Strategic Concept of Partnering In Construction Projects
Transcription
Strategic Concept of Partnering In Construction Projects
saqarT velos mecn ierebaTa erovnu li ak ad em iis moam be, t. 9, #1, 2015 BULL ET IN OF THE GEORGIAN NATIONAL ACADEM Y OF SCIENCE S, vols. 9, no. 1, 2015 Civil Strategic Concept of Partnering In Construction Projects Alireza Ghaffari Ph.D in Civil Engineering (Construction Management), University of Pune , Pune , India ABSTRACT- Today’s construction industry businesses are seeking new strategies to reduce the time of the project, to lower the costs of projects to compete in the national and international market, to improve the quality and business performance, and to overcome claims and intractable disputes, which is an essential strategy in the success of the high-risk and competitive business construction companies. Partnering is the only approach to overcome these impediments for achieving business in the competitive environment through a new method in management from the economical view of time, resources and costs by enhancing cooperation of construction engineering projects. The myriad of real-time problems, including cost overruns, delays, excessive and avoidable change orders, and litigation threats and actions, cannot be overcome for any management process except partnering. This paper develops the concept of partnering as a contracting strategy in construction engineering firms over the last 30 years and addresses partnering strategy development, partner selection, contract negotiation, and implementing a partnering agreement. Creativity is a common theme in partnering to encourage innovative work. The essential background highlighted in all sections of this article indicates the importance of partnering on construction engineering firms in the recent 30 years. © 2015 Bull. Georg. Natl.Acad. Sci. Key words: Partnering, Construction industry, companies, strategic, contracts, Construction projects. INTRODUCTION Partnering can be used as a contracting strategy, to strengthen the firm's competitive capabilities, to improve performance, to overcome the barriers, to reduce adversarial relationships, expensive claim and litigation and to encourage innovative work. The needs of changing the construction industry for respond to new thinking and innovative strategies is a necessity issue’s which combined by new modern decisions and investment, changing regulations, new technologies, mergers, foreign competition, and to augment of profit by changing the traditional system to new modern one. The economic factors as inflation raise rate, impelled that construction firms to develop a new strategies for this challenged they have faced, so global competition, increment on cost of product, and product quality are compelling the construction owners to seek efficient method of reducing cost and time for obtaining design and construction services in their projects. So partnering agreement may be provide mutual achievement of profit and success for company and participates by heavily weakening disputes and claims of firms. In 1990s the concept of partnering has emerged to approach to the conducting business to envisage the challenges in economic and technological view in construction industry. Partnering is not a panacea for the ills of the construction industry, if it is improperly applied, either on process or in the wrong situation. A recent study by the CII examined the process and determined that long-term partnering offers major opportunities for the U.S. construction industry. Their study researched six categories of benchmarks, including cost, schedule, safety, quality, claims, and disputes. They compared traditional metrics of the construction industry such as total project cost, schedule changes, lost workdays, rework, number of claims, and job satisfaction. As a rule, the study used discrete metrics to compare project performance. The study compared the results of partnering efforts versus the industry average for all other © 2015 Bull. Georg. Natl. Acad. Sci. Strategic Concept of Partnering In Construction Projects 139 construction. In brief, the CII research team concluded the competitive advantage of partnering is barely tapped at this time (CII 1996). In the project partnering at the end of project the relationship is terminated and another project may be commenced, which was pioneered in the U.S. construction industry during the mid to late 1980s. Partnering is a long-term commitment between two or more organizations for the purpose of achieving specific business objectives by maximizing the effectiveness of each participant’s resources. This requires changing traditional relationships to a shared culture without regard to organizational boundaries. The relationship is based upon trust, dedication to common goals, and an understanding of each other’s individual expectations and values. Expected benefits include improved efficiency and cost-effectiveness increased opportunity for innovation, and the continuous improvement of quality products and services (Construction Industry Institute1991, Hancher 1989). Partnering Paradigms In The Last Three Decades Partnering is a commitment between two or more organizations for the purpose of achieving specific business objectives by maximizing the effectiveness of each participant’s resources. This requires changing traditional relationships to a shared culture without regard to organizational boundaries. This relationship is based on trust, dedication to common goals, and an understanding of each other’s individual expectations and values (Construction Industry Institute 1995). Partnering is a project-focused process that brings together key stakeholders in the project outcome, usually representatives of the project owner, designer and contractor. It seeks to resolve differences, remove roadblocks, and build and develop trust and commitment, a common mission statement, shared goals, interdependence, accountability among team members and problem solving skill (CII Team Building Task Force PTBTF1993). The firms are finding that traditional contracting relationships may be too slow and too expensive and result in too many adversarial relationships to meet the time, cost, and quality constraints in the new environment (Goldbaum1988 ;Hancher 1989). In recent years increased interest in cooperative arrangements, such as partnering, has been noticeable in the construction industry as a means to mitigate escalating conflicts and adversarial relationships in many countries (Bresnen and Marshall 2000; Ng et al. 2002; Chan et al. 2003). The effective management of an alliance can be used to obtain and sustain a competitive advantage in the marketplace (Krippaehne et al. 1992). The information-sharing can provides a better possibility to contribute with improvements. Open books seem to be a factor where openness is particularly called for (Bennett and Jayes, 1998; Kadefors 2002). Partnering will improve performance within the construction industry in terms of quality, cost and duration (Bennett and Jayes, 1998). A straightforward interpretation of partnering in the construction industry is to see the concept as a relational contract, which includes the ingredients of trust and repeated interaction. This comparison has also