1. business and industrial
2. construction

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t. 9, #1, 2015
BULL ET IN OF THE GEORGIAN NATIONAL ACADEM Y OF SCIENCE S, vols. 9, no. 1, 2015
Civil
Strategic Concept of Partnering In Construction Projects
Alireza Ghaffari
Ph.D in Civil Engineering (Construction Management), University of Pune , Pune , India
ABSTRACT- Today’s construction industry businesses are seeking new strategies to reduce the time of
the project, to lower the costs of projects to compete in the national and international market, to improve
the quality and business performance, and to overcome claims and intractable disputes, which is an
essential strategy in the success of the high-risk and competitive business construction companies.
Partnering is the only approach to overcome these impediments for achieving business in the competitive
environment through a new method in management from the economical view of time, resources and costs
by enhancing cooperation of construction engineering projects. The myriad of real-time problems,
including cost overruns, delays, excessive and avoidable change orders, and litigation threats and actions,
cannot be overcome for any management process except partnering. This paper develops the concept of
partnering as a contracting strategy in construction engineering firms over the last 30 years and addresses
partnering strategy development, partner selection, contract negotiation, and implementing a partnering
agreement. Creativity is a common theme in partnering to encourage innovative work. The essential
background highlighted in all sections of this article indicates the importance of partnering on construction
engineering firms in the recent 30 years. © 2015 Bull. Georg. Natl.Acad. Sci.
Key words: Partnering, Construction industry, companies, strategic, contracts, Construction projects.
INTRODUCTION
Partnering can be used as a contracting strategy, to strengthen the firm's competitive capabilities, to improve
performance, to overcome the barriers, to reduce adversarial relationships, expensive claim and litigation and to
encourage innovative work. The needs of changing the construction industry for respond to new thinking and
innovative strategies is a necessity issue’s which combined by new modern decisions and investment, changing
regulations, new technologies, mergers, foreign competition, and to augment of profit by changing the traditional
system to new modern one. The economic factors as inflation raise rate, impelled that construction firms to develop
a new strategies for this challenged they have faced, so global competition, increment on cost of product, and
product quality are compelling the construction owners to seek efficient method of reducing cost and time for
obtaining design and construction services in their projects. So partnering agreement may be provide mutual
achievement of profit and success for company and participates by heavily weakening disputes and claims of firms.
In 1990s the concept of partnering has emerged to approach to the conducting business to envisage the challenges in
economic and technological view in construction industry. Partnering is not a panacea for the ills of the construction
industry, if it is improperly applied, either on process or in the wrong situation. A recent study by the CII examined
the process and determined that long-term partnering offers major opportunities for the U.S. construction industry.
Their study researched six categories of benchmarks, including cost, schedule, safety, quality, claims, and disputes.
They compared traditional metrics of the construction industry such as total project cost, schedule changes, lost
workdays, rework, number of claims, and job satisfaction. As a rule, the study used discrete metrics to compare
project performance. The study compared the results of partnering efforts versus the industry average for all other
© 2015 Bull. Georg. Natl. Acad. Sci.
Strategic Concept of Partnering In Construction Projects
139
construction. In brief, the CII research team concluded the competitive advantage of partnering is barely tapped at
this time (CII 1996). In the project partnering at the end of project the relationship is terminated and another project
may be commenced, which was pioneered in the U.S. construction industry during the mid to late 1980s. Partnering
is a long-term commitment between two or more organizations for the purpose of achieving specific business
objectives by maximizing the effectiveness of each participant’s resources. This requires changing traditional
relationships to a shared culture without regard to organizational boundaries. The relationship is based upon trust,
dedication to common goals, and an understanding of each other’s individual expectations and values. Expected
benefits include improved efficiency and cost-effectiveness increased opportunity for innovation, and the continuous
improvement of quality products and services (Construction Industry Institute1991, Hancher 1989).
Partnering Paradigms In The Last Three Decades
Partnering is a commitment between two or more organizations for the purpose of achieving
specific business objectives by maximizing the effectiveness of each participant’s resources. This requires changing
traditional relationships to a shared culture without regard to organizational boundaries. This relationship is based on
trust, dedication to common goals, and an understanding of each other’s individual expectations and values
(Construction Industry Institute 1995). Partnering is a project-focused process that brings together key stakeholders
in the project outcome, usually representatives of the project owner, designer and contractor. It seeks to resolve
differences, remove roadblocks, and build and develop trust and commitment, a common mission statement, shared
goals, interdependence, accountability among team members and problem solving skill (CII Team Building Task
Force PTBTF1993). The firms are finding that traditional contracting relationships may be too slow and too
expensive and result in too many adversarial relationships to meet the time, cost, and quality constraints in the new
environment (Goldbaum1988 ;Hancher 1989). In recent years increased interest in cooperative arrangements, such
as partnering, has been noticeable in the construction industry as a means to mitigate escalating conflicts and
adversarial relationships in many countries (Bresnen and Marshall 2000; Ng et al. 2002; Chan et al. 2003). The
effective management of an alliance can be used to obtain and sustain a competitive advantage in the marketplace
(Krippaehne et al. 1992). The information-sharing can provides a better possibility to contribute with improvements.
Open books seem to be a factor where openness is particularly called for (Bennett and Jayes, 1998; Kadefors 2002).
