The Relationship between Main Contractors and Subcontractors in the Zambian Construction Industry

TABLE OF CONTENTS

LIST OF FIGURES

LIST OF TABLES

LIST OF ABBREVIATIONS

CHAPTER 1: INTRODUCTION
1.1. Background
1.2. Problem statement
1.3. Research questions
1.4. Aim of the study
1.4.1. Specific objectives
1.5. Importance of the study
1.6. Brief research methodology
1.7. Organisation of the dissertation
1.8. Chapter summary

CHAPTER 2: LITERATURE REVIEW
2.1. Introduction
2.2. Subcontracting
2.2.1. Types of subcontractors
2.2.2. Selection of subcontractors
2.3. Subcontracting in the Zambian construction sector
2.3.1. 20% subcontracting policy
2.3.2. Types of subcontractors
2.4. The relationship between the main contractor and subcontractors
2.4.1. Types of relationships
2.4.2. Factors contributing to relationship problems
2.4.3. Impacts of interface problems
2.4.4. General solutions to interface problems
2.5. Partnering
2.5.1. Definition of partnering
2.5.2. Types of partnering
2.5.3. Benefits and difficulties of partnering
2.6. Chapter summary

CHAPTER 3: RESEARCH METHODOLOGY
3.1. Introduction
3.2. Research methodology
3.3. Research approaches
3.4. Research design
3.5. Research strategy
3.5.1. Experiment
3.5.2. Action research
3.5.3. Archival research
3.5.4. Survey
3.5.5. Grounded theory
3.5.6. Case study
3.5.7. Ethnography
3.6. Data collection
3.6.1. Primary research
3.6.2. Secondary research
3.7. Processing and analysis
3.7.1. Relative importance index
3.7.2. Average rating
3.8. Sampling
3.8.1. Probability sampling
3.8.2. Non-probability sampling
3.8.3. Response rate
3.9. Chapter summary

CHAPTER 4: ANALYSIS AND DISCUSSION OF RESULTS
4.1. Introduction
4.2. Questionnaire data and analysis
4.2.1. Section one: respondents’ general information
4.2.2. The main contractor-subcontractor relationship
4.2.3. Interface problem caused by main contractors
4.2.4. Interface problem caused by subcontractors
4.2.5. Interface problem caused by other factors
4.2.6. Top ten factors out of all the factors combined
4.2.7. Improving the interface between main contractors and subcontractor…..
4.3. Interview data and analysis
4.3.1. Interviewee general information
4.3.2. Involvement in a project affected by main contractor-subcontractor relationship.
4.3.3. Factors that contribute to relationship problems.
4.3.4. Factors that can improve the relationship
4.3.5. Contractual factors
4.3.6. Effect of nominated subcontractors
4.3.7. Effect of the 20% subcontracting policy
4.3.8. Subcontracting practice in Zambia
4.3.9. Improving the Zambian subcontracting environment
4.4. Summary of top factors
4.5. Chapter summary

CHAPTER 5: THE PARTNERING PROCESS FLOWCHART MODEL
5.1. Introduction
5.2. Development of a non-contractual project partnering model
5.2.1. Decision to adopt partnering
5.2.2. Self-assessment
5.2.3. Engagement of facilitator
5.2.4. Partnering awareness training
5.2.5. Making the offer to partner
5.2.6. Kick-off partnering workshop
5.2.7. Follow-up partnering workshops
5.2.8. Facilitated dispute resolution session
5.2.9. Closeout workshop
5.2.10. Continuous improvement
5.3. Chapter summary

CHAPTER 6: CONCLUSIONS, STUDY LIMITATIONS AND RECOMMENDATIONS
6.1. Introduction
6.2. Conclusions
6.2.1. Nature of the relationship between main contractors and subcontractors in Zambia and how it was affecting projects
6.2.2. Establish the factors leading to contention between subcontractors and main contractors in Zambia
6.2.3. Establish factors that contribute to an effective interface between subcontractors and main contractors in Zambia
6.2.4. Options to ensure relationship between main contractors and subcontractors in Zambia support the attainment of project goals.
6.3. Recommendations
6.4. Limitations of the study

