In recent years it has been argued that bundling construction with operation/maintenance can increase profits in the construction sector. This idea is critically evaluated using different theoretical frameworks and the main points are: innovative organizational models only lead to higher profits in the short run, unless the firm can reduce long‐run competition. Many firms should however be able to bundle construction and maintenance. Several arguments have been put forward for the proposition that bundling is more efficient, but none of them are very strong. Knowledge about the construction phase is difficult to transfer also within firms, and it is not clear how a construction firm can build up knowledge of the long‐run effects of different construction alternatives. A long‐run contract for certain services is—just as a construction contract—difficult to write in a way that does not lead to surprises and future problems, so the gain from this perspective is not clear. The initiative for bundling came from the public sector; it was not an innovation from the private sector looking for higher profits. The motives for the public sector seem more related to financing and risk for cost overruns and delays. Taking over risk leads to higher profits, but this is just compensation for the risk and nothing more, if it is a competitive market.Service‐led construction, bundling, PPP, PFI,
The aim of this paper is to argue for a number of statements about what is important for a client to do in order to improve quality in new infrastructure projects, with a focus on procurement and organizational issues. The paper synthesizes theoretical and empirical results concerning organizational performance, especially the role of the client for the quality of a project. The theoretical framework used is contract theory and transaction cost theory, where assumptions about rationality and self-interest are made and where incentive problems, asymmetric information, and moral hazard are central concepts. It is argued that choice of procurement type will not be a crucial factor. There is no procurement method that guarantees a better quality than another. We argue that given the right conditions all procurement methods can give good results, and given the wrong conditions, all of them can lead to low quality. What is crucial is how the client organization manages knowledge and the incentives for the members of the organization. This can be summarized as “organizational culture.” One way to improve knowledge and create incentives is to use independent second opinions in a systematic way.
Abstract:The way in which we plan and produce buildings today will influence our energy consumption in the future. This paper explores how the types of laundry facilities provided in owner-occupied multi-family buildings in Sweden have changed since the 1990s and seeks to draw attention to how this may impact energy consumption for laundry. Three factors are analyzed that influence energy consumption: the number of laundry appliances, energy performance in laundry appliances and user demand for laundry. The results indicate that there has been a change in building practices, from the domination of communal laundry rooms towards in-unit laundry facilities. The findings imply that the changes in provision of laundry facilities increase the number of appliances but do not necessarily increase energy consumption during the usage phase depending on energy performance and user behavior. Thus, developers should consider laundry facility organization when designing multi-family buildings in order to optimize the use of space and resources, given user demand and building regulations. This paper is exploratory in nature and indicates a shift in building practices that up until now has been undocumented in a research context which in turn opens up for many new research questions related to resource use but also related to the economics of developers, housing firms and households.
This benchmarking study compares how railway investments are procured in five European countries: Sweden, Norway, Germany, the Netherlands, and the UK. In total, 19 procurement managers and project managers were interviewed. This study compares the national rail clients’ procurement strategies regarding: delivery system, reward system, contractor selection, and collaboration model. Historically, these clients have used in-house production. The first step towards a gradually increased usage of the market was to outsource the construction activities while keeping the design and development competence in-house. All five countries have mainly used Design-Bid-Build contracts in their initial outsourcing. However, the last few years there is a discernible trend in Sweden, Norway, the Netherlands and the UK towards allocating more design and development responsibilities to contractors (i.e. Design-Build contracts) and increasing the strategic focus on cooperation. The UK and the Netherlands are forerunners in this trend that can be viewed as a third step in the transition towards a market oriented railway sector. Norway and Sweden is in the middle of this transition, whereas Germany has not initiated this change. The transition towards a gradually increased usage of the market has two main dimensions; degree of cooperation and degree of contractor freedom, which differs among the countries. The UK and Sweden focus on increasing both these dimensions, while The Netherlands and Norway mostly focus on increasing the degree of contractor freedom. Germany still limits both dimensions by performing design and development in-house and letting contractors compete for construction work in Design-Bid-Build contracts. Due to historical and cultural reasons, Deutsche Bahn in Germany is very hesitant to engage in collaboration with external suppliers; focusing on competition is considered more appropriate and less controversial.
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