been made by Chueng et al. (2006). Companies must seek new strategies to lower costs and differentiate themselves to gain competitive advantage (Kearney 1987; Modic 1988).Constructors and engineers are seeking ways to grow and to maintain competitiveness. Formation of alliances between organizations has become a contemporary management strategy that can be used to improve business performance (Lei 1993; Shash 1998). Partnering cannot solve all the problems in the construction industry; it is only a management technique, and its success is totally dependent on the people who drive it (Slater1998). The effective management of an alliance can be used to obtain and sustain a competitive advantage in the marketplace which implicitly influences the application of many CSFs of partnering in construction (Hartington 2003). Transaction cost economics (TCE) is a widely utilized theoretical framework when investigating procurement and inter-organizational relationships in general (Aulakh et al. 1996; Eriksson2006, Eriksson and Laan 2007; Rahman and Kumaraswamy 2002). According to TCE (Transaction cost economics), competitive advantage results from efficient governance of transactions (Williamson 1985). In alliancing, parties contractually commit to their contribution levels and required profit and then place these at risk in undertaking the project. This provides a powerful incentive to achieve project goals (Walker and Hampson 2003). According to TCE (Transaction cost economics), competitive advantage results from efficient governance of transactions, which requires tailoring of procurement procedures to transaction characteristics (Eriksson 2006). The professional debate about partnering approaches, and claimed that previous research remained at a largely prescriptive level, and that empirical evidence concerning partnering in practice had largely been piecemeal and anecdotal( Bresnen and Bull. Georg. Natl. Acad. Sci., vols 9, no. 1, 2015 140 A.Ghaffari Marshall 2000). The mechanism by which the benefits of partnering are actually achieved is still not clear. If the quintessential nature of partnering is understood, it is possible for participants to tailor these principles to meet their own particular requirements (Critchlow 1998). The partnering mechanism will be crucial to tailoring the partnering process for participants on an informed basis as opposed to trial and error, and this requires identification of the important components and processes in partnering (Lazar 1997). Clearly there is a need to identify critical success factors CSFs for partnering and to develop quantifiable models (Li et al. 2000; Lazar 2000). The Chinese industrial culture shares many elements with partnering and the influence of culture on partnering is well accepted, (Rahman and Kumaraswamy 2002). UK main contractors state that several companies had identified; they were adopting, or going to adopt, partnering relationships with their subcontractors in order to improve service and reduce costs (Baxendale and Greaves 1997). Despite the potential benefits to be gained by participants from the implementation of partnering, there are obstacles and barriers to successful partnering (Chan et al. 2003, Larson and Drexler1997, Li and Green 1996, and Ng et al. 2002). The partnering group, with key personnel in the project from both parties and subcontractors, are recommended to meet as soon as possible for the purpose of strengthening the team spirit and getting to know each other (Cheng et al., 2000; Humphreys et al., 2003). Concept of Partnering Partnering, aimed at increasing cooperation and integration between project participants by building trust and commitment and decreasing disputes, can bring about advantages regarding quality, sustainability, dispute resolution, human resource management, innovation, and time and cost reductions (Barlow et al. 1997; Egan 1998 ;Chan et al. 2003). Partnering can be used as a contracting strategy between owners, contractors, and engineering companies to attain mutually desirable goals, to satisfy long-term needs, and to achieve future competitive advantage (Stralkowski et al. 1988). The increased need for cooperation is also derived from increased complexity, uncertainty, and time pressure characterizing construction projects (Anvuur and Kumaraswamy 2007; Eriksson 2008). Since the degree of cooperation and integration among the participants is affected by procurement, many aspects of the traditional procurement procedures need to be changed when implementing partnering (Eriksson and Laan 2007; Eriksson and Pesamaa 2007). If the right people are brought together with an effective organizational process, the barriers to partnering can be removed, and the opportunities can be identified, prioritized, and pursued (Stralkowski et al. 1988). The scope of partnering relationships in industries ranges from informal working arrangements between customers and suppliers to contractual pacts that are legally binding and enforceable (Goldbaum 1988). Alliancing is “where the arrangement is underpinned by an incentive scheme, whereby the rewards of the contractor and, indeed, the owner are linked directly to actual performance during the execution phase of the project (Scott 2001). The benefits produced by partnering as: An improved ability to respond to changing project environment; improved quality and safety; reduced cost and project time; improved profit and value; and more effective utilization of resources( Cowan 1992, Kubal 1994, Li and Green1996, and Mc- George and Palmer 1997 ). Based on a study of 280 construction projects, reported that partnered projects achieved better results than other projects in controlling costs, in technical performance and in satisfying customer expectations (Larson 1995). Some quantitative analysis of improvements to cost and time performance gained via partnering (Weston and Gibson 1993, Pocock et al. 1997, Gransberg et al. 1999, Graijek et al. 2000). Alliancing is “where the arrangement is underpinned by an incentive scheme, whereby the rewards of the contractor and, indeed, the owner are linked directly to actual performance during the execution phase of the project (Scott 2001). Based on the results of 25 alliancing projects the cost of alliancing projects is on average 8.10% lower than the target cost, and the duration of alliancing projects is on average 6.94% less than schedule (ACA 1999, Barlow 2000, Voordijk 2000, Clegg 2001, Ross 2001, Scott 2001, Gallagher 2002). Arizona Department of Transportation the contingency value of partnered projects was only 3% instead of the historical trend of 5%; comparable partnered projects were completed 20% earlier than traditional projects (Warne 1994). Bull. Georg. Natl. Acad. Sci., vols. 9, no. 1, 2015 Strategic Concept of Partnering In Construction Projects 141 Significant Factors of Partnering i. Mutual Objectives The first step of partnering is to develop a partnering charter addressing mutual objectives. Joint goal formulation provides a deeper understanding of the project’s overall goals and the difficulties and possibilities involved in their establishment (Kadefors 2004). In developing the mutual objectives, the share of many common concerns are emerged by partners. This sharing of goals will change