REFERENCES

APPENDICES
APPENDIX 1: Questionnaire Cover Letter
APPENDIX 2: Questionnaire
APPENDIX 3: Structured interview guide

ABSTRACT

In recent years there have been a substantial number of projects conducted in the Zambian construction industry. Due to the magnitude and complexity of many of these projects, contractors have resorted to subcontracting to share responsibilities and mitigate project risks. The Zambian government has also invigorated the practice of subcontracting in the construction industry as it plays an important role in increasing economy viability and building capacity. Instead of improving project success, subcontracting can act as a catalyst for poor project outcomes. Though there are many reasons that contribute to problems from subcontracting, a poor relationship between main contractors and subcontractors can be seen as a notorious contributor affecting construction works.

The study aimed at investigating the relationship between the main contractors and subcontractors in the Zambian construction industry and recommend a framework that can be implemented to better the relationship. The study also examined the effects of a poor interface between main contractors and subcontractors in Zambia. Data collection techniques used included literature review, interviews and questionnaire surveys. The relative importance index was used to determine the ranking of the results of the study. Using the results adduced from the study a main contractor-subcontractor non-contractual partnering model was developed.

The study established that the relationship between main contractors and subcontractors in Zambia is poor therefore needing attention. Interface problems were caused by payment issues, poor communication, unexpected price escalations and poor construction work. In order to address interface problems, the study found that there was need for better communication between the parties, timely payments and subcontractors’ access to labour and machinery. However, the study, had some limitations that need consideration when interpreting the results found. The limitations included scarcity of specific literature on subcontracting in the Zambian construction industry, the size of the sample only being limited to Lusaka. Nevertheless, these limitations could be addressed through further studies.

Keywords:Construction industry, Main contractor, Subcontractor, Partnering, Zambia

ACKNOWLEDGMENTS

First and foremost, I would like to thank the almighty God for enabling me to pursue my studies and for giving me the strength and health. Without Him, I would be nothing.

I would also want to extend my gratitude to Ms. Mwiya for her patience and pertinent guidance during the course of study. My heartfelt gratitude to Dr Mwanaumo for his support and guidance. Many thanks to the University of Zambia for providing the necessary facilities.

Further gratitude goes to my mother and brother; they mean all to me and I did this for them.

LIST OF FIGURES

Figure 2.1:Contribution of Zambian Construction Industry to GDP (CSO, 2014)

Figure 3.1:Flow Chart of Research Process.

Figure 4.1:Percentage breakdown by respondents' sector in construction industry

Figure 4.2:Percentage breakdown by respondents' management position

Figure 4.3:Percentage breakdown by respondents' experience in construction industry

Figure 4.4:Percentage breakdown by respondents' academic qualification

Figure 4.5:Respondents perception on the relationships between main contractors and subcontractors

Figure 4.6:Rating of relationship attributes

Figure 4.7:Effects of a poor relationship between the main contractors and subcontractors

Figure 5.1:Non-contractual project partnering model

LIST OF TABLES

Table 2.1:Content analysis of literature reviewed

Table 4.1:Factors causing interface problems between main contractors and subcontractors caused by main contractors

Table 4.2:Factors causing interface problems between main contractors and subcontractors caused by subcontractors

Table 4.3:Factors causing caused by the external factors

Table 4.4:Top ten factors causing interface problems between main contractors and subcontractors

Table 4.5: Top ten attributes that can enhance the relationship between the main contractors and subcontractors by respondent category

LIST OF ABBREVIATIONS

illustration not visible in this excerpt

CHAPTER 1: INTRODUCTION

1.1. Background

The construction industry contributes significantly towards the economic output of a country (Mirawati et al., 2015). In 2014 the United Kingdom’s (UK) construction industry contributed £103 billion in economic output which is 6.5% of the total. It also created 2.1 million jobs which was 6.3% of the UK total employment (Rhodes, 2015). In Zambia, the construction industry comprised 9.9% of the total national Gross Domestic Product (GDP) in 2014 and had a growth rate of 8.9% from 2013 (Central Statistical Office (CSO), 2016). For that reason, the construction sector is among the major economic sectors that contribute significantly towards the economic growth of Zambia.

