Developing cooperation in discontinuous s/c relationships: a case study in the construction industry

Developing cooperation in discontinuous s/c relationships: a case study in construction industry Florence CRESPIN and Robert SALLE The aim of this paper is to identify mechanisms at play in the development of cooperation in industries characterized by a high level of purchase discontinuity. The paper concentrates on the construction industry. In the construction industry adversarial relationships between actors (customers, contractors, subcontractors, suppliers,..) are usually the rule on specific projects such as real estate projects, construction of plants,... Several factors favor this kind of opportunistic behavior: the existing purchasing procedures based on competitive tendering, the industry fragmentation, the uniqueness of construction as a product, the distinction between design and execution, and the specific role of consultants....The crisis that this industry went through in the 90s’ led to huge competition between actors which in turn led to increased opportunism. This generated negative consequences such as difficulties for the main contractor to foresee the profitability on a given project, frequent cost and schedule overruns, confrontation and claims. Faced with these problems important changes occurred in the French construction industry at the end of the 90s’. Main contractors attempted to implement new modes of relationships with customers. This paper is based on a case study. It analyzes the evolution of a relationship between a main contractor (SBP) and two subsidiaries (DRESS and CLOTH) of the same customer group over a 9 years period. During this period, the main contractor changes its offering (including more pre-sale services, consultancy and feasibility studies when defining and designing the project) and the way to involve the customer in the management of the project (similar to the way traditional industry such as the automotive manages project with suppliers). The objective is to interact with each customer as soon as a project emerges in the customer organization. This anticipative approach aims at allowing the contractor to limit (or to avoid) the scope of the call for tender (highly uncertain), to bring more value to the customer and to have a better predictability on each project profitability.