Partnering will improve performance within the construction industry in terms of quality, cost and duration (Bennett
and Jayes, 1998). A straightforward interpretation of partnering in the construction industry is to see the concept as a
relational contract, which includes the ingredients of trust and repeated interaction. This comparison has also been
made by Chueng et al. (2006). Companies must seek new strategies to lower costs and differentiate themselves to
gain competitive advantage (Kearney 1987; Modic 1988).Constructors and engineers are seeking ways to grow and
to maintain competitiveness. Formation of alliances between organizations has become a contemporary management
strategy that can be used to improve business performance (Lei 1993; Shash 1998). Partnering cannot solve all the
problems in the construction industry; it is only a management technique, and its success is totally dependent on the
people who drive it (Slater1998). The effective management of an alliance can be used to obtain and sustain a
competitive advantage in the marketplace which implicitly influences the application of many CSFs of partnering in
construction (Hartington 2003). Transaction cost economics (TCE) is a widely utilized theoretical framework when
investigating procurement and inter-organizational relationships in general (Aulakh et al. 1996; Eriksson2006,
Eriksson and Laan 2007; Rahman and Kumaraswamy 2002). According to TCE (Transaction cost economics),
competitive advantage results from efficient governance of transactions (Williamson 1985). In alliancing, parties
contractually commit to their contribution levels and required profit and then place these at risk in undertaking the
project. This provides a powerful incentive to achieve project goals (Walker and Hampson 2003). According to TCE
(Transaction cost economics), competitive advantage results from efficient governance of transactions, which
requires tailoring of procurement procedures to transaction characteristics (Eriksson 2006). The professional debate
about partnering approaches, and claimed that previous research remained at a largely prescriptive level, and that
empirical evidence concerning partnering in practice had largely been piecemeal and anecdotal( Bresnen and
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A.Ghaffari
Marshall 2000). The mechanism by which the benefits of partnering are actually achieved is still not clear. If the
quintessential nature of partnering is understood, it is possible for participants to tailor these principles to meet their
own particular requirements (Critchlow 1998). The partnering mechanism will be crucial to tailoring the partnering
process for participants on an informed basis as opposed to trial and error, and this requires identification of the
important components and processes in partnering (Lazar 1997). Clearly there is a need to identify critical success
factors CSFs for partnering and to develop quantifiable models (Li et al. 2000; Lazar 2000). The Chinese industrial
culture shares many elements with partnering and the influence of culture on partnering is well accepted, (Rahman
and Kumaraswamy 2002). UK main contractors state that several companies had identified; they were adopting, or
going to adopt, partnering relationships with their subcontractors in order to improve service and reduce costs
(Baxendale and Greaves 1997). Despite the potential benefits to be
gained by
participants from the implementation of partnering, there are obstacles and barriers to successful partnering (Chan et
al. 2003, Larson and Drexler1997, Li and Green 1996, and Ng et al. 2002). The partnering group, with key
personnel in the project from both parties and subcontractors, are recommended to meet as soon as possible for the
purpose of strengthening the team spirit and getting to know each other (Cheng et al., 2000; Humphreys et al.,
2003).
Concept of Partnering
Partnering, aimed at increasing cooperation and integration between project participants by building trust and
commitment and decreasing disputes, can bring about advantages regarding quality, sustainability, dispute
resolution, human resource management, innovation, and time and cost reductions (Barlow et al. 1997; Egan 1998
;Chan et al. 2003). Partnering can be used as a contracting strategy between owners, contractors, and engineering
companies to attain mutually desirable goals, to satisfy long-term needs, and to achieve future competitive
advantage (Stralkowski et al. 1988). The increased need for cooperation is also derived from increased complexity,
uncertainty, and time pressure characterizing construction projects (Anvuur and Kumaraswamy 2007; Eriksson
2008). Since the degree of cooperation and integration among the participants is affected by procurement, many
aspects of the traditional procurement procedures need to be changed when implementing partnering (Eriksson and
Laan 2007; Eriksson and Pesamaa 2007). If the right people are brought together with an effective organizational
process, the barriers to partnering can be removed, and the opportunities can be identified, prioritized, and pursued
(Stralkowski et al. 1988). The scope of partnering relationships in industries ranges from informal working
arrangements between customers and suppliers to contractual pacts that are legally binding and enforceable
(Goldbaum 1988). Alliancing is “where the arrangement is underpinned by an incentive scheme, whereby the
rewards of the contractor and, indeed, the owner are linked directly to actual performance during the execution
phase of the project (Scott 2001). The benefits produced by partnering as: An improved ability to respond to
changing project environment; improved quality and safety; reduced cost and project time; improved profit and
value; and more effective utilization of resources( Cowan 1992, Kubal 1994, Li and Green1996, and Mc- George
and Palmer 1997 ). Based on a study of 280 construction projects, reported that partnered projects achieved better
results than other projects in controlling costs, in technical performance and in satisfying customer expectations
(Larson 1995). Some quantitative analysis of improvements to cost and time performance gained via partnering
(Weston and Gibson 1993, Pocock et al. 1997, Gransberg et al. 1999, Graijek et al. 2000). Alliancing is “where the
arrangement is underpinned by an incentive scheme, whereby the rewards of the contractor and, indeed, the owner
are linked directly to actual performance during the execution phase of the project (Scott 2001). Based on the results
of 25 alliancing projects the cost of alliancing projects is on average 8.10% lower than the target cost, and the
duration of alliancing projects is on average 6.94% less than schedule (ACA 1999, Barlow 2000, Voordijk 2000,
Clegg 2001, Ross 2001, Scott 2001, Gallagher 2002). Arizona Department of Transportation the contingency value
of partnered projects was only 3% instead of the historical trend of 5%; comparable partnered projects were
completed 20% earlier than traditional projects (Warne 1994).
