A conceptual framework for effective contracting in construction supply chains

Abstract

Construction supply chains are characterised by lack of trust and poor collaboration due to the short-term, project-based organisational structure of the construction industry. The lack of collaboration and trust among construction supply chain stakeholders affects the transparency and exchange of information, as well as the efficiency of the supply chain. Existing literature has shown that collaboration problems can be overcome through better integration, partnering and contractual governance. The latter requires some form of compatibility analysis and matching between the stakeholder profile and the appropriate contract type. This paper aims to develop a conceptual framework that will assist General Contractors in dealing with the complicated relationships and risks in construction supply chains through effective contracting. The methodology employed for the purposes of our analysis is based on constructive literature review, qualitative correlation of existing research and combination of concepts drawn from the fields of construction supply chain management and stakeholder analysis. The construction supply chain is viewed as a network of stakeholders organised around a General Contractor. Borrowing principles and tools from Stakeholder Analysis, a matching mechanism is developed with the aim to facilitate General Contractors in determining the suitable contract type for different profiles of construction supply chain stakeholders. The main conclusion of this paper is that stakeholder theory and contractual management can be effectively used to tackle opportunism and its negative impacts on construction supply chains.