the attitude of partners to enable them to think win/win scenario and to consider the interests of others by accepting commitment and equity at the beginning to get common benefits. The factors of mutual objectives, active attitude, commitment, and equity are the precursors necessary for establishing trust between participants. ii. Long-Term Commitment Partnering is a commitment between two or more organizations for the purpose of achieving specific business objectives by maximizing the effectiveness of each participant’s resources. This requires changing traditional relationships to a shared culture without regard to organizational boundaries. This relationship is based on trust, dedication to common goals, and an understanding of each other’s individual expectations and values (Construction Industry Institute 1995). Commitment will provide a synergistic environment that encourages trust and openness and empowers individuals to employ break through thinking in a supportive environment (Morgan and Stundza 1988; Morgan and Dowst 1988; Weimer et al. 1988). A long-term relationship creates an atmosphere that allows companies to achieve competitive advantages by addressing problems in areas that require extensive time to solve or that require constant improvement (Morgan and Dowst 1988). Commitment refers to the willingness of an individual or organization to exert effort (Porter etal.1974). More committed parties are expected to balance the attainment of short-term objectives with long-term goals and achieve both individual and joint missions without raising the fear of opportunistic behavior (Parkhe1993). Partnering is a commitment-intensive process that requires effort from all the parties involved. What it offers is an alternative to the traditionally acrimonious relationship between an owner and a construction contractor (U.S. Department of Interior 1991). Commitment is the most important element in partnering relationship establishment. The partnering companies must commit to a long-term relationship in which each one understands the goals of the others, everyone seek a new ways to assist the partner in achieving its goals and each partner has a clear focus on continuous improvement of the long-term relationship and dedication to common goals. Partnering bring a clear intent between the partners to maintain a functional organization and implies a long-term relationship over many projects. The turnover of manager and supervisory personnel has impacted the schedule, cost, and quality of a project and it is an inevitable in construction industry. The partnering can minimize the turnover supervisory personnel and management as adverse effects on the construction project due to interfaces between the two or more companies compare to single one with single project. Long-term commitment is described as the willingness of the involved parties to integrate continuously to weather unanticipated problems. iii. Trust A successful partnering relationship requires each company to share its strategies and possibly share proprietary or confidential information (Morgan and Stundza 1988). By eliminating adversarial relationships, companies can share information and control to capture seemingly obscure synergies in systemic fashion (Morgan and Stundza 1988). Trust can be defined as the belief that a party is reliable in fulfilling its obligations in an exchange relationship (Pruitt 1981). Mutual trust increase information exchange and joint problem solving and promise better outcomes (Mohr and Spekman 1994). Mutual trust is critical to ‘‘open’’ the boundaries of the relationship as it can relieve stress and enhance adaptability (Williamson 1985). Mutual trust increase information exchange and joint problem solving (Zand 1972). Partnering creates a trust-based environment, thus encouraging project participants to make maximum contributions to achieving the completion of a successful project to the benefit of all (CII 1991; Cowan 1992; Scott 2001) By establishing trust, organizations begin to develop confidence in each other, which gradually influences them to merge their boundaries, and finally trust encourages parties to make their merged Bull. Georg. Natl. Acad. Sci., vols 9, no. 1, 2015 142 A.Ghaffari boundary more permeable, allowing active inter-organizational exchange (Crowley and Karim 1995). Trust and contracting methods are related, and a trust relationship can be the root cause for a significant saving in construction cost (Zaghloul and Hartman 2003). Trust is the pivotal attitudinal factor of partnering.(Cheung et al. 2003). Trust is behavioral or attitudinal in nature (Cheung et al. 2003). If trust is present, people can spontaneously engage in constructive interaction without pondering what hidden motives exchange partners might have, who are formally responsible for problems, or what are the risks in disclosing information (Kadefors 2004). Distinguishing trust-based from reciprocation based relationships: is a partnering relationship always "trust-based," or can it also be held together by a much more fragile bond that mimics trust until the relationship suddenly evaporates (Friedland 1990, Pabre 1994). Further unanticipated deferral of reciprocation or a disproportionately small reciprocal move could easily be interpreted as a breach of the partnering relationship (Friedland 1990). If the primary barrier to partnering in an organization comes from its culture, a long-term program for change may be called for. Culture appears to be hard to change, even in the long term (Denison 1996). Trust is the reliance by one person, group or firm upon a voluntarily accepted duty on the part of another person, group or firm to recognize and protect the rights and interests of all others engaged in a joint endeavor or economic exchange (Hosmer 1995). The partnering companies must trust each other’s by sharing knowledge and information. Trust combine the resources and knowledge of the partners in a new intension to high degree of sharing which required each company to fully understand the scope, expectations, shared confidential information, and range of the involved partnership to eliminate the adversarial relationships. Many researchers have identified that partnering is a trust-based relationship which is critical to maximizing positive economic outcomes indicate that also point out the positive influence of trust is realized through facilitating open communication among participants. Positive attitudes to people are vital to successful communication, as good communication and willing cooperation are merged in each other. Therefore, trust is the basis of open communication among partners as it can be claimed to be the pivotal attitudinal factor which the benefits of partnering are directly depend on it. Management Skill The appropriate management’s skills can convert threats to opportunities suppose effective communication and conflict resolution are conducive to successful partnering. 