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Significant Factors of Partnering
i.
Mutual Objectives
The first step of partnering is to develop a partnering charter addressing mutual objectives. Joint goal formulation
provides a deeper understanding of the project’s overall goals and the difficulties and possibilities involved in their
establishment (Kadefors 2004). In developing the mutual objectives, the share of many common concerns are
emerged by partners. This sharing of goals will change the attitude of partners to enable them to think win/win
scenario and to consider the interests of others by accepting commitment and equity at the beginning to get common
benefits. The factors of mutual objectives, active attitude, commitment, and equity are the precursors necessary for
establishing trust between participants.
ii.
Long-Term Commitment
Partnering is a commitment between two or more organizations for the purpose of achieving
specific business objectives by maximizing the effectiveness of each participant’s resources. This requires changing
traditional relationships to a shared culture without regard to organizational boundaries. This relationship is based on
trust, dedication to common goals, and an understanding of each other’s individual expectations and values
(Construction Industry Institute 1995). Commitment will provide a synergistic environment that encourages trust
and openness and empowers individuals to employ break through thinking in a supportive environment (Morgan and
Stundza 1988; Morgan and Dowst 1988; Weimer et al. 1988). A long-term relationship creates an atmosphere that
allows companies to achieve competitive advantages by addressing problems in areas that require extensive time to
solve or that require constant improvement (Morgan and Dowst 1988). Commitment refers to the willingness of an
individual or organization to exert effort (Porter etal.1974). More committed parties are expected to balance the
attainment of short-term objectives with long-term goals and achieve both individual and joint missions without
raising the fear of opportunistic behavior (Parkhe1993). Partnering is a commitment-intensive process that requires
effort from all the parties involved. What it offers is an alternative to the traditionally acrimonious relationship
between an owner and a construction contractor (U.S. Department of Interior 1991). Commitment is the most
important element in partnering relationship establishment. The partnering companies must commit to a long-term
relationship in which each one understands the goals of the others, everyone seek a new ways to assist the partner in
achieving its goals and each partner has a clear focus on continuous improvement of the long-term relationship and
dedication to common goals. Partnering bring a clear intent between the partners to maintain a functional
organization and implies a long-term relationship over many projects. The turnover of manager and supervisory
personnel has impacted the schedule, cost, and quality of a project and it is an inevitable in construction industry.
The partnering can minimize the turnover supervisory personnel and management as adverse effects on the
construction project due to interfaces between the two or more companies compare to single one with single project.
Long-term commitment is described as the willingness of the involved parties to integrate continuously to weather
unanticipated problems.
iii.
Trust
A successful partnering relationship requires each company to share its strategies and possibly share proprietary or
confidential information (Morgan and Stundza 1988). By eliminating adversarial relationships, companies can share
information and control to capture seemingly obscure synergies in systemic fashion (Morgan and Stundza 1988).
Trust can be defined as the belief that a party is reliable in fulfilling its obligations in an exchange
relationship (Pruitt 1981). Mutual trust increase information exchange and joint problem solving and promise better
outcomes (Mohr and Spekman 1994). Mutual trust is critical to ‘‘open’’ the boundaries of the relationship as it can
relieve stress and enhance adaptability (Williamson 1985). Mutual trust increase information exchange and joint
problem solving (Zand 1972). Partnering creates a trust-based environment, thus encouraging project participants to
make maximum contributions to achieving the completion of a successful project to the benefit of all (CII 1991;
Cowan 1992; Scott 2001) By establishing trust, organizations begin to develop confidence in each other, which
gradually influences them to merge their boundaries, and finally trust encourages parties to make their merged
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boundary more permeable, allowing active inter-organizational exchange (Crowley and Karim 1995). Trust and
contracting methods are related, and a trust relationship can be the root cause for a significant saving in construction
cost (Zaghloul and Hartman 2003). Trust is the pivotal attitudinal factor of partnering.(Cheung et al. 2003). Trust is
behavioral or attitudinal in nature (Cheung et al. 2003). If trust is present, people can spontaneously engage in
constructive interaction without pondering what hidden motives exchange partners might have, who are formally
responsible for problems, or what are the risks in disclosing information (Kadefors 2004). Distinguishing trust-based
from reciprocation based relationships: is a partnering relationship always "trust-based," or can it also be held
together by a much more fragile bond that mimics trust until the relationship suddenly evaporates (Friedland 1990,
Pabre 1994). Further unanticipated deferral of reciprocation or a disproportionately small reciprocal move could
easily be interpreted as a breach of the partnering relationship (Friedland 1990). If the primary barrier to partnering
in an organization comes from its culture, a long-term program for change may be called for. Culture appears to be
hard to change, even in the long term (Denison 1996). Trust is the reliance by one person, group or firm upon a
voluntarily accepted duty on the part of another person, group or firm to recognize and protect the rights and
interests of all others engaged in a joint endeavor or economic exchange (Hosmer 1995). The partnering companies
must trust each other’s by sharing knowledge and information. Trust combine the resources and knowledge of the
partners in a new intension to high degree of sharing which required each company to fully understand the scope,
expectations, shared confidential information, and range of the involved partnership to eliminate the adversarial
relationships. Many researchers have identified that partnering is a trust-based relationship which is critical to
maximizing positive economic outcomes indicate that also point out the positive influence of trust is realized
through facilitating open communication among participants. Positive attitudes to people are vital to successful
communication, as good communication and willing cooperation are merged in each other. Therefore, trust is the
basis of open communication among partners as it can be claimed to be the pivotal attitudinal factor which the
benefits of partnering are directly depend on it.
Management Skill
The appropriate management’s skills can convert threats to opportunities suppose effective communication and
conflict resolution are conducive to successful partnering.
1. Open Communication in Partnering
Open communication refers to the free flow of resources in terms of ideas, knowledge, skills, and technology
through different effective channels (Cheng and Li 2001). Partnering provides methods through which it is natural to
discuss and share information about new processes, innovations, improvements, and management practices, and thus
makes it possible to have a level of information exchange that does not exist traditionally (Ronco 1996). Besides
informal oral communication, partnering typically devises procedures for two other kinds of communication:
meetings and written communication (Ronco 1996). Because of cultural diversity, they tend to be dominated by
their own goals and objectives, which can be conflicting and as a result may cause adversarial relations (Love et al.
1998). The involves formation of effective communication channels, which can be used to motivate partners to
jointly participate in planning and goal setting and therefore exert their cooperative efforts to create compatible
expectations (Mohr and Spekman 1994) Timely communication and decision-making not only saves money, but
also can keep a problem from growing into a dispute (Cowan 1992). To facilitate the exchange of ideas and visions
and to overcome to misunderstandings and stimulated mutual trust effective communication skills may used in
organizations to improve the relationship in partnering. Partnering workshops are used in construction to motivate
partners in an open environment, to ensure constructive discussions.
2. Improved Total Quality Management
TQM and partnering share similar elements (Kubal 1994, Carr et al. 1999, Chini and Valdez
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2003). Partnering is another way of implementing quality management by attempting to improve the communication
flow in a project (Chini and Valdez 2003). The role of partnering in enhancing TQM in construction can also be
largely attributed to open communication. Open communication enables all participants to be much more integrated,
and as a result the barriers to implementation of TQM in construction can be substantially removed, so it is expected
that partnering can improve the implementation of TQM in construction.
3. Improve Risk management
The added information brought about by partnering can reduce some uncertainties, and therefore can reduce the
risks of a project because of the value of the information. This value arises from a change in actions because of the
change in understanding after the receipt of the information (Buck 1989). Information that has value reduces lost
opportunity (Buck 1989), which illustrates why added information generated from open communication in
partnering improves risk management. A very important benefit of added information generated by partnering is the
improved risk management in a partnering project.
4. Increased Opportunity of Success
Overall, the partnering mechanism model reveals how improvements can be generated by achieving open
communication in partnering based on trust relationships between participants. Open communication leads to
efficient information circulation which improves the efficiency of the whole construction process, and also helps to
bring added information to the construction system. These results would reduce project risks, lower monitoring
costs, increased value engineering, and improved implementation of TQM. Incentives can create a more proactive,
cooperative relationship between the contracting parties, and reinforce the cultural shift away from the traditional
adversarial approach to contracting (Walker and Hampson 2003). Although parties recognize that they share many
common objectives, the priorities of each party may still be different. For contractors, the main business objective is
ultimately profit. For clients, the project objectives should be an optimum combination of time, cost and quality,
which contributes to their business objective, misalignment between the owner and the contractors (Scott 2001). The
tendency toward adversarial relationships between organizations in the construction industry is attributed in part to
clients placing too much emphasis on the lowest price in awarding contracts and, as a result, some contractors price
work unrealistically low and then seek to recoup their profit margins through contract cost variations, e.g., design
changes, and other claims leading to disputes and litigation (NAO 2001). Selection on the basis of lowest price
places extreme pressure on the bidders to provide a marginally adequate bid to cover the work, with a small margin
for contingency and profit, which may result in the situation where contractors feel compelled to find profit in
variations and claims (Carr et al. 1999). Use of the gain-share/ pain-share mechanism is one of the fundamentals of
equitable relationships among parties, and parties to an agreement should be aligned not only through common
goals, but also through shared business interests in the project’s success (ACA 1999). Recognition of the limitations
of the structure of traditional delivery systems leads to the introduction of incentives or gain-share/ pain-share
mechanisms in alliance (Bower et al. 2002). The discussion of the conceptual partnering model has outlined why
partnering can increase the opportunity for a project to succeed through open communication in an environment of
trust. Incentives may create strong motivations for participants. Incentives need to exert their influences through
facilitating other techniques and are expected to have overall positive impacts on the components of the conceptual
partnering model.
5. Conflict Resolution
The conflict resolution can be either productive or destructive and largely depends on the manner in which partners
resolve conflict (Mohr and Spekman 1994). The success of a construction project depends on a number of variables;
one of the key variables is the way the participants to a building project approach the problems and conflicts facing
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the project. They contend that, conflicts create adverse environment in a project, foster distrust, and undermines the
cooperative nature of the building process (Diekman, et al 1994). Impediments to successful partnering encountered
by participants can be largely due to a lack of understanding of the deeper concepts underlying partnering. There
appears to be considerable uncertainty as to how to translate general principles of partnering into any sort of
concrete application, and the uncertainty is largely born of the vagueness of the partnering concept, which means
many things to many people (Critchlow 1998). Ambrose and Tucker (1999) argue that, the temporary nature of
construction projects and their multi-organizational structure make them prone to conflicts. These contentions
amount to the assertion that, in a project environment there is a need to acknowledge and plan ahead for conflicts
and any subsequent changes arising and to control them. As managers of our individual or corporate duty, we must
take advantage of the opportunities uniquely available not only to achieve sensible resolutions of disputes but also to
avoid the conflicts in the first place (Your 1991).