Subcontracting is a major aspect of construction projects and its importance has increased in recent years (Ujene et al, 2011). Rajput and Agarwal, (2015) noted that 80 to 90% of the work on construction projects is performed by subcontractors. The rise in subcontracting is primarily due to projects becoming more complex and challenging owing to technical advances, tighter regulations and need for effective management of resources for a competitive edge (White and Marasini, 2014). The increase in complexity and size of construction projects, has made it impracticable for an organisation to develop expertise in all trades and disciplines required in the execution of the project (Construction Industry Development Board (CIDB), 2013). Therefore, contractors have exerted to subcontracting, to allow for specialisation (Okunlola, 2015).

Assigning work to a subcontractor reduces work load and limits the contractors risk exposure (Abdullahi, 2014). Subcontracting also assists with timely completion, improved quality, innovativeness and enhanced performance in environmental, health and safety issues on projects (Eriksson & Westerberg, 2011). However, subcontracting is seen as risk to construction projects (Yoke-Lian et al, 2013). This is because it can lead to poor project outcome (Ujene et al., 2011). A major aspect that contributes to the degree of success or failure of projects which are subcontracted is the relationship between main contractors and subcontractors (Jin et al., 2013; Okunlola, 2015; White & Marasini, 2014).

When practicing subcontracting, interface problems can arise, for example, the lack of cooperation, and ineffective communication leading to an adversarial relationship between the main contractor and subcontractor (Huang et al, 2008). This kind of relationship induces project delays, cost overruns, litigations, and compromise project quality (Meng, 2012). However, a better interface between project parties can be used to ensure project success or even improve performance (Vilasini et al, 2012; Eom et al, 2015). This statement is reinforced by Eriksson and Westerberg (2011) who showed that the strategic alliances between contractors and subcontractors produce superior client satisfaction because of the overall improvement of on-site construction activities.

1.2. Problem statement

Subcontractor related problems are quoted as one of the main risk to construction projects (Mirawati et al., 2015). Problems with subcontractors have been identified as some of the factors contributing to delays in Malaysian and United Arab Emirates construction industry (Yoke-Lian et al, 2013). In Nigeria, Ujene et al., (2011) recognised subcontracting to be affecting the quality of projects. A study done in Zambia also identified that subcontracting is one of the causes of project schedule overruns (Kaliba, 2010). However, the issues arising from subcontracting have not been addressed and very little research has been conducted in Zambia to improve the subcontracting practice in particular the operational relationship between main contractors and subcontractors.

Realising the importance of subcontracting in developing the local contractors and providing employment, the Road Development Agency (RDA) has implemented the 20% subcontracting policy which has augmented the practice of subcontracting in Zambia. However, no research has been done on the practice of subcontracting to ensure that subcontracting is being practiced effectively and its benefits are being experienced and not affecting the degree of project success in the construction industry. Therefore, the aim of this study is to investigate the relationship between subcontractors and main contractors and its effects on projects in the Zambian construction industry.

1.3. Research questions

1. What is the nature of the relationship between main contractors and subcontractors in the Zambian construction industry?
2. What are the factors that contribute to contention between subcontractors and main contractors in Zambia?
3. What are the factors that can help create a better interface between subcontractors and main contractors in Zambia?
4. What framework can be followed to ensure relationship between subcontractor and main contractor support the attainment of project goals in Zambia?

1.4. Aim of the study

The aim of this study is to investigate the relationship between subcontractors and main contractors and its effects on projects in the construction industry.

1.4.1. Specific objectives

Thus the specific objectives of this research are to:

1. Determine the nature of the relationship between main contractors and subcontractors in Zambia and how it is affecting projects.
2. Establish the factors that lead to contention between subcontractors and main contractors in Zambia.
3. Establish factors that contribute to an effective interface between subcontractors and main contractors in Zambia.
4. Suggest possible options that can be followed to ensure relationship between main contractors and subcontractors in Zambia support the attainment project goals.

