The hold-up problem in the management of construction projects: A case study of the Channel Tunnel

Chang, Chi Cheng; Ive, Graham J.

doi:10.1016/j.ijproman.2007.01.001

Cited by 70 publications

(66 citation statements)

References 5 publications

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“…The customer-led systems integration as occurred in the major project for the construction of London Heathrow Terminal 5 may lead to a higher probability of major project success due to the deeper involvement of the customer (BAA) and stricter checks and balances. These initial governance decisions may avoid major issues such as the hold-up problem as it happened in the major project of the Channel Tunnel (see, for example, Chang and Ive (2007) and Genus (1997)). Moreover, this is accompanied by the development of project capabilities that may have a significant impact on organisational capabilities, which is briefly reviewed in the following sub-section.…”

Section: Figure 1 -The Integration Of Systemsmentioning

confidence: 99%

Developing Organisational Capabilities through Customer-Led Systems Integration Projects: The Case of the Major Project BT 21st Century Network in the UK

Sato¹

2017

GeP

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Traditional approaches to systems integration in major projects take the strategy of selecting a supplier-led prime/systems integrator. Although this strategy pushes a significant amount of risk to the supplier, project performance may suffer due to lower engagement of the customer in the anticipation of potential issues involving a major project. Thus, this research investigates the implications of the customer, as opposed to a selected external supplier, assuming the role of systems/prime integrator. A case study approach is conducted on the major project BT 21 st Century Network (BT21CN) to demonstrate that customer-led systems integration projects may provide more balance in the relationship and distribution of risks between supplier and customer, having a positive impact on project performance and on accelerating the development of BT's organisational capabilities.Keywords: Customer-Led Systems Integration Projects; Major Projects; Organisational Capabilities; Project Performance; BT 21 st Century Network (BT21CN). DESENVOLVENDO CAPACIDADES ORGANIZACIONAIS ATRAVÉS DE PROJETOS DE INTEGRAÇÃO DE SISTEMAS LIDERADOS PELO CLIENTE: O ESTUDO DE CASO DO PROJETO DE LARGA ESCALA BT 21ST CENTURY NETWORK NO REINO UNIDO RESUMOAbordagens tradicionais para integração de sistemas em projetos de larga escala assumem a estratégia de selecionar um integrador de sistemas liderado por uma empresa fornecedora. Embora esta estratégia transfira uma quantidade significativa de risco para o fornecedor, o desempenho do projeto pode ser prejudicado devido ao baixo engajamento do cliente na antecipação de problemas potenciais envolvendo o projeto de larga escala. Desta forma, esta pesquisa investiga as implicações de quando o cliente, ao invés de o fornecedor externo selecionado, assume o papel de integrador principal de sistemas. Uma abordagem de estudo de caso é conduzida considerando o projeto de larga escala BT 21st Century Network (BT21CN) para demonstrar que projetos de integração de sistemas liderados pelo cliente podem proporcionar maior equilíbrio no relacionamento e distribuição de riscos entre o fornecedor e o cliente, resultando em um impacto positivo no desempenho do projeto e na aceleração do desenvolvimento das capacidades organizacionais da empresa BT.Palavras-chave: Projetos de Integração de Sistemas Liderados pelo Cliente; Projetos de Larga Escala; Capacidades Organizacionais; Desempenho de Projetos; BT 21st Century Network (BT21CN).

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Section: Figure 1 -The Integration Of Systemsmentioning

confidence: 99%

Developing Organisational Capabilities through Customer-Led Systems Integration Projects: The Case of the Major Project BT 21st Century Network in the UK

Sato¹

2017

GeP

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“…First, Graham and I worked closely to develop my doctorate dissertation into journal papers, which came to fruition in two theory papers on the application of transaction cost economics (TCE) methodology to the analysis of procurement system selection (Ive and Chang, 2007;Chang and Ive, 2007b) and a case study paper on the Channel Tunnel project (Chang and Ive, 2007a). Graham deems the paper on the 'principle of inconsistent trinity' (Ive and Chang, 2007) the best scholarly work of his career.…”

Section: From 2001 To Present: School Of Construction and Project Manmentioning

confidence: 99%

A festschrift for Graham Ive

Chang

2015

Construction Management and Economics

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“…Furthermore, various types of asset specificity can lead to costly agency conflicts known as "holdup" (Williamson, 1985), including in construction projects where construction clients become vulnerable at post-contract stage due a change in the initial requirements coupled with an incomplete contract (Chang and Ive, 2007). Thus, according to Esty (2004), by creating an asset-specific governance system, the project finance structure (extensive contracting, concentrated equity and debt ownership, a separate legal entity, and high leverage) can reduce the agency cost between ownership and management, lessen cash flow problems, and avert opportunistic behaviours.…”

Section: Overview Of Project Finance and Project Risk Measurementmentioning

confidence: 99%

Impacts of Construction Events on the Project Equity Value of the Channel Tunnel Project

Park

Chang²

2013

Proceedings of the 20th Annual European Real Estate Society Conference - Vienna, Austria

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With the growing strains on public resources, many governments in recent years have turned to the private sector for infrastructure project financing. The special purpose vehicles (SPVs) taking such project usually has a 2 stage business model: a construction stage followed by an operating stage.However, the project risk in stage 1 is very high, and in most cases, the impacts of specific construction events on project risk and capital cost are unobservable due to lack of informational transparency.Eurotunnel (the Channel Tunnel project) is unique in that the share price data for the entire construction period is publicly available. The goal of this paper is to contribute to the measurement and assessment of project risk by providing empirical data on the impact of various events that occur during the construction phase of the project finance company's life. Using the event study methodology, our study shows that: (1) during the construction stage, efforts to better manage the interests and incentives of contractors produce more significant positive impact from investors than efforts for cost containment; (2) during the construction stage, meeting the project deadline is a higher investor priority than containing construction cost; and (3) once the construction phase is complete, the investors' priority then becomes the overall cost and the impact of construction events on the expected returns from investment. Finally, the level of risk and the potential conflicts of interest that arise during the construction phase of a mega infrastructure project are such that turning to IPOs to provide equity capital may not be appropriate.

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The hold-up problem in the management of construction projects: A case study of the Channel Tunnel

Cited by 70 publications

References 5 publications

Developing Organisational Capabilities through Customer-Led Systems Integration Projects: The Case of the Major Project BT 21st Century Network in the UK

Developing Organisational Capabilities through Customer-Led Systems Integration Projects: The Case of the Major Project BT 21st Century Network in the UK

A festschrift for Graham Ive

Impacts of Construction Events on the Project Equity Value of the Channel Tunnel Project

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