Yates and Hardcastel (2003) define conflict in the context of the spectrum by linking the terms; “claim”, “dispute”
and “conflict”. First, they define claim as “an assertion of a right to money, property, or a remedy, and can be made
under the contract itself; for breach of the contract, for breach of duty in common law, or on quasi-contractual
basis”. They simply define dispute as unresolved claim. Then they define conflict by combining the definitions of
claim and disputes with sociological definitions of conflicts given above by Brown and Marriott (1993) and Fenn et
al (1997). A study on causes of conflicts and disputes in the Hong Kong construction industry carried out by Yates
and Hardcastle in 2003, revealed a dramatic increase in conflicts and disputes in construction industries of many
countries. It was found that, conflicts and disputes led to high attendant cost both in terms of direct and indirect costs
(Yates and Hardcastel, 2003). Parties to the conflict may not perceive a potential conflict, or if perceived, the
conflict may be resolved before hostilities break out (Vaaland and Häkansson, 2003). Diekmann and Nelson (1985)
and Semple (1994), underlined major sources of construction conflicts to be a combination of design errors and
scope increases of work. Thamhain and Wilemon in Cheung and Chuah (1999) categorized causes of conflict over
the life cycle of a project, conflicting issues are defined as: 1- Project priorities 2- Administrative procedures 3Technical opinions 4- Performance trade-offs 5- Manpower resources 6-Cost 7- Schedules and personality. Blake
and Mouton in Cheung and Chuah (1999) identified the five methods of resolving or conflicts as: 1-Collaborating 2Compromising 3-Smoothing 4-Avoiding 5-Forcing. For enhancing cooperation on long-term success adopting
more potential resolution techniques such as joint solving problems which is the collective decision for
problematic issues. In uncertain condition, joint problem solving strategy is rescue for partnering project by
gathering partners to share their tactic and views.
6. Adequate Resources
Nevertheless, for enhancing the sharing of resources, mutual interaction should be emphasized (Devlin and
Bleackley 1988). The permeable boundaries for flow of appropriate resources from one organization to other were
restricted for leakage of sensitive and confidential information (Crowley and Karim 1995). It is not common for an
organization to share its resources with other organizations as resources are competitive and scarce. In construction
project normally different professional backgrounds such as architects, structural engineers , surveyors and so on
with variety of skills and technology used as complementary expertise to improve, enhance and strengthen the
competitiveness and construction liability by partnering scenario. It is important to ascertain and use the main
shared resources as expertise such as information knowledge, specific skills, technology and capital in partnership.
7. Top Management Support
Mutual agreement from senior management of involved parties is important since the goals and objectives projected
by each organization should be compatible and aligned with one another (Rai et al. 1996). Top senior management
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may plan the strategy and direction of business activities, so full support and commitment of his is crucial to
initiating and leading a partnering arrangement and vital for success of partnering relationship.
8. Coordination
Coordination reflects the expectations of each party from the other parties in fulfilling a set of tasks (Mohr and
Spekman 1994). Greater coordination is expected to achieve stability in an uncertain environment (Pfeffer and
Salancik 1978) and mutually fulfilled expectations (Frazier et al. 1988). In partnering, all parties of project meet
each other before construction begins and agree to specific management procedures for the project. They create
team-based approaches, focusing on creating cooperation and developing working relationships. The relationships
are carefully built upon the tenets of trust, mutual respect, and integrity (Welch 1996).To attain greater coordination
mutual exchange of information between partners to cover their expectations is necessary. The loss of trust and
commitment may cause worst situations by poor communication and coordination and often stimulate adversarial
relations.
9. Creativity or Innovation
Partnering has been acknowledged by many as an innovative approach to the procurement of construction services
in the industry. It lowers the risk of cost overruns and delays as a result of better time and cost control over the
project (Cowan et al. 1992; Abudayyeh 1994; CII 1996; Thompson and Sanders 1998; Gransberg et al. 1999; Black
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A.Ghaffari
et al. 2000; Li et al. 2001).Partnering increases the opportunity for innovation, especially in the development of
value engineering changes and constructability improvement (Abudayyeh 1994; Li et al. 2001). In the third
generation of partnering the construction firm should be building virtual organizations with its supply chain to
provide a complete service that is efficient, creative, and innovative (Watson 1999). To reduce adversarial
relationships and expensive claim and litigation, partnering can be used as panacea in organizations to improve their
performance and achievement to grow and expand utility as a strategic issue. Creativity is a common theme in
partnering to encourage innovative work. Figure1 illustrate the significant factors of partnering in construction
firms.
Benefits of Partnering
Though the partnering experiment is fairly recent in Caltrans projects, the benefits of such relationships with
contractors are being realized. Caltrans' intent is to eventually establish partnering relationships with all its
contractors, and to express such interest in every project's special provisions document. This section briefly
describes the potential benefits of partnering, to Caltrans, as well as to its contractors (Weston 1993; Cook 1990).
I. Mutual Advantage and Opportunity
A partnering relationship requires the companies to invest in the relationship the strengths they uniquely possess that
can contribute to the success of the partnership and to accept the appropriate risks proportional to their rewards
(Goldbaum 1988). Mutual advantage and opportunity is the next important key elements in the partnering
relationship. The partnering companies may expect more opportunities and advantages than traditional business
commensurate relationships ones.