1. Open Communication in Partnering Open communication refers to the free flow of resources in terms of ideas, knowledge, skills, and technology through different effective channels (Cheng and Li 2001). Partnering provides methods through which it is natural to discuss and share information about new processes, innovations, improvements, and management practices, and thus makes it possible to have a level of information exchange that does not exist traditionally (Ronco 1996). Besides informal oral communication, partnering typically devises procedures for two other kinds of communication: meetings and written communication (Ronco 1996). Because of cultural diversity, they tend to be dominated by their own goals and objectives, which can be conflicting and as a result may cause adversarial relations (Love et al. 1998). The involves formation of effective communication channels, which can be used to motivate partners to jointly participate in planning and goal setting and therefore exert their cooperative efforts to create compatible expectations (Mohr and Spekman 1994) Timely communication and decision-making not only saves money, but also can keep a problem from growing into a dispute (Cowan 1992). To facilitate the exchange of ideas and visions and to overcome to misunderstandings and stimulated mutual trust effective communication skills may used in organizations to improve the relationship in partnering. Partnering workshops are used in construction to motivate partners in an open environment, to ensure constructive discussions. 2. Improved Total Quality Management TQM and partnering share similar elements (Kubal 1994, Carr et al. 1999, Chini and Valdez Bull. Georg. Natl. Acad. Sci., vols. 9, no. 1, 2015 Strategic Concept of Partnering In Construction Projects 143 2003). Partnering is another way of implementing quality management by attempting to improve the communication flow in a project (Chini and Valdez 2003). The role of partnering in enhancing TQM in construction can also be largely attributed to open communication. Open communication enables all participants to be much more integrated, and as a result the barriers to implementation of TQM in construction can be substantially removed, so it is expected that partnering can improve the implementation of TQM in construction. 3. Improve Risk management The added information brought about by partnering can reduce some uncertainties, and therefore can reduce the risks of a project because of the value of the information. This value arises from a change in actions because of the change in understanding after the receipt of the information (Buck 1989). Information that has value reduces lost opportunity (Buck 1989), which illustrates why added information generated from open communication in partnering improves risk management. A very important benefit of added information generated by partnering is the improved risk management in a partnering project. 4. Increased Opportunity of Success Overall, the partnering mechanism model reveals how improvements can be generated by achieving open communication in partnering based on trust relationships between participants. Open communication leads to efficient information circulation which improves the efficiency of the whole construction process, and also helps to bring added information to the construction system. These results would reduce project risks, lower monitoring costs, increased value engineering, and improved implementation of TQM. Incentives can create a more proactive, cooperative relationship between the contracting parties, and reinforce the cultural shift away from the traditional adversarial approach to contracting (Walker and Hampson 2003). Although parties recognize that they share many common objectives, the priorities of each party may still be different. For contractors, the main business objective is ultimately profit. For clients, the project objectives should be an optimum combination of time, cost and quality, which contributes to their business objective, misalignment between the owner and the contractors (Scott 2001). The tendency toward adversarial relationships between organizations in the construction industry is attributed in part to clients placing too much emphasis on the lowest price in awarding contracts and, as a result, some contractors price work unrealistically low and then seek to recoup their profit margins through contract cost variations, e.g., design changes, and other claims leading to disputes and litigation (NAO 2001). Selection on the basis of lowest price places extreme pressure on the bidders to provide a marginally adequate bid to cover the work, with a small margin for contingency and profit, which may result in the situation where contractors feel compelled to find profit in variations and claims (Carr et al. 1999). Use of the gain-share/ pain-share mechanism is one of the fundamentals of equitable relationships among parties, and parties to an agreement should be aligned not only through common goals, but also through shared business interests in the project’s success (ACA 1999). Recognition of the limitations of the structure of traditional delivery systems leads to the introduction of incentives or gain-share/ pain-share mechanisms in alliance (Bower et al. 2002). The discussion of the conceptual partnering model has outlined why partnering can increase the opportunity for a project to succeed through open communication in an environment of trust. Incentives may create strong motivations for participants. Incentives need to exert their influences through facilitating other techniques and are expected to have overall positive impacts on the components of the conceptual partnering model. 5. Conflict Resolution The conflict resolution can be either productive or destructive and largely depends on the manner in which partners resolve conflict (Mohr and Spekman 1994). The success of a construction project depends on a number of variables; one of the key variables is the way the participants to a building project approach the problems and conflicts facing Bull. Georg. Natl. Acad. Sci., vols 9, no. 1, 2015 144 A.Ghaffari the project. They contend that, conflicts create adverse environment in a project, foster distrust, and undermines the cooperative nature of the building process (Diekman, et al 1994). Impediments to successful partnering encountered by participants can be largely due to a lack of understanding of the deeper concepts underlying partnering. There appears to be considerable uncertainty as to how to translate general principles of partnering into any sort of concrete application, and the uncertainty is largely born of the vagueness of the partnering concept, which means many things to many people (Critchlow 1998). Ambrose and Tucker (1999) argue that, the temporary nature of construction projects and their multi-organizational structure make them prone to conflicts. These contentions amount to the assertion that, in a project environment there is a need to acknowledge and plan ahead for conflicts and any subsequent changes arising and to control them. As managers of our individual or corporate duty, we must take advantage of the opportunities uniquely available not only to achieve sensible resolutions of disputes but also to avoid the conflicts in the first place (Your 1991). Yates and Hardcastel (2003) define conflict in the context of the spectrum by linking the terms; “claim”, “dispute” and “conflict”. First, they define claim as “an assertion of a right to money, property, or a remedy, and can be made under the contract