Contractual governance as a source of institutionalised waste in construction: a review, implications, and road map for future research directions

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Sarhan, S. ORCID: 0000-0002-0105-2350, Pasquire, C. ORCID: 0000-0001-6344-2031, Manu, E. ORCID: 0000-0002-9002-3681 and King, A. ORCID: 0000-0002-6195-687X, 2017. Contractual governance as a source of institutionalised waste in construction: a review, implications, and road map for future research directions. International Journal of Managing Projects in Business, 10 (3), pp. 550-577. ISSN 1753-8378

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Official URL: http://dx.doi.org/10.1108/IJMPB-07-2016-0058

Abstract

Purpose – The construction industry has been subject to substantial criticism for its short term "hit-and-run" relationships which are focused on win-lose situations. Despite the wide recognition of these problems the industry persistently resists the radical demanded of it. Therefore, the main purposes of this study are twofold. First, to investigate why this might be the case by reviewing the governance problem confronting clients and decision makers in construction procurement, as conceptualised in Transaction Cost Economics (TCE). Secondly, to critically
analyse and question the efficiency and effectiveness of various safeguarding approaches, which are taken for granted and commonly practiced in construction, from a lean perspective.
Design/methodology/approach – The analysis of this paper is based on an in-depth critical review of 76 construction
procurement and contractual related articles, ranging from 1994 to 2016, using theories of Lean Construction and Transaction Cost Economics as an analytical lens.
Findings – Findings reveal that clients and decision makers often tend to safeguard their project-specific assets, against opportunism and exploitation, through the deployment of formal contractual arrangements and governance structures. These arrangements and structures typically dominate the management of the project delivery often to the detriment of the project itself; but because there is a belief that interests are safeguarded, clients and decision
makers feel they have taken the best course of action. This goes a long way to explaining the coherence of the current construction model.
Research implications – To the best of the authors' knowledge, this paper is the first to demonstrate the
usefulness of using principles of Lean construction in association with TCE when analysing construction-procurement related issues. In particular, the use of a 'lean' lens helps to expose the impact of procurement governance arrangements on process flow. The study also provides a potential research agenda that can lead to the development of prescriptive conceptual frameworks for causal analysis of institutionalised waste in construction.
Practical implications – The paper attempts to expose to clients and decision makers the amount of waste (and
unnecessary cost) they embed by adhering to prevailing unfit-for-purpose contractual governance approaches. It also helps decision makers to consider alternative procurement
arrangements and organisational techniques that could be of value and support collaborative ways of working.
Originality/value – The study contributes to the overall understanding of waste in construction by providing insight into various imperfect procurement and contractual arrangements, which are taken-for-granted and impede efficiency and improvement efforts in construction. The findings presented provide a theoretical anchor and rationale for developing alternative approaches to the design and delivery of capital projects.

Item Type:

Journal article

Publication Title:

International Journal of Managing Projects in Business

Creators:

Sarhan, S., Pasquire, C., Manu, E. and King, A.

Publisher:

Emerald

Date:

6 June 2017

Volume:

Number: