Towards a social network theory of project governance

Abstract

The findings of a study are presented using social network analysis in an innovative application involving the analysis of construction project governance. The rationale supporting the application of social network analysis (SNA) within the construction project coalition context was published by this author in a previous paper in this journal. The rationale is summarised in order to explore a very specific framework for the examination of the governance of construction coalitions. The significance of the analytical approach proposed relates to the weakness in existing analytical methods, particularly in relation to changes in approach to procurement following the publication of the Latham and Egan reports.

The research framework relates to the key functions of the coalitions to SNA. Within the framework of these key functions, network density and actor point centrality data are gathered using a form of linear responsibility analysis chart adapted to assemble network data in node list form for input in UCINET 6, SNA analysis and visualisation software. Analysis of the directional, non‐trivial, valued and multivariate network data reveals that the study of comparative network density and project actor related point centrality is effective in providing an understanding of a number of characteristics of new procurement. Specifically, we can study and evaluate quantitatively, possibly for the first time: use and relevance of financial incentives in the governance of projects; emergent and redundant project actor roles; movement away from traditional independent financial management roles within projects adopting a supply chain management (SCM) approach; alternative candidates for the role of manager of the supply chain and their relative levels of engagement and effectiveness; the effects that the use of clusters and SCM have upon post‐contract production activities; the effects that partnering arrangements and standardisation of design have upon transaction costs during the production phase; the effects on project governance of a reduced reliance on contract for project governance; and characteristics of the relatively new role of cluster leader. The results of the research are presented here principally in tabulated form and involve network density values for contractual, performance incentive and information exchange networks. Centrality values relate to the prominence of the key project actors within the three main types of network identified above.

Keywords:

• Governance
• procurement
• project management
• social network analysis (SNA)
• intra‐coalition networks

Acknowledgements

The financial support of the Royal Institution of Chartered Surveyors Education Trust and London South Bank University are gratefully acknowledged. A large number of very busy project team members also gave of their time willingly. Thanks also to Dr Hedley Smyth from the Bartlett School, University College London, for his comments on the draft paper.

Notes

1. New procurement refers to procurement methods involving partnering, supply chain management and the use of work or technology clusters. For a more detailed discussion of the features of these procurement strategies, refer to Pryke (2002).

2. The identification and classification of control projects, and those representing what has been classified as new procurement, is problematic and imperfect. The control projects were selected on the basis that they appeared to exhibit none of the features or characteristics of new procurement as defined in note 1 above. The schemes representing new procurement were selected on the following basis:

	The Slough project represented the systems used by one of the UK's largest property developers. The manager of the building division at the time was a contributor to both Latham and Egan reports, as well as a number of influential industry bodies.
	The Aldershot project was chosen after having some difficulty in locating an example of new procurement in the public sector. The project comprised a Prime Contracting project put forward as a Demonstration Project.

3. Clearly, from a methodological point of view, we would seek four projects identical in all aspects apart from the variables forming the basis of the data analysis. This is not practicable; most construction projects are unique apart perhaps from housing projects, where repetition of design, though not overall project design parameters, is commonplace. Housing projects could not provide useful suitable projects for the studying of innovative procurement and project management techniques. The characterisation of particular procurement routes is, in itself, problematic. There is some discussion of this point in Green (1999, pp. 133–37).

4. The term ‘sociogram’ is used throughout since it is the most commonly used term to describe ‘spider diagrams’ relating to social networks. Some may feel that the term ‘graph’ would be more appropriate to describe diagrams relating to relationships other than those involving social relationships. Hence contractual relationships between firms might be more correctly depicted by ‘graphs’.

5. At this point we have another conceptual bridge to cross; it relates to the relevance of the chosen measure of centrality (degree) to the analysis of networks relating to networks of contractual relationships. The choice of degree centrality is rationalised above in a context of human communication networks. It also suggested that the centrality values generated by the construction project case studies would provide a measure of power within the networks. This was based upon the evidence of those who have correlated influence and power in small decision‐making groups with communication network centrality. It is argued here that although the concept of power may be an issue (see the work of Cox and Townsend, 1998) it is not essential to this case study. We are seeking to map changing patterns of influence within a given network; it is therefore proposed that the same formula for centrality be applied to all network calculations to provide a consistent and comparable measure of centrality across a number of different types of project network. It is, however, accepted that the justification of centrality measure was based upon criteria that related to communication networks alone. It is suggested that those who have referred to the importance of power in procurement routes might be persuaded that it is in fact centrality (as distinct from power) that is important for the reasons given above.

6. It is interesting to note that the clients for both the Essex and Uxbridge projects were located in the same buildings as their respective project managers and within a short walk of the construction site. The centrality of the client in the respective specification information exchange networks represented the minimum and maximum values compared to the other case studies. We might conclude that physical location is not a function of centrality, within this context.

7. This is because the incentivisation of the contractor, by the client, to complete the works within a given lump sum, effectively diverts responsibility for management of the client's budget to the contractor, rather than the client's quantity surveyor (PQS). The contractor's staff have higher levels of connectivity in information exchange networks than the consultant (client's) QS and are able to more effectively manage client costs.

8.  For evidence relating to this assertion, see density figures for contract and performance incentives in table 3. The figures are relatively low, being 44% of the highest value in the sample contract and 9.4% of the highest value in the sample for performance incentives. In addition, figure 1 illustrates the point about performance incentives (or the lack of their use in this case) for the Slough project.

9.  This refers to a strong correlation between the centrality values for contract, performance incentives and information exchanges, for a given actor in a given network.

10. This was in a mood of optimism about massive future workloads through Prime Contracting following the completion of this pilot study.