itself; for breach of the contract, for breach of duty in common law, or on quasi-contractual basis”. They simply define dispute as unresolved claim. Then they define conflict by combining the definitions of claim and disputes with sociological definitions of conflicts given above by Brown and Marriott (1993) and Fenn et al (1997). A study on causes of conflicts and disputes in the Hong Kong construction industry carried out by Yates and Hardcastle in 2003, revealed a dramatic increase in conflicts and disputes in construction industries of many countries. It was found that, conflicts and disputes led to high attendant cost both in terms of direct and indirect costs (Yates and Hardcastel, 2003). Parties to the conflict may not perceive a potential conflict, or if perceived, the conflict may be resolved before hostilities break out (Vaaland and Häkansson, 2003). Diekmann and Nelson (1985) and Semple (1994), underlined major sources of construction conflicts to be a combination of design errors and scope increases of work. Thamhain and Wilemon in Cheung and Chuah (1999) categorized causes of conflict over the life cycle of a project, conflicting issues are defined as: 1- Project priorities 2- Administrative procedures 3Technical opinions 4- Performance trade-offs 5- Manpower resources 6-Cost 7- Schedules and personality. Blake and Mouton in Cheung and Chuah (1999) identified the five methods of resolving or conflicts as: 1-Collaborating 2Compromising 3-Smoothing 4-Avoiding 5-Forcing. For enhancing cooperation on long-term success adopting more potential resolution techniques such as joint solving problems which is the collective decision for problematic issues. In uncertain condition, joint problem solving strategy is rescue for partnering project by gathering partners to share their tactic and views. 6. Adequate Resources Nevertheless, for enhancing the sharing of resources, mutual interaction should be emphasized (Devlin and Bleackley 1988). The permeable boundaries for flow of appropriate resources from one organization to other were restricted for leakage of sensitive and confidential information (Crowley and Karim 1995). It is not common for an organization to share its resources with other organizations as resources are competitive and scarce. In construction project normally different professional backgrounds such as architects, structural engineers , surveyors and so on with variety of skills and technology used as complementary expertise to improve, enhance and strengthen the competitiveness and construction liability by partnering scenario. It is important to ascertain and use the main shared resources as expertise such as information knowledge, specific skills, technology and capital in partnership. 7. Top Management Support Mutual agreement from senior management of involved parties is important since the goals and objectives projected by each organization should be compatible and aligned with one another (Rai et al. 1996). Top senior management Bull. Georg. Natl. Acad. Sci., vols. 9, no. 1, 2015 Strategic Concept of Partnering In Construction Projects 145 may plan the strategy and direction of business activities, so full support and commitment of his is crucial to initiating and leading a partnering arrangement and vital for success of partnering relationship. 8. Coordination Coordination reflects the expectations of each party from the other parties in fulfilling a set of tasks (Mohr and Spekman 1994). Greater coordination is expected to achieve stability in an uncertain environment (Pfeffer and Salancik 1978) and mutually fulfilled expectations (Frazier et al. 1988). In partnering, all parties of project meet each other before construction begins and agree to specific management procedures for the project. They create team-based approaches, focusing on creating cooperation and developing working relationships. The relationships are carefully built upon the tenets of trust, mutual respect, and integrity (Welch 1996).To attain greater coordination mutual exchange of information between partners to cover their expectations is necessary. The loss of trust and commitment may cause worst situations by poor communication and coordination and often stimulate adversarial relations. 9. Creativity or Innovation Partnering has been acknowledged by many as an innovative approach to the procurement of construction services in the industry. It lowers the risk of cost overruns and delays as a result of better time and cost control over the project (Cowan et al. 1992; Abudayyeh 1994; CII 1996; Thompson and Sanders 1998; Gransberg et al. 1999; Black Bull. Georg. Natl. Acad. Sci., vols 9, no. 1, 2015 146 A.Ghaffari et al. 2000; Li et al. 2001).Partnering increases the opportunity for innovation, especially in the development of value engineering changes and constructability improvement (Abudayyeh 1994; Li et al. 2001). In the third generation of partnering the construction firm should be building virtual organizations with its supply chain to provide a complete service that is efficient, creative, and innovative (Watson 1999). To reduce adversarial relationships and expensive claim and litigation, partnering can be used as panacea in organizations to improve their performance and achievement to grow and expand utility as a strategic issue. Creativity is a common theme in partnering to encourage innovative work. Figure1 illustrate the significant factors of partnering in construction firms. Benefits of Partnering Though the partnering experiment is fairly recent in Caltrans projects, the benefits of such relationships with contractors are being realized. Caltrans' intent is to eventually establish partnering relationships with all its contractors, and to express such interest in every project's special provisions document. This section briefly describes the potential benefits of partnering, to Caltrans, as well as to its contractors (Weston 1993; Cook 1990). I. Mutual Advantage and Opportunity A partnering relationship requires the companies to invest in the relationship the strengths they uniquely possess that can contribute to the success of the partnership and to accept the appropriate risks proportional to their rewards (Goldbaum 1988). Mutual advantage and opportunity is the next important key elements in the partnering relationship. The partnering companies may expect more opportunities and advantages than traditional business commensurate relationships ones. II. Owner Benefits Companies that are strategically aligned are able to assist each other in providing a diversity of talent not usually found in a single company. They can draw upon the resources of each organization to successfully complete a project (Provost and Lipscomb 1989).A partnership provides the owner increased flexibility and responsiveness in terms of the added skills and resources available from the partner. The effective human resource utilization is the most important benefit to owner in providing expertise and required staffs. Additional benefits to the owner by reducing costs associated with constructor or engineer selection, contract administration, mobilization in beginning of a project. The potential benefits to owner are: reduce claims, reduce cost overruns and delays due to schedule control and improve