II. Owner Benefits
Companies that are strategically aligned are able to assist each other in providing a diversity of talent not usually
found in a single company. They can draw upon the resources of each organization to successfully complete a
project (Provost and Lipscomb 1989).A partnership provides the owner increased flexibility and responsiveness in
terms of the added skills and resources available from the partner. The effective human resource utilization is the
most important benefit to owner in providing expertise and required staffs. Additional benefits to the owner by
reducing costs associated with constructor or engineer selection, contract administration, mobilization in beginning
of a project. The potential benefits to owner are: reduce claims, reduce cost overruns and delays due to schedule
control and improve conflict resolution strategies, lower administration costs and it will increased opportunity for
innovation.
III. Constructor Benefits
The benefit of partnering to the constructor or engineering firm is the opportunity to refine and develop new skills in
a controlled and low-risk way. This occurs because new methods or approaches may be required to meet owner
project requirements. These new skills then become an integral part of the company's total capability (Provost and
Lipscomb 1989)
Partnering emerge an active functional organization with clear intent and long-term non adversarial relationship, so
their revenues become more stable and claim or litigation process may reduced significantly. The benefits to the
contractor may define as: to reduce high costs of claims and litigation, to improved productivity, cost and schedule
control, to lower risk of cost overruns and delays and to enhance opportunity for innovation.
IV. Mutual Benefits
The partnering relationship encourages the companies to identify major obstacles to the successful completion of the
project and to develop preventive action plans to overcome those obstacles before they impact schedule or cost
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(Rubin and Lawson 1988). By partnering in the project, team members can work together to achieve the highest
level of quality and safety (Provost and Lipscomb 1988). All the potential benefits resulting from partnering
relationships, perhaps the one that will have the most impact on the construction industry is improved project quality
(Laime 1987). The close team relationship between the owner, constructor, and engineer can provide atmosphere of
cooperation and mutual trust, the companies can jointly determine and evaluate approaches to design, to construct
the project and environment of better ways of doing business. The partnering agreement allows each firm to use the
opportunity of learning and using the other's one. The partnering agreement reduces litigation by neglecting
adversarial relationship and make companies to work together to understand the owner's needs and goals for the
project.
Partnering Strategy In Construction Contracts
In the construction industry, U.S. construction companies were losing market share because of increased foreign
competition, increased change in customer requirements, and the rapid development of new technologies (Kearney
1987; Morgan and Dowst 1988). American construction companies realized that to succeed in the diverse and
complex global marketplace they had to develop new contracting strategies for growth and to maintain the
companies' competitive position. Partnering is a direct response to this challenge (Conrads 1983). Partnering can be
used as a contracting strategy by companies in the product diversification stage. For example, a company that
develops an advanced technology may find that partnering can translate this technology into products faster and
more effectively than internally developing the products. The company that developed the technology can partner
with firms in industries that have the existing manufacturing and marketing capabilities to use this new technology
to produce products specifically needed by that industry (Teece 1988). Partnering needs to be implemented on an
ongoing basis so that trust and commitment can be developed and used in learning environment, as trust and
commitment could not be developed during a short contract term (Loraine 1994; Munns 1996; Love et al. 1998).
Apparently, some other characteristics e.g. mutual trust are critical in establishing interdependence and selfwillingness to work for the long-lasting cohesive relationship. These critical characteristics form the favorable
context conducive to partnering success (Abudayyeh 1994). Does the organization want to use partnering as a
mechanism to define the relationships between the different parties involved in the construction process in an
attempt to reduce or eliminate claims and litigation (Abudayyeh 1994)? The complex relationships (differentiated
skills and knowledge of clients/owners, architects, engineers, surveyors, general contractors, subcontractors) exist
within project teams that, if not managed effectively, can adversely affect a project’s performance (Walker 1994).
Partnering is a co-operative strategy by modifying and supplementing the traditional boundaries that separate
organizations in a competitive climate (Walker 1994, Crowley and Karim 1995). A construction project has formed
by parties with different skills and knowledge. Partnering can be used to synergies all project parties to openly
interact and perform in cohesive atmosphere for their benefits in long-term commitment, mutual trust, and costeffectiveness. Construction industries may use partnering to strengthen their capabilities by providing
complementary skills prior to bidding for projects, so partnering can use as contractual requieren. The use of
partnering in bidding may stop when the contract is awarded to the organizations undertaking the project. The
partnership may be used for exchanging resources as visions, knowledge, skills, experience, information, and ideas,
by sharing of these resources the organizations able to improve their competitiveness in the market business.
Partnering can develop and extend a single project relationship to long-term cooperation unit. The losing of ability
to compete in the global market in the 1980s compelled U.S. construction companies to innovate partnering as an
panacea to the loss of competitiveness in global market by enhancing productivity and quality in manufacturing
with shortening time of production. Partnering growth research for company defined in, Volume expansion,
Geographic expansion, Vertical integration and Product diversification (Chandler 1962). Partnering used by
companies to form strategic alliances at each stage of growth to strengthen the competitive position of companies.
Partnering can be formed among firms and its customers, suppliers, or even competitors in the direction of the needs
of the company. In vertical integration the firm grows by either buying or creating other production or distribution
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functions. Product environment includes the nodes of research, development, design, marketing, manufacturing and
distribution. Partnering will be one strategy used to link these nodes to maintain a firm's competitive position or to
take advantage of a new business opportunity. Partnering can reduce the time and the cost to link these nodes
(Conrads 1983; Teece 1988; Modic 1988) The relationship between business strategies and organizational structures
has been the subject of numerous conceptual and empirical studies. In general, research has repeatedly shown that
keeping organizational structure in tune with business strategy plays a vital role not only in enterprise effectiveness,
but also in enterprise survival and growth (Caves 1980). The changing business environment has forced U.S.
companies to adopt partnering as a strategy to maintain markets and competitive advantage (Higgins 1985). The
expected result of the relationship is to replace an adversarial atmosphere with one of trust and commitment so that
costs can be reduced by solving problems together (Kennedy 1988).The CII (Construction Industry Institute's
Partnering Task Force) has identified the most common partnering relationships in use by U.S. companies as: 1Competitor-competitor relationships; 2-Buyer-seller relationships; and 3- Diverse company relationships. U.S. firms
are entering to partnering with their customers, suppliers, competitors. The relationship involves the timeliness,
self-interest, and mutual dependence of both companies. The agreement is designed with a limited life span and
depends on the day-to-day satisfaction of both companies (Teece 1988; Kearney 1987).
