Balancing value creating logics in construction

Abstract

Construction companies apply different logics to create value. Some companies are organized according to one primary logic, while others are based on multiple logics. Different value creating logics have different cost and value drivers according to the type of activities involved and the interdependencies between them. Where multiple logics coexist, the different cost and value drivers may generate tensions. The purpose of the paper is to study how construction companies maintain a balance between multiple logics and how they handle tensions between them through a case study from the Norwegian construction industry. Both project management and supply chain management perspectives have been used to explain construction practice. By applying a ‘value configuration analysis’, it is clear how value creation is achieved in construction practice by balancing the needs of both the project and the supply chain. Both intra‐ and inter‐organizational interactions are vital in creating value across different logics. The contribution of the study lies in applying this framework to the construction area by adding knowledge about the underlying principles of different logics, including the tensions between them. Furthermore, the case study illustrates how these may be handled in order to create value in construction.

Keywords:

• Norway
• value creating logics
• interdependence
• case study
• interaction

Acknowledgements

The authors would like to thank Centre for the construction industry at BI Norwegian School of Management for financing the research and Lars Huemer at BI Norwegian School of Management for useful comments on an earlier version of the paper. We would also like to thank the anonymous reviewers from Construction Management and Economics for their valuable comments.