Eriksson notes that there is not a generally accepted definition for the concept of partnering and there is an inadequate understanding of when and how to implement it. This has negative consequences for both practice and research. Based on a thorough literature review and a multiple case study of four partnering projects in Sweden, Eriksson develops a definition of partnering, which addresses the importance of balancing competition and cooperation (for which the term ‘coopetition’ has been coined) in buyer‐supplier relationships. He defines partnering as a cooperative governance form that is based on core and optional cooperative procurement procedures to such an extent that cooperation‐based coopetition is facilitated. As complexity, customization, uncertainty, duration (project size), and time pressure increases from low to high levels, the governance form should focus more on cooperation and less on competition. The empirical data also provides practical illustrations of how the implementation of the identified core and optional cooperative procurement procedures can be managed.
Balatbat, Lin and Carmichael assess the financial and market performance of publicly listed construction companies in Australia over a ten‐year period, 1998 to 2007. The authors question the generalizations in the construction economics literature that the construction industry produces long‐term, low and constant rates of return, making these companies unattractive to institutional investors and undermining its ability to access capital from the public equity market. Using a sample of companies engaged in building and civil infrastructure, the authors perform a comprehensive assessment of the share market returns and financial and profitability ratios of this sector. They find a strong and stable financial and market performance that is comparable with the largest traded shares in the Australian Securities Exchange. There is evidence that this sector is resilient, experiencing growth despite poor economic conditions. The results are encouraging to investors in this sector, providing managers with the confidence to raise funds from the public equity market.
Li and Liu employ the Malmquist index method with a novel decomposition technique for obtaining economically meaningful sources of productivity changes with best practice production technologies in the construction industry. The authors estimate total factor productivity performances and analyse the factors affecting the technological progress. In addition, based on temporal and spatial comparisons, the analysis for the construction productivity reveals a slow growth without the stability and continuity. The authors argue that their proposals and recommendations may be useful to deciders and policy‐makers seeking to improve productivity performance.
Huang and Lin use an option‐based approach to study the impact of debt structure on the risk of contractor default. The authors highlight the importance of debt structure in contractor financial planning. Shorter‐term debt maturities match construction company assets that are composed primarily of current assets, but the resulting shorter‐term debt structures are prone to higher default risk. To test how shorter‐term debt structures affect contractor default risk, a maximum likelihood estimation method is used, derived from down‐and‐out call (DOC) option theory. Based on the historical debt data of public construction firms in Taiwan, construction firms whose average debt maturity is less than three years would tend to default even when their net worth is positive, which is evidence of higher default risk. To mitigate the risk, more conservative debt structures are recommended that rely more on long‐term debts in contractor financial planning. Regression analysis shows that the DOC approach fails to capture the impact of asset quality and thus tends to overestimate contractor default risk. Caution is thus required in the use of the DOC approach in contractor default prediction.
Chiang and Cheng examine the shortage of construction loans and its implications on industry development, focusing on building contractors in Hong Kong. Being typically small private firms, building contractors have generally resorted to bank loans as their major, if not only, source of external finance. However, building and construction loans represent a tiny proportion of all bank loans in Hong Kong, which is an international banking centre. The authors pose several questions: Why are loans so inaccessible to buildings contractors? What are the consequences for the contractors themselves and the industry at large? A questionnaire survey was conducted to solicit contractors’ perceptions on their financing decisions as well as relationships with their lenders. Follow‐up interviews were conducted with a group of senior executives to explore the rationale of the survey results. The empirical results were then triangulated with secondary data. While contractors’ borrowing is constrained by their lack of collateral assets, the provision of interim payments has enabled them to work with small capital outlay. However, this project financing mechanism has also perpetuated a low barrier to entry, and consequently intense rivalry between firms as well as stagnation of innovation. The authors offer a financial perspective to explain why the building industry has evolved to what it is today but seemingly no further, despite repeated calls for industry reform.
Jones, Shan and Goodrum investigate the differences of corporate approaches to sustainability among contractors, designers, and owners in the US engineering and construction industry. Contractors, designers, and owners often prioritize the three major pillars of sustainability (environmental, economical, and societal) differently and this misalignment of objectives between the different parties can lead to differing expectations and objectives with industry sustainability efforts. The authors randomly sampled 300 construction related companies’ annual reports and mission/vision/value statements, performed content analyses on these documents, and identified the disconnections over the major pillars of sustainability emphasized by the different parties. Their results can be used by each party as a reference to recognize the specific incongruence with other parties, allowing earlier communication and negotiation to avoid the misalignment of the sustainability objectives.
Lehtonen and Kiiras develop cost models for underpinning projects. They argue that remedial underpinning has expanded significantly over two decades worldwide, and that many new methods have been developed, including micropiles and jet grouting. However, in underpinning, only retrospective analysis of costs (empirical price‐per‐square metre prices, including large variance and poor accuracy) has been available for the owner’s decision process. In order to develop tools for pre‐tender cost estimating and for comparison of different design solutions and evaluation of tenders of the underpinning project, Lehtonen and Kiiras have developed two costing models. The most detailed model includes an assessment based on the design solution, including known pile types and the load transfer classification. They suggest that underpinning costs can be assessed accurately after the key design solutions of the project become available.
Bowen, Cattell, Edwards and Marks explore the nature of HIV/AIDS policies and treatment programmes in a sample of Western Cape construction firms. They argue that the construction industry has been identified as performing comparatively poorly with regard to the implementation of firm‐based awareness, and care, support and treatment programmes. Their web‐based survey revealed, however, that opinions on the perceived long‐term threat of HIV/AIDS to the construction industry are divided. Whilst the existence of awareness policies within firms is widespread, firm‐based prevention and treatment policies are less pervasive with less than a quarter of firms report offering treatment programmes. Reasons given for not implementing firm‐based treatment programmes are insufficient resources, avoiding the further stigmatisation of HIV+ staff, not being able to guarantee the confidentiality and anonymity of employees, the perception that HIV/AIDS has little economic effect on the company, low take‐up rates by employees, and a view within firms that the need does not exist. Most firms surveyed, whether running firm‐based treatment programmes or not, do not see such interventions as being financially viable.
In the continuing effort to reduce the incidence of accidents in the construction industry, increasing attention is being paid to the role of design and the possibility of being able to remove errors from the outset. Some forms of procurement provide greater opportunities for doing this than others. Atkinson and Westall examine the extent to which integrated design/construction procurement performs better than more fragmented types. Using a sample of 55 major projects within one large UK construction company, statistical tests showed little significance when integration and safety scores were compared. However, a follow up interview study indicated that there was a link between integration and safety and provided some clear reasons for this. Integrated working produces better communications and a more positive relationship allowing the designers to pro‐actively design for safety in cooperation with construction personnel. Integrated working does not, however, guarantee safer design and further work is needed in relation to all procurement types. In view of the unreliability of statistics in safety studies, further work should also use a combination of qualitative and quantitative methods, both to overcome this problem, but also to better illustrate cause.