Measuring Scale of Partnering
By determining the appropriate performance measures and relevant measurement parameters, involved parties can
communicate to their staff the objectives, priorities, criteria, and values with which they should comply (Alarcon
and Serpell 1997). The consequences of partnering are measures of the degree of partnering success (Mohr and
Spekman 1994). The performance measures can be subjective or objective. The subjective measures are based on
the notion that strategic partnering has to achieve important long-term goals and are assessed individually by
appropriate indicators or items with individual perceptual scales such as the Likert scale (Hair et al. 1998).
Partnering is said to be satisfactory when the expectations of the involved parties have been attained (Anderson and
Narus 1990; Mohr and Spekman 1994). The failure of partnering is attributed to ambiguous goals and poorly
coordinated activities (Lynch 1990). Objective measures stem from the belief that success is partly determined by
some short-term objectives or so called business performance (Marosszeky and Karim 1997). The criteria of costeffectiveness, quality and schedule, scope of work, profit, and construction process to be attained in a construction
project (Alarcon and Serpell 1997, Puddicombe 1997).
Barriers to Growth of Partnering
Barriers to the growth of partnering should identified on the construction industry and types of partnering
relationships are defined, for the construction industry to apply partnering as an alternative contracting strategy, the
industry must develop a "partnering process" (Kearney 1987). The process should identify those barriers to
partnering that limit its growth and use, which should be removed, plus the process should identify those barriers
which should not be removed (Stralkowski et al. 1988). The barriers for growth of partnering may define as the time
required developing the partnership, the traditional owner-contractor-engineer relation and cultural corporation.
Structuring a partnering relationship can take many months and the arrangement requires a long-term commitment
to the partnership (Conrads 1983). Both companies must devote considerable time to establishing procedures for the
arrangement and to implementing the arrangement. The companies must assess how they function and how they will
change under the partnering agreement (Kearney 1987). In a joint project involving product development and
production of entire systems, the partnering relationship may require an agreement approaching a true joint venture.
In this situation, the risk to the partner is large because the partner may have to go beyond its own products to
coordinate the purchasing and development of components it does not produce (Weimer et al. 1988). It is essential
that both partners understand the limits on the process and the restrictions of sharing confidential information
(Stralkowski et al. 1988). The time required to select, develop and implement proper partners is important barrier of
successful partnering agreement and fundamental factor to the success of the partnership. A successful partnership
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depends on preserving the autonomy of each participant to foster the strengths that made them attractive partners in
the first place. In developing a partnering agreement, some barriers that should be designed into the agreement
include barriers that enforce confidentiality, limit dependency, and define ways the companies can use and benefit
from jointly developed product or service innovations.
Partnering In Government Commitment
Partnering seemed to offer the opportunity of harnessing capabilities, talents, and positive energies of both owner
and contractor groups and focusing them on mutually agreed-upon goals. It offered the opportunity for all parties to
change preconceived attitudes in order for both to win in the long run (Edelman et al. 1991).The nine elements being
essential to a successful partnering effort (CII 1995) are:
• A formal planning process is in place for partner selection or team building.
• A partnering or team-building implementation plan is in place.
• The objectives for team building or selecting partners are defined.
• There is a formal process for selection of teams and partners.
• The partnering or team-building selection process, implementation plan, objectives, etc, are communicated to the
organization.
• A partnering agreement has been developed and is in place.
• A team is established.
• A leadership workshop is held along with training sessions.
• Partnering or team building takes place on an ongoing basis.
a. Benefits of Partnering in Government Contract (Edelman et al. 1991)
• Sharing a common set of goals.
• Clear expectations shared by each participant.
• Trust and confidence amongst the participants.
• Commitment by all participants.
• Responsibility being recognized and accepted without conflict.
• Courage of the participants to be honest and forthright in confronting issues and resolving conflict.
• Understanding and respecting the goals of the other stakeholders.
• Synergy amongst the team through the collaboration of resources.
• Excellence expected from others and delivered in turn.
Validation and Assessment of Partnering Projects
In order to assess the effects of partnering in a good evaluation fulfilment it should meet the conditions as
defined follow:
1) Based on Project Facts
The analysed data in the project have to be based on the facts about, primarily cost and quality to find the effects of
partnering. The project should be based on objective which contains indicators of cost and quality. In order to
qualify a project fact, the indicator has to explicit argument that relates it to cost and quality.
2) Comparative Analysis
The partnering outcome in projects needs to be compared with non-partnering projects. It is easy to claim that this is
done implicitly by a comparison with the general perception of the construction industry, but to fulfil this condition
an explicit reference case is needed.
3) Other Variables Affect Outcomes
Construction is a complex field, with many variables data that affect the outcome of a project, therefore it is
necessary to control explicitly for other variables. This may be done by multivariate statistical methods or by an
analysis of matching pairs. The effects of partnering should meet the aforesaid conditions.