conflict resolution strategies, lower administration costs and it will increased opportunity for innovation. III. Constructor Benefits The benefit of partnering to the constructor or engineering firm is the opportunity to refine and develop new skills in a controlled and low-risk way. This occurs because new methods or approaches may be required to meet owner project requirements. These new skills then become an integral part of the company's total capability (Provost and Lipscomb 1989) Partnering emerge an active functional organization with clear intent and long-term non adversarial relationship, so their revenues become more stable and claim or litigation process may reduced significantly. The benefits to the contractor may define as: to reduce high costs of claims and litigation, to improved productivity, cost and schedule control, to lower risk of cost overruns and delays and to enhance opportunity for innovation. IV. Mutual Benefits The partnering relationship encourages the companies to identify major obstacles to the successful completion of the project and to develop preventive action plans to overcome those obstacles before they impact schedule or cost Bull. Georg. Natl. Acad. Sci., vols. 9, no. 1, 2015 Strategic Concept of Partnering In Construction Projects 147 (Rubin and Lawson 1988). By partnering in the project, team members can work together to achieve the highest level of quality and safety (Provost and Lipscomb 1988). All the potential benefits resulting from partnering relationships, perhaps the one that will have the most impact on the construction industry is improved project quality (Laime 1987). The close team relationship between the owner, constructor, and engineer can provide atmosphere of cooperation and mutual trust, the companies can jointly determine and evaluate approaches to design, to construct the project and environment of better ways of doing business. The partnering agreement allows each firm to use the opportunity of learning and using the other's one. The partnering agreement reduces litigation by neglecting adversarial relationship and make companies to work together to understand the owner's needs and goals for the project. Partnering Strategy In Construction Contracts In the construction industry, U.S. construction companies were losing market share because of increased foreign competition, increased change in customer requirements, and the rapid development of new technologies (Kearney 1987; Morgan and Dowst 1988). American construction companies realized that to succeed in the diverse and complex global marketplace they had to develop new contracting strategies for growth and to maintain the companies' competitive position. Partnering is a direct response to this challenge (Conrads 1983). Partnering can be used as a contracting strategy by companies in the product diversification stage. For example, a company that develops an advanced technology may find that partnering can translate this technology into products faster and more effectively than internally developing the products. The company that developed the technology can partner with firms in industries that have the existing manufacturing and marketing capabilities to use this new technology to produce products specifically needed by that industry (Teece 1988). Partnering needs to be implemented on an ongoing basis so that trust and commitment can be developed and used in learning environment, as trust and commitment could not be developed during a short contract term (Loraine 1994; Munns 1996; Love et al. 1998). Apparently, some other characteristics e.g. mutual trust are critical in establishing interdependence and selfwillingness to work for the long-lasting cohesive relationship. These critical characteristics form the favorable context conducive to partnering success (Abudayyeh 1994). Does the organization want to use partnering as a mechanism to define the relationships between the different parties involved in the construction process in an attempt to reduce or eliminate claims and litigation (Abudayyeh 1994)? The complex relationships (differentiated skills and knowledge of clients/owners, architects, engineers, surveyors, general contractors, subcontractors) exist within project teams that, if not managed effectively, can adversely affect a project’s performance (Walker 1994). Partnering is a co-operative strategy by modifying and supplementing the traditional boundaries that separate organizations in a competitive climate (Walker 1994, Crowley and Karim 1995). A construction project has formed by parties with different skills and knowledge. Partnering can be used to synergies all project parties to openly interact and perform in cohesive atmosphere for their benefits in long-term commitment, mutual trust, and costeffectiveness. Construction industries may use partnering to strengthen their capabilities by providing complementary skills prior to bidding for projects, so partnering can use as contractual requieren. The use of partnering in bidding may stop when the contract is awarded to the organizations undertaking the project. The partnership may be used for exchanging resources as visions, knowledge, skills, experience, information, and ideas, by sharing of these resources the organizations able to improve their competitiveness in the market business. Partnering can develop and extend a single project relationship to long-term cooperation unit. The losing of ability to compete in the global market in the 1980s compelled U.S. construction companies to innovate partnering as an panacea to the loss of competitiveness in global market by enhancing productivity and quality in manufacturing with shortening time of production. Partnering growth research for company defined in, Volume expansion, Geographic expansion, Vertical integration and Product diversification (Chandler 1962). Partnering used by companies to form strategic alliances at each stage of growth to strengthen the competitive position of companies. Partnering can be formed among firms and its customers, suppliers, or even competitors in the direction of the needs of the company. In vertical integration the firm grows by either buying or creating other production or distribution Bull. Georg. Natl. Acad. Sci., vols 9, no. 1, 2015 148 A.Ghaffari functions. Product environment includes the nodes of research, development, design, marketing, manufacturing and distribution. Partnering will be one strategy used to link these nodes to maintain a firm's competitive position or to take advantage of a new business opportunity. Partnering can reduce the time and the cost to link these nodes (Conrads 1983; Teece 1988; Modic 1988) The relationship between business strategies and organizational structures has been the subject of numerous conceptual and empirical studies. In general, research has repeatedly shown that keeping organizational structure in tune with business strategy plays a vital role not only in enterprise effectiveness, but also in enterprise survival and growth (Caves 1980). The changing business environment has forced U.S. companies to adopt partnering as a strategy to maintain markets and competitive advantage (Higgins 1985). The expected result of the relationship is to replace an adversarial atmosphere with one