1.5. Importance of the study

At the commencement of this research there was very limited information on the subcontracting practice in Zambia. Therefore, the successful completion of this study brings forth important information on subcontracting in the Zambian construction industry. This information is intended to improve the construction industry and promote project success by providing a better means of practice.

Construction activities in Zambia are primarily undertaken by foreign and local contractors, registered by the National Council for Construction (NCC). According to the NCC Annual Report, (2012), there were 3,887 registered contractors in Zambia of which, 3,732 were Zambian entities and 155 were foreign companies. 54% of the total registered contractors in that year were in Grade 6 which is the lowest category and most of the contractors being involved in building activities. The grade 1 category, the highest denomination only had 4% of the registered contractors and most of them foreign entities. Figure 1.1 illustrates the ratio of local contractors to foreign contractors in grade1.

illustration not visible in this excerpt

Figure 1.1:Ratio of Local versus Foreign Contractors in NCC Grade 1

This means most local contractors are not able to compete for a bid for major construction projects on the market which are dominated by a few, construction multinational enterprises. The local contractors resort to subcontracting work from large, multinational enterprises. This means subcontracting is very important in providing opportunities for the local contractors. Deductions from this research will help local contractors to practice subcontracting effectively and also assist prospective local contractors to have means of best practice.

Subcontracting enables skills transfer from bigger well-established main contractors to small local subcontractors (CIBD, 2013). Therefore, in order for the small local contractors to develop and be able to compete with multinational contractors for major project they should be involved in many successful subcontracting arrangements. The findings from this research will provide information that will equip subcontractors to perform well in subcontracting hence betterment the reputation, experience and knowledge in order to promote local contractors moving from lower grades to higher grades of contractors.

1.6. Brief research methodology

The research methodology explains the way in which the research was carried out. It includes the research design, population, sample size, data collection, instrument design, instrument validity, pilot study, and the method of data processing and analysis. This research was designed to be conducted in the following stages:

Stage 1: Literature review

This stage involves the systematic reviewing of relevant literature on the research subject. Various literature related to subcontracting in the construction industry were reviewed. Literature reviewed covered areas about subcontractor selection, subcontracting in Zambia, conflicts and issues between main contractors and subcontractors and how to improve the relationship. This was done for the researcher to understand the subject, recognise what other researchers have previously achieved and lastly to prepare the research methodology appropriate for the research.

Stage 2: Study design

The next stage after an extensive review of literature was to design an approach that would allow for the collection of relevant data. A mixed method approach was adopted in this research. Where qualitative and quantitative methods were used simultaneously. Therefore, structured interviews were conducted and questionnaires were designed and distributed by the researcher to collect information.

Stage 3: Data collection

After the development of the questionnaire, it was distributed among the contractors, consultants and clients in the construction industry. Data was collected from personnel in the construction industry in Lusaka the capital city of Zambia who are currently working or have worked on a completed or on-going construction project. The data collected was to help obtain the perspectives of practitioners regarding the relationship between contractors and subcontractors.

Stage 4: Data analysis and recommendations

The data collected was analysed using Microsoft Excel program. After the analysis of data collected the researcher came up with a conclusion on the relationship between contractors and subcontractors in Zambia. The last step was suggesting recommendations for a better interface and areas for further studies.

1.7. Organisation of the dissertation

The report is organized in seven chapters.

Chapter 1: Introduction – this is a general introduction to the topical area. It outlines the background, rationale, aim and objectives of the study. It also presents the achievements recorded in the study.

Chapter 2: Literature review – This chapter lays a foundation of the study through the review of literature relevant to the relationship between main contractors and subcontractors in construction industry. Literature review gives the reader knowledge and ideas that have already been established by other researchers.

Chapter 3: Methodology – The purpose of this section is to highlight the various research methodologies and the justification for the method adopted for the study. This chapter presents the methods and plans used by the researcher to collect, analyse and interpret information.

Chapter 4: Findings and Data Analysis – This chapter serves to provide the reader with an overview of the significant findings from the research and their denotation.

Chapter 5:The Partnering Processes Flowchart Model – This chapter provides the suggested procedures that should be followed when implementing non-contractual project partnering between main contractors and subcontractors.

Chapter 6:Conclusions, Study Limitations and Recommendations – this chapter gives an overview of the study. Provide conclusions drawn from findings and recommendations based on the conclusion. It also states the limitations of the study

1.8. Chapter summary

This chapter provided an introduction of the topic to be studied and a brief overview of subcontracting. The use of subcontracting in the construction industry, its benefits, challenges encountered and the importance of the relationship between main contractors and subcontractors. The chapter also highlighted the study justification, objectives, summary of the research methodology and report layout. The next chapter will present a review of various literature reviewed on subcontracting and the relationship between main contractors and subcontractors.

CHAPTER 2: LITERATURE REVIEW

1.

2.

2.

2.1. Introduction

The previous chapter conveyed an introduction of the study. It presented an overview of subcontracting, its application in construction projects and also its benefits. The chapter presented the rationale and objectives of the research. This chapter presents a review of available literature on subcontracting and its application in the Zambian construction projects. The benefits of subcontracting and importance of the main contractor-subcontractor relationship were emphasised. However, it was shown that little attention was being paid to this relationship as a result a poor relationship typically exists between main contractors and subcontractors. The poor relationship affects projects negatively resulting in difficulties including disputes, cost and schedule overruns and poor work quality. A number of factors that contribute to a poor relationship were delineated. In addition, a number of methods suggested by researchers to resolve the relationship were outlined.

2.2. Subcontracting

A subcontractor is an individual or company hired by a general contractor to perform part or all of the obligations of the general contractor’s contract. Since subcontractors are usually specialist in the execution of a specific job, they are ordinarily hired by contractors when the contractor lacks expertise in a specific type of work on the project (Okunlola, 2015). Subcontracting enables the contractor to limit their risk exposure and enables the expansion of the available workforce so that there are more opportunities to bid on new projects (Abdullahi, 2014). In construction projects, a typical group of subcontractors that will work on a project may include such diverse trades as electrical, steel erection, roofing and drywall to name a few. However, Smith and Hinze (2011) clarified that the range of opportunities for subcontractor is not limited to construction as it is possible for subcontractors to operate in the information technology and information sectors of business.

The practice of subcontracting offers several advantages over internalisation, such as production efficiency and organisational flexibility. Assigning work to a subcontractor reduces work load and limits the contractors risk exposure (Fah, 2006). Eriksson and Westerberg (2011) advocated that, subcontractor integration in projects can also assist with timely completion, improved quality, innovativeness and enhanced performance in environmental, health and safety issues in projects. Moreover, subcontractors play an important role in a construction project as they make up for the lack of manpower and technical know-how either, reduce costs and help mitigate project risks (Abdullahi, 2014).

Subcontracting is not only beneficial to the main contractor but also to a country’s economy (Arditi and Chotibhongs, 2005). The benefits that can be expected from subcontracting from an economical point of view are; contractor development, global competitiveness, sustainable business growth, good environmental management and socio-economic development of developing countries (Dlungwana and Rwelamila, 2005). In Japan, subcontracting has been regarded as an important source of efficiency and competitiveness for industries in textiles, general machinery, electric machinery and automobiles (Mihara, 2015).

Due to the benefits of subcontracting and the increase in number and complexity of projects, there has been increased dependence on subcontracting within the construction industry (White and Marasini, 2014). In the South African construction industry, up to 70% of building and 30% of civil construction projects are subcontracted out (CIDB, 2013). Because of the increased dependence on subcontracting in the construction industry, the operational interface between main contractors and subcontractor has become an important aspect to successful project delivery (Akintan & Morledge, 2013).

An interface can be defined as a dimension between two parties that can mutually influence each other (Huang et al, 2007). Construction project involves so many parties, such as owners, designers, construction contractors, subcontractors, maintenance contractors, and material suppliers. Not managing the interface between these parties can lead to cost overruns, project delays, litigations, and compromising project quality (Huang et al, 2007). On the contrary, a good relationship will sustain the project from planning until handover (Gadde and Dubois, 2010). A healthy relationship also possesses advantages to both the main contractors and subcontractor. For main contractors, good relationships with their subcontractors reduce the risk of poor quality work as well as cost and time overruns. Whereas for subcontractors the benefits are preferential status when bidding for work as well as support and guidance during the construction process.

