Supply chain partnerships is a recipe for better and cheaper construction, but it demands a healthy dose of mutual trust. And that is where things often go wrong, concludes Jelle Koolwijk in his PhD research. When personal relations become strained, his advice is to stay focused on the long-term interests.
In major projects with lots of repetition, such as the retrofit of homes, supply chain partnering appears to be the ideal approach. As the client, you enter into a long-term collaboration with one or more parties, working closely with them to develop the best approach. There are no secrets, all parties are transparent and actively help to make improvements and more cost-efficient decisions. The idea is that this makes best use of the (sub-)contractors’ skills, leading to a better end result for the client. “It often works, but things also often go wrong,” explains Jelle Koolwijk. “A significant factor is how parties deal with the rules of the system. If the rules change during the project, or if they are used as a means of control, disaster often looms.”
For his award-winning research, the PhD researcher from Design & Construction Management compared supply chain partnerships throughout the Netherlands. He interviewed various key figures. The projects mainly concerned major retrofits to housing corporation properties. Koolwijk was involved to help establish supply chain partnerships, and witnessed resounding successes. With their years of experience, foremen who put their heads together after testing a renovation solution in a home can often come up with improvements. And even if this only results in a saving of a few hundred euros per house, in the case of major housing projects, that is serious money.
But a good start offers no guarantee of continued success. Koolwijk also saw how large projects were completed on time and on budget, but that the supply chain partnership still collapsed. Where it went wrong along the way? He notes that it often comes down to positions of power and a lack of trust. “A corporation manager who has had negative past experiences with contractors may have difficulty trusting their construction partner. If that leads to quotes being called into question, the partnership will soon come under pressure.”
Rules that were devised to help keep the supply chain partnership on track can then change into means of control. The contractor usually gets the blame; despite all the good intentions, it quickly becomes clear that only one party really calls the shots: the party paying the bills.
If the collaboration collapses and there are no subsequent projects, all of the effort was for nothing. Neither party reaps the benefits of what they have learned. Poor relations between the contractor and their subcontractors can have a similar effect. A lack of trust usually spells disaster, balancingpower relations is crucial.
This raises the question of where the boundary between trust and credulity lies. Is it not logical that a client or primary contractor also critically assesses the construction partners in the case of an integrated contract? It certainly is, concludes Koolwijk. “But in supply chain partnerships, it’s all about the long term. You do not always need to bring your power position into play.” Hence: if a deadline is not met, do not immediately bring out the big guns. In supply chain partnerships, materials can still be delivered late, and employees can still make mistakes. The point is that parties learn from what happened.
Koolwijk also notes that getting the best out of construction partners is not a matter of course. Following his analysis of supply chain collaboration projects, he concludes that this only happens if the management team creates the right conditions. If sub-contractors are involved as early as the design phase, the best use can be made of their expertise, in contrast to traditional projects. “But for this to happen, a manager needs to create a safe environment, so that they are comfortable having their say,” he explains. “Otherwise the demolition contractor that recognises a potential asbestos issue will hold his tongue. And then you only find out once it’s too late, once work has started.”
Messing with the rules once the project is underway is a ‘no go’, but aside from that, there are no set rules for a successful supply chain partnership. Koolwijk: “Just never forget that it is all about the future. A supply chain partnership is a learning organisation that benefits all parties.”
Read more about the RISE Award (Research, Innovation, Sustainability and Enterprise) for research into supply chain collaborations and sustainability.
The full thesis can be found here.