Civil Engineering Reference
In-Depth Information
number of projects, developing ongoing relationships with a number of
suppliers, forming a virtual organisation capable of repeatedly collabo-
rating on different projects for different clients. This may come about
owing to the main contractor's ability to channel work and provide
continuity. At the same time, familiarity with personnel and working
practices can enhance trust between fi rms and produce productivity
gains. However, the relationship remains essentially a set of discrete
transactions and main contractors should still want to market-test their
suppliers to compare prices and ensure competitiveness in the tender
process.
Organisational supply chains in construction can best be described
as a number of transactions between independent fi rms in the supply
chain, and the relationships between the tier 1, tier 2 and tier 3 contrac-
tors are a form of economic game. Cox (2009), for example, distinguishes
between one-off games and repeat games. Most games in construction
are one-off, with neither fi rm expecting to continue the relationship on
completion of the transaction. However, where more work is expected
the transaction can take the form of a repeat game, in which both parties
stand to gain in future transactions, if their relationship is profi table.
Cox also distinguishes the level of involvement fi rms may have with
each other: namely, proactive or reactive, arm's length or collaborative.
In fact, Cox (ibid.) goes on to develop a number of approaches to sourc-
ing suppliers available to tier 1 contractors. These include sourcing from
within the tier 1 contractor itself. However, the main contractor simply
does not often have the in-house capability to undertake the work alone.
A second method involves working closely with a tier 2 supplier, devel-
oping a long-term relationship and commitment, often based on the
need to invest in plant and machinery by both parties to fulfi l the
requirements of a programme. Supply chain management simply takes
this one step further and involves a close working relationship with a
number of tier 2 and even tier 3 suppliers. Although many construction
clients and some developers do not have the skills to organise their
supply chains, supply chain management may be an appropriate approach
in certain circumstances, where the client has a regular fl ow of standard
construction work or where there is a dominant purchaser and the pro-
gramme is on a large scale.
In SCM, clients need to be willing to engage directly with contractors
and specialist fi rms as early as possible. However in traditional contract-
ing, architects and engineers can often form barriers between the client
and the contractor. Therefore, selecting an appropriate procurement