However, the increase in complexity, the over-supply of specialist firms, and the declining construction output has cultivated an adversarial atmosphere which has had a negative effect on main contractor and subcontractor relationships (Matthews et al, 2000). Furthermore, relationship studies between main contractor and subcontractor have received little to no attention (Bankvall et al, 2010). This is detrimental considering the relevance the relationship has to the projects.

2.2.1. Types of subcontractors

In construction projects there are three main categories of subcontractors (CIDB, 2013), subcontractors can be identified as:

- specialist subcontractors; these are subcontractors that perform specialist services on a project. The works are typically building or engineering services such as electrical, ventilating, plumbing, heating, and air-conditioning;
- generalist and specialist trade subcontractors; this category generally consist of main contractors that use subcontracting as a means to get work when they are not under a contract. The subcontractors here offer general trade services or specialise on specific trades such as painting and brickwork; and
- labour-only subcontractors; these are skilled tradesmen that mainly perform labour-only services on a project. The main contractor will provide the materials and supervision.

However, Mbachu (2008) revealed that subcontractors can also be categorised from a contractual point of view, the categories are as follows:

- selected subcontractors, these are subcontractors solicited from a list that has been recommended in the tender documents as potential subcontractors;
- domestic subcontractors, these are hired by the main contractors to perform specific responsibilities; and
- nominated subcontractors, these are subcontractors that are nominated by the client or client’s agent to perform specified task for the main contractor on a project.

2.2.2. Selection of subcontractors

Subcontractors play a vital role in executing significant portions of construction work on a project. Therefore, one of the most important factors to ensuring project success is having the correct subcontractor. This is because choosing the right subcontractor for the job influences, the parties’ relationship and the quality of work. Consequently, it is important that the most appropriate subcontractors for relevant sub-works is selected during the bidding process. Tayeh (2009) emphasised this by stating that selecting the most appropriate subcontractors for the relevant work is highly critical for the overall project performance. During the bidding process optimum selection of subcontractors is vital for an accurate and realistic bid proposal. However, the importance of subcontractor selection is mostly underestimated and neglected in construction and little research has been conducted to aid general contractors in their selection of subcontractors (El-Mashaleh, 2009).

The selection techniques created by the researchers, call for an assessment that includes multiple criteria to make selection decisions. These techniques are there to diminish current practices which rely heavily on subcontractor’s bid proposal to make selection decisions. A majority of the techniques of subcontractor selection are based on a set of subjective criteria, these are; performance on previous projects, financial strength, completion on time, safety record, timely payment to labour and suppliers (El-Mashaleh, 2009).

Haksever et al, (2001) conveyed that main contractors use commercial aspects as the overriding features in selecting a subcontractor, such as: experience in similar projects, previous project performance, previous disputes, current workload and price of bid. Several papers concluded that the lowest bid price is usually the key determinant factor for selecting subcontractors by general contractors (Luu and Sher, 2006). However, Arslan et al. (2008) argued relying on bid price for selecting a subcontractor may cause poor quality of work, delays and costs overruns that can cause major losses for construction companies in the long run.

Recently researchers have devised a number of models for subcontractor selection to assist the main contractor’s decision making process in choosing a subcontractor. Ko et al. (2007) developed a selection model called the Subcontractor Performance Evaluation Model (SPEM). The model considers; construction method, duration, control ability, services after work completion, collaboration with other subcontractors, corporative manner and material wastage as crucial factors for subcontractor selection.

Tserng and Lin (2002) proposed an Accelerated Subcontracting and Procuring (ASAP) model. The model helps general contractors to select subcontractors by deciding on an appropriate trade-off between risk and profit for different combinations of subcontractors. ASAP is based on the assumption that all considered subcontractors are recognized as qualified subcontractors for the particular job.

Arslan et al (2008) highlighted that some of the proposed methods and approaches by researchers are complex and difficult to apply in practice. Arslan et al (2008) proposed a simple and user-friendly system model called web-based subcontractor evaluation system (WEBSES). The evaluation process is done using a weighted average score for considered subcontractors based on 25 evaluation criteria, which are assumed of identical importance.

2.3. Subcontracting in the Zambian construction sector

Subcontracting is extensively used in the construction industry as it allows the main contractors to employ a minimum workforce in construction projects and promotes specialization (Chung et al, 2003). In some cases, the main contractors will only act as construction management agents in construction projects and subcontract a large volume of their work to subcontractors. Like many countries with an increasing construction industry, Zambia has also augmented the practice of subcontracting in recent years. Figure 2.1 illustrates the growth in the Zambian construction industry.

illustration not visible in this excerpt

Figure 2.1:Contribution of Zambian Construction Industry to GDP (CSO, 2014)

Another aspect that has augmented the practice of subcontracting in the Zambian construction industry is RDA’s 20% subcontracting policy.

2.3.1. 20% subcontracting policy

Zambia is a country that is aspiring to be a prosperous middle income Nation by 2030. A document named vision 2030 outlines in what manner Zambia aspires and will work towards being a strong and dynamic middle-income industrial nation that provides opportunities for improving the wellbeing of all, embodying values of socio-economic justice. One of the objectives for economic growth is by promoting strong entrepreneurial capabilities, self-reliant, outward looking and enterprising, where nationals can take advantage of potential and obtainable opportunities giving opportunities for all citizens to become resourceful and prosperous nationals (Republic of Zambia, 2006). As a result, the government has encouraged Zambian citizens to participate in economy building activities and one of the major ones being contracting in the construction industry through subcontracting.

Acknowledged the significance of subcontracting in the Zambia, a ministerial statement was then issued on July 25, 2012 directing RDA to ensure a minimum of 20%subcontracting on all major road contracts to Zambian-owned Companies with shareholding structure as specified in the CEE Act No.9 of 2006. This statement was passed on in order to:

- empower local contractor hence encourage subcontracting among Zambians;
- this will then help in creating jobs for Zambian citizens;
- hence creating sustainable local contracting capacity and the systematic and subsequent upgrade of Zambian contractors from grade six through to grade one; and
- ultimately retaining capital in the country by reducing the number of foreign contractors hired to do projects in Zambia.

Despite all the benefits of subcontracting, without proper management its benefits cannot be fully experienced in reality it can turn out to be a loss. Many of the projects in Zambia have been delayed due to issues between main contractor and subcontractor (Kaliba, 2010).

2.3.2. Types of subcontractors

In Zambia the subcontractors are categorised into two groups: the domestic subcontractor and nominated subcontractor. A domestic subcontractor is a subcontractor who contracts with the main contractor to supply or fix any materials or goods or execute work forming part of the main contract. Basically this is a subcontractor that is employed or named by the main contractor. A nominated subcontractor is a subcontractor who is stated in the contract as being nominated or a subcontractor instructed to the main contractor by the client to employ. The most common type of subcontractor in Zambia is the domestic subcontractor. Nominated subcontractors are usually specialists for example on bridges, piling, electricals, surfacing.

2.4. The relationship between the main contractor and subcontractors

The oxford dictionary defines a relationship as the way in which two or more concepts, objects, or people are connected, or the state of being connected. In a construction project the important relationships are between parties involved in the supply chain. The supply chain in the construction industry involves a set of companies that form an activity chain. Here the output of another activity is the input to the next. Therefore, ideal relationships between parties in the supply chain is essential to the project success (Beach et al, 2005). As a result, many organisations have sought to improve the supply chain relationships in recent years (Beach et al, 2005). However, Beach et al, (2005) noted that in many project environments the concern and improvements in operational relationship has not been significant at the lower levels in the supply chain. Figure 2.2 shows the interconnectivity of activities and relationships in the construction industry supply chain in the UK.

illustration not visible in this excerpt

Figure 2.2:The UK construction industry supply chain

Source: (Beach et al, 2005)