of trust and commitment so that costs can be reduced by solving problems together (Kennedy 1988).The CII (Construction Industry Institute's Partnering Task Force) has identified the most common partnering relationships in use by U.S. companies as: 1Competitor-competitor relationships; 2-Buyer-seller relationships; and 3- Diverse company relationships. U.S. firms are entering to partnering with their customers, suppliers, competitors. The relationship involves the timeliness, self-interest, and mutual dependence of both companies. The agreement is designed with a limited life span and depends on the day-to-day satisfaction of both companies (Teece 1988; Kearney 1987). Measuring Scale of Partnering By determining the appropriate performance measures and relevant measurement parameters, involved parties can communicate to their staff the objectives, priorities, criteria, and values with which they should comply (Alarcon and Serpell 1997). The consequences of partnering are measures of the degree of partnering success (Mohr and Spekman 1994). The performance measures can be subjective or objective. The subjective measures are based on the notion that strategic partnering has to achieve important long-term goals and are assessed individually by appropriate indicators or items with individual perceptual scales such as the Likert scale (Hair et al. 1998). Partnering is said to be satisfactory when the expectations of the involved parties have been attained (Anderson and Narus 1990; Mohr and Spekman 1994). The failure of partnering is attributed to ambiguous goals and poorly coordinated activities (Lynch 1990). Objective measures stem from the belief that success is partly determined by some short-term objectives or so called business performance (Marosszeky and Karim 1997). The criteria of costeffectiveness, quality and schedule, scope of work, profit, and construction process to be attained in a construction project (Alarcon and Serpell 1997, Puddicombe 1997). Barriers to Growth of Partnering Barriers to the growth of partnering should identified on the construction industry and types of partnering relationships are defined, for the construction industry to apply partnering as an alternative contracting strategy, the industry must develop a "partnering process" (Kearney 1987). The process should identify those barriers to partnering that limit its growth and use, which should be removed, plus the process should identify those barriers which should not be removed (Stralkowski et al. 1988). The barriers for growth of partnering may define as the time required developing the partnership, the traditional owner-contractor-engineer relation and cultural corporation. Structuring a partnering relationship can take many months and the arrangement requires a long-term commitment to the partnership (Conrads 1983). Both companies must devote considerable time to establishing procedures for the arrangement and to implementing the arrangement. The companies must assess how they function and how they will change under the partnering agreement (Kearney 1987). In a joint project involving product development and production of entire systems, the partnering relationship may require an agreement approaching a true joint venture. In this situation, the risk to the partner is large because the partner may have to go beyond its own products to coordinate the purchasing and development of components it does not produce (Weimer et al. 1988). It is essential that both partners understand the limits on the process and the restrictions of sharing confidential information (Stralkowski et al. 1988). The time required to select, develop and implement proper partners is important barrier of successful partnering agreement and fundamental factor to the success of the partnership. A successful partnership Bull. Georg. Natl. Acad. Sci., vols. 9, no. 1, 2015 Strategic Concept of Partnering In Construction Projects 149 depends on preserving the autonomy of each participant to foster the strengths that made them attractive partners in the first place. In developing a partnering agreement, some barriers that should be designed into the agreement include barriers that enforce confidentiality, limit dependency, and define ways the companies can use and benefit from jointly developed product or service innovations. Partnering In Government Commitment Partnering seemed to offer the opportunity of harnessing capabilities, talents, and positive energies of both owner and contractor groups and focusing them on mutually agreed-upon goals. It offered the opportunity for all parties to change preconceived attitudes in order for both to win in the long run (Edelman et al. 1991).The nine elements being essential to a successful partnering effort (CII 1995) are: • A formal planning process is in place for partner selection or team building. • A partnering or team-building implementation plan is in place. • The objectives for team building or selecting partners are defined. • There is a formal process for selection of teams and partners. • The partnering or team-building selection process, implementation plan, objectives, etc, are communicated to the organization. • A partnering agreement has been developed and is in place. • A team is established. • A leadership workshop is held along with training sessions. • Partnering or team building takes place on an ongoing basis. a. Benefits of Partnering in Government Contract (Edelman et al. 1991) • Sharing a common set of goals. • Clear expectations shared by each participant. • Trust and confidence amongst the participants. • Commitment by all participants. • Responsibility being recognized and accepted without conflict. • Courage of the participants to be honest and forthright in confronting issues and resolving conflict. • Understanding and respecting the goals of the other stakeholders. • Synergy amongst the team through the collaboration of resources. • Excellence expected from others and delivered in turn. Validation and Assessment of Partnering Projects In order to assess the effects of partnering in a good evaluation fulfilment it should meet the conditions as defined follow: 1) Based on Project Facts The analysed data in the project have to be based on the facts about, primarily cost and quality to find the effects of partnering. The project should be based on objective which contains indicators of cost and quality. In order to qualify a project fact, the indicator has to explicit argument that relates it to cost and quality. 2) Comparative Analysis The partnering outcome in projects needs to be compared with non-partnering projects. It is easy to claim that this is done implicitly by a comparison with the general perception of the construction industry, but to fulfil this condition an explicit reference case is needed. 3) Other Variables Affect Outcomes Construction is a complex field, with many variables data that affect the outcome of a project, therefore it is necessary to control explicitly for other variables. This may be done by multivariate statistical methods or by an analysis of matching pairs. The effects of partnering should meet the aforesaid conditions. Evaluation Process Bull. Georg. Natl. Acad. Sci., vols 9, no. 1, 2015 150 A.Ghaffari a) Surveys This study often conducted by means of questionnaires, and many of the partnering assessments are done by this method. Haksever et al. (2001), Chan et al. (2003), Beach et al. (2005) are based on questionnaires administered to project managers who are asked to choose between printed alternatives on the benefits of partnering. Surveys are convenient when wanting to gather information about people’s opinions regarding a specific issue (Balnaves and Caputi 2001). b) Case Studies The purpose of case studies is not to draw general empirical conclusions (Yin, 2003). Different benefits of partnering have been pointed out, based on case-study methods, (Bresnen and Marshall, 2000, Vassie and Fuller 2003, Bayliss et al. 2004, Chan et al. 2005). These studies are combinations of interviews and questionnaires. The researcher enhances understanding of the project through interviews and observations, often in combination with questionnaires. This strengthens the quality of the data. Most of these studies except Vassie and Fuller, (2003) do not make any comparative analysis of non-partnering projects and fail to satisfy condition two above. Rossi and Wright (1977) studied case studies without a control group to compare with as the weakest form of evaluation. Bresnen and Marshall (2000) include a comparative analysis, but it is based on a maximum variation concerning type and size, which does not fulfil the purpose of controlling for other variables. Criticism has been raised concerning the fact that only positive outcomes of partnering have been reported and that there is a lack of objectivity in some of the case studies (Green, 1999; Bresnen and Marshall, 2000). c) Comparative Studies by observations There are a few studies about partnering effects with a large number of observations. Larson (1995), Ruff et al. (1996) and Gransberg et al. (1999) are to a large extent based on questionnaires with 280, 60 and 400 observations, respectively. Despite the large number of observations, the studies suffer from the same problems as the surveys, in that they focus on the respondents’ perceptions of the effects, and not on real effects based on project facts. The three studies make a distinction between partnering and non-partnering projects, which satisfies condition two for a comparative analysis. However, none of the studies control for other affecting variables. There is also a large bulk of data on outcomes of partnering projects in benchmarking studies. CONCLUSION This paper develops the concept of partnering as a contracting strategy in construction engineering firms over the last 30 years. The author has tried to bring all the 3 decade partnering research work in this paper in a possible manner for use of consultants, owners, and contractors which they form almost 5% to 10% of GDP of all countries, and the work is unique with this vastitude (abroad). The essential background highlighted in all sections of this article indicates the importance of partnering on construction engineering firms in the recent 30 years. The future development of partnering should take place in Asian and African countries which are in infantile stages. The research is based on a survey of three decade research on partnering strategy development in construction contracts, partner selection, contract negotiation, partnering concept, significant factors effecting to partnering, benefits of partnering, measuring scale and barriers of partnering, partnering in government commitment , validation and assessment of partnering. Partnering is the only approach for achieving business in the competitive environment through a new method in management from the economical view of time, resources and costs by enhancing cooperation, especially in the large-scale endeavors of construction engineering projects. The limitations of research are: 1 .Limits on the process and the restrictions of sharing confidential information. 2. Developing a partnering relationship can take many months and the arrangement requires a Bull. Georg. Natl. Acad. Sci., vols. 9, no. 1, 2015 Strategic Concept of Partnering In Construction Projects 151 long-term commitment to the partnership. 3. The time required to select, develop and implement proper partners in successful partnering agreement. Partnering is a high efficient management skill that can bring together key stakeholders in the project outcome, as project owner, designer and contractor. The adversarial (traditional) atmosphere ownerconstructor-engineer relationship can replace by effectively potential partnering agreement, which will foster a team approach to achieve common goals as a main aim of this paper. Due to world critical financial crisis, even in developed countries such as Italy, Greece, or most of EU countries , need of brain storming or knowledge sharing as well as financial sharing are evident, so partnering is most efficient issues to compete in the national and international market in construction industry. Partnering is a strategic alliance of long-term relationship with high structured agreements among companies to cooperate at high degree to achieve their separate but complementary objectives. Construction industries and engineering firms may use partnering as a contracting strategy to enhance their competitiveness, augment product quality and fulfilling the needs of a customer. The adverse atmosphere and strained owner-constructor-engineer relationship has to be replaced by effectively potential partnering agreement which will foster a team approach to achieve common goals. The adverse atmosphere and strained owner-constructor-engineer relationship has to be replaced by effectively potential partnering agreement which will foster a team approach to achieve common goals. In the review of papers published on partnering in several significant construction journals in last 30 years have been carried out from start point of partnering. It can be concluded from this review that success of U.S construction companies to compete in international tenders is due to strong research carried out on partnering in that country. It is felt that there is a need to study about the partnering process for developing Asian country. The performance measures of partnering can be subjective or objective. The subjective measures are based on the achievement of long-term goals by appropriate indicators with individual perceptual scales such as the Likert scale and objective scale, measures business performance. For assessment of the success of partnering, subjective measures such as satisfaction of partners, expectations and compatible goals and for objective measures, cost variation and rejection of work may be used. The evaluation process may be carried out by three methods as: 1. Surveying based on project facts 2.Case studies and 3. Comparative studies by observations. Cost and quality is the most important factors since they create value, while time should be included if it affects the net present value of the project. More observable indicators are often required for measuring scale of successful partnering since comparable data on cost and quality can be hard to find, such indicators are contract flexibility, the amount of additional work and number of disputes occurred. 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