Developing a Quality Culture — Project Alliancing Versus Bussiness‐as‐Usual

Keniger, Michael; Walker, Derek H.T.

doi:10.1002/9780470690635.ch8

Cited by 3 publications

(1 citation statement)

References 6 publications

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“…Lahdenperä, 2012), and especially, in alliancing (cf. Department of Infrastructure and Transport, 2011;Keniger and Walker, 2003;Alliance Executive Team, 2013;Morwood et al, 2008) which applies the said principles and is likely to offer a primary field of application.…”

Section: Practicalities and Extrinsic Design Criteriamentioning

confidence: 99%

Preparing a framework for two-stage target-cost arrangement formulation

Lahdenperä

2016

International Journal of Managing Projects in Business

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Purpose – Early involvement of the project team with the construction resources seems to be gaining popularity as it aims to improve the cost efficiency of a project as there is significantly more potential to influence the project solution at that point in time. The missing price during early involvement/selection and the principal-agent setting, however, tend to leave the project owner in doubt of the reasonableness of pricing when it is fixed only later after the joint design phase involving the service provider and the owner. The purpose of this paper is to find a solution for this challenge. Design/methodology/approach – A two-stage target-cost (2STC) arrangement has been proposed as the solution. In this model the service provider earns a bonus by suggesting a lower target cost than the reference set at the time of the involvement of the provider. The amount of bonus also impacts the cost over-run risk transferred to the service provider to avoid overly optimistic promises. The proposition encompassed just the basic idea, and did not really delve into actual model formulations and their functioning under practical realities. Therefore, the required work is presented here in the form of a conceptual, discursive study focusing on relevant theories and empirical findings from major investment projects. Findings – The study produces a requirement framework for the 2STC model to allow functioning models to be formulated and tested. The framework incorporates numerous requirements, constraints and a suggested path forward. For instance, while the model may not be manipulatable, it must incentivise the service provider to seek more cost-effective project solutions, be feasible also from the view of the project owner and adapt to various project risk profiles and ranges of efficiency improvements. Research limitations/implications – The study suggests more concrete model formulations to be provided under the guidance of the presented framework. Originality/value – The 2STC model is a unique concept and no comparable construct is known to exist. Besides the requirement framework, the study also strengthens the foundation of and need for the 2STC model by a thorough survey of its theoretical linkages. Accordingly, the study presented in this paper forms the second stage in the overall 2STC development process focused on benefiting project owners and the industry.

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Section: Practicalities and Extrinsic Design Criteriamentioning

confidence: 99%

Preparing a framework for two-stage target-cost arrangement formulation

Lahdenperä

2016

International Journal of Managing Projects in Business

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Quality management in construction: an innovative advance using project alliancing in Australia

Walker

Keniger

2002

The TQM Magazine

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This paper presents an account of the quality management system designed and adopted using a project alliance approach on the National Museum of Australia project. We discuss the integration of the selection criteria and performance measures and how these were used to provided a risk and reward structure that provided the incentive for a high level of achievement of the projects' goals. Interestingly, the organisational structure of the project alliance provided a cross-team relationship outcome that sealed the quality culture observed on this project. This culture drove high levels of quality and was also observed to appeal to intrinsic motivation to deliver best-for-project outcomes.

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Maintaining Relationship Based Procurement

Davis

2012

CEB

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Alliance and relationship projects are increasing in number and represent a large pool of work. To be successful relationship style contracts depend on soft-dollar factors, particularly the participants' ability to work together within an agreed framework, generally they are not based on low bid tendering. Participants should be prepared to do business in an open environment based on trust and mutually agreed governance. The research evaluates relationship maintenance in the implementation phase of construction alliances -a particular derivative of relationship style contracts. To determine the factors that contribute to relationship maintenance forty-nine experienced Australian alliance project managers were interviewed. The main findings were; the development of relationships early in the project form building blocks of success from which relationships are maintained and project value added; quality facilitation plays an important part in relationship maintenance and a hybrid organisation created as a result of alliance development overcomes destructive organisational boundaries. Relationship maintenance is integral to alliance project control and failure to formalise it and pay attention to process and past outcomes will undermine an alliance project's potential for success. (Kubal 1994;Allen 1995;Pascale and Sanders 1997;Boyd and Browning 1998). Contemporary research on relationship procurement suggests a focus on win-win solutions, that drive the team toward collaboration rather than adversarial behaviours and a view toward shared and mutually agreed goals that provides underpinning synergies. These terms, whilst not explicit in contract documents developed for alliance projects for example, do form an implicit underpinning theme (Hollingsworth 1988;Hutchinson and Gallagher 2003). Benchmark documents that have captured a change in contracting strategies advocate the use of relationship type strategies (Latham 1994;Egan 1998). These documents, when compared with more recent texts that discuss relationship based procurement, show where enhanced value is provided to project participants in a RC environment (Keniger and Walker 2003). The third factor for a successful alliance is risk allocation and allotted commercial incentives (Scott 1993;Fellows 1998;KPMG Legal 1998). By cooperating, the participants aim to reduce overall project costs, share project risk and reward and increase mutual profits (Allen 1995;Das and Teng 1998;KPMG Legal 1998;Hutchinson and Gallagher 2003;Ross 2003;. Research and practice has shown that relationship style projects are not based on low-bid tendering. Awkward issues such as price and change to the scope are accounted for by participants at the earliest opportunity (Kubal 1994;Allen 1995;Pascale and Sanders 1997;KPMG Legal 1998;Walker, Hampson et al. 2000).These three factors are founded on; trust, cooperative rather than adversarial relationships, collaboration rather than competition, problem solving and innovation rather than sanctions or

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Developing a Quality Culture — Project Alliancing Versus Bussiness‐as‐Usual

Cited by 3 publications

References 6 publications

Preparing a framework for two-stage target-cost arrangement formulation

Preparing a framework for two-stage target-cost arrangement formulation

Quality management in construction: an innovative advance using project alliancing in Australia

Maintaining Relationship Based Procurement

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