth analysis and flexibility required to complete the study required a combination of qualitative and quantitative research methods.
The questionnaire contained closed and open-ended questions handed to participants involved in the project. This method provides sufficient level of investigation for a construction research and allows research data to be collected quickly, for less cost, it is also suggested that a better rate of return can be achieved (Kate Carter and Chris Fortune 2004), provided that the following considerations were taken into account:
The questions have to be properly designed to ensure all the relevant data required for the research are collected;
The questionnaire has to be tested before being handed to the participants
The opinions of various parties (clients, consultants, and contractors) sought and evaluated in relation to the partnered project to identify success factors, common threads and problem areas. The analysis is then presented in tables, graphics or charts to illustrate the results that obtained from the survey. Then, the research questions are used as the guide to test the hypothesis as well as to conclude the findings by determining the aims and objectives of the research.
Finally, conclusions from the survey and case study, recommendations made where appropriate. The limitation of the research will then be discussed followed by a statement of further possible research suggested by this study.