Evaluation Process
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a) Surveys
This study often conducted by means of questionnaires, and many of the partnering assessments are done by this
method. Haksever et al. (2001), Chan et al. (2003), Beach et al. (2005) are based on questionnaires administered to
project managers who are asked to choose between printed alternatives on the benefits of partnering. Surveys are
convenient when wanting to gather information about people’s opinions regarding a specific issue (Balnaves and
Caputi 2001).
b) Case Studies
The purpose of case studies is not to draw general empirical conclusions (Yin, 2003). Different benefits of
partnering have been pointed out, based on case-study methods, (Bresnen and Marshall, 2000, Vassie and Fuller
2003, Bayliss et al. 2004, Chan et al. 2005). These studies are combinations of interviews and questionnaires. The
researcher enhances understanding of the project through interviews and observations, often in combination with
questionnaires. This strengthens the quality of the data. Most of these studies except Vassie and Fuller, (2003) do
not make any comparative analysis of non-partnering projects and fail to satisfy condition two above. Rossi and
Wright (1977) studied case studies without a control group to compare with as the weakest form of evaluation.
Bresnen and Marshall (2000) include a comparative analysis, but it is based on a maximum variation concerning
type and size, which does not fulfil the purpose of controlling for other variables. Criticism has been raised
concerning the fact that only positive outcomes of partnering have been reported and that there is a lack of
objectivity in some of the case studies (Green, 1999; Bresnen and Marshall, 2000).
c) Comparative Studies by observations
There are a few studies about partnering effects with a large number of observations. Larson (1995), Ruff et al.
(1996) and Gransberg et al. (1999) are to a large extent based on questionnaires with 280, 60 and 400 observations,
respectively. Despite the large number of observations, the studies suffer from the same problems as the surveys, in
that they focus on the respondents’ perceptions of the effects, and not on real effects based on project facts. The
three studies make a distinction between partnering and non-partnering projects, which satisfies condition two for a
comparative analysis. However, none of the studies control for other affecting variables. There is also a large bulk of
data on outcomes of partnering projects in benchmarking studies.
CONCLUSION
 This paper develops the concept of partnering as a contracting strategy in construction engineering firms
over the last 30 years. The author has tried to bring all the 3 decade partnering research work in this paper
in a possible manner for use of consultants, owners, and contractors which they form almost 5% to 10% of
GDP of all countries, and the work is unique with this vastitude (abroad). The essential background
highlighted in all sections of this article indicates the importance of partnering on construction engineering
firms in the recent 30 years. The future development of partnering should take place in Asian and African
countries which are in infantile stages.
 The research is based on a survey of three decade research on partnering strategy development in
construction contracts, partner selection, contract negotiation, partnering concept, significant factors
effecting to partnering, benefits of partnering, measuring scale and barriers of partnering, partnering in
government commitment , validation and assessment of partnering.
 Partnering is the only approach for achieving business in the competitive environment through a new
method in management from the economical view of time, resources and costs by enhancing cooperation,
especially in the large-scale endeavors of construction engineering projects.
 The limitations of research are: 1 .Limits on the process and the restrictions of sharing confidential
information. 2. Developing a partnering relationship can take many months and the arrangement requires a
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Strategic Concept of Partnering In Construction Projects





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
151
long-term commitment to the partnership. 3. The time required to select, develop and implement proper
partners in successful partnering agreement.
Partnering is a high efficient management skill that can bring together key stakeholders in the project
outcome, as project owner, designer and contractor. The adversarial (traditional) atmosphere ownerconstructor-engineer relationship can replace by effectively potential partnering agreement, which will
foster a team approach to achieve common goals as a main aim of this paper.
Due to world critical financial crisis, even in developed countries such as Italy, Greece, or most of EU
countries , need of brain storming or knowledge sharing as well as financial sharing are evident, so
partnering is most efficient issues to compete in the national and international market in construction
industry.
Partnering is a strategic alliance of long-term relationship with high structured agreements among
companies to cooperate at high degree to achieve their separate but complementary objectives.
Construction industries and engineering firms may use partnering as a contracting strategy to enhance their
competitiveness, augment product quality and fulfilling the needs of a customer. The adverse atmosphere
and strained owner-constructor-engineer relationship has to be replaced by effectively potential partnering
agreement which will foster a team approach to achieve common goals.
The adverse atmosphere and strained owner-constructor-engineer relationship has to be replaced by
effectively potential partnering agreement which will foster a team approach to achieve common goals.
In the review of papers published on partnering in several significant construction journals in last 30 years
have been carried out from start point of partnering. It can be concluded from this review that success of
U.S construction companies to compete in international tenders is due to strong research carried out on
partnering in that country. It is felt that there is a need to study about the partnering process for developing
Asian country.
The performance measures of partnering can be subjective or objective. The subjective measures are based
on the achievement of long-term goals by appropriate indicators with individual perceptual scales such as
the Likert scale and objective scale, measures business performance. For assessment of the success of
partnering, subjective measures such as satisfaction of partners, expectations and compatible goals and for
objective measures, cost variation and rejection of work may be used.
The evaluation process may be carried out by three methods as: 1. Surveying based on project facts 2.Case
studies and 3. Comparative studies by observations. Cost and quality is the most important factors since
they create value, while time should be included if it affects the net present value of the project. More
observable indicators are often required for measuring scale of successful partnering since comparable data
on cost and quality can be hard to find, such indicators are contract flexibility, the amount of additional
work and number of disputes occurred.
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