The interaction between head contractor and subcontractor on the supply chain often contributes to the degree of success or failure of any large-scale construction project (Jin et al, 2013). Meng, (2012) revealed project poor performance can be effectively reduced by improving some aspects of this relationship. On the other hand, when the interface is not properly managed the likelihood of project poorly performing is increased (Meng, 2012). If the contractual and personal features of the relationship between the main contractor and their subcontractors are uncertain, the likelihood of disputes arising is significantly increased. Disputes and conflicts between main contractors, subcontractors and other project participants often result in costly litigation and dissatisfied customers (Dossick and Schunk, 2007). It is therefore inarguable that the effective management of the interface between the main contractor and subcontractor can significantly increase the chances of project success.

In spite of its importance, and its effect on projects, the construction industry places very little emphasis on the main contractor-subcontractor relationship. The relationships between main contractors and subcontractors are often characterized as being strained by conflict and mistrust. The relationships are mostly transactional in nature and this enables the main contractor to effectively allocate excessive risk to the subcontractor (Miller et al. 2002). Miller et al, (2002) reiterated that the poor relationships between main contractors and subcontractors are contributed by the traditional procurement procedures based on price. The relationships between the general contractor and the subcontractors can mostly be characterized as pure competitive market relationships. As a result, the heavy reliance on competitive tendering for acquiring subcontracted works result in adversarial attitudes between the two parties. The main contractors mostly seek cost reductions rather than expertise and mutual cooperation from subcontractors. The relationship also involves a significant amount of uncertainty (Jin et al, 2013). The uncertainties usually stem from the nature of the construction process and others from the uncertainty of a potential partner’s performance during the construction process.

2.4.1. Types of relationships

The construction industry supply chain relationships are quite diverse, among which three distinct forms are; the traditional relationship, the project partnering relationship and strategic partnering relationship (Meng, 2012). The traditional relationship is a purely contractual relationship. This is usually a one-off contract setting, where companies are engaged through a competitive environment. It is criticised by many researchers as it often leads to selfish objectives, poor communication, a lack of trust among the parties, confrontations, problem escalation, and a lack of continuous improvement (Meng, 2012).

On the other hand, partnering is encouraged by many researchers because it is recognised a collaborative supply chain relationship (Meng, 2012). There are no fixed definitions used when defining partnering although common themes prevail in the relationship the relationship is based on trust, dedication to common goals, and an understanding of each other's individual expectations and value (Matthews et al, 2000). Partnering can be classified into project partnering focused on a single project and strategic partnering based on multiple projects.

2.4.2. Factors contributing to relationship problems

Researchers in recent years have conducted research in order to resolve the interface issues. Many factors have been identified as the causes to an ineffectual interface between the main contractor and the subcontractor in projects. For example, in Malaysia the lack of subcontractor skills was found to be one of the major contributor to contractor subcontractor relationships problems, causing delay in 78 construction projects studied (Kadir et al, 2005). Other than causing delay, coordination problems with subcontractor affected the construction labour productivity of residential projects in Malaysia (Alaghbari et al, 2007). From the reviewing and analysis of various literature related to main contractor and subcontractor relationships, key words or factors that lead to an ineffectual interface were collected. The following are the major causes of a poor interface between the main contractor and subcontractor extracted from various literature.

a) Factors caused by main contractors or subcontractors

From literature review a number of factors were identified as causing interface problems between main contractors and subcontractors. Most of these factors are within the control of the main contractor or the subcontractor and can be solved by these two parties. The factors include, communication problems, payment problems, non-adherence to the construction schedule, revisions, multilayer subcontracting, poor quality work, lack of trust, health and safety, bid shopping, takeover of equipment.

i) Communication

Communication is described as the imparting or exchanging of information by speaking, writing, or using any other medium. During a construction project there are many parties that are involved. Often in large projects a contractor can work with several subcontractors which means for the subcontractor to do work accordingly and to be in sync with the main contractor proper communication is required. Briscoe et al, (2005) discussed that communication exchange requires effective communication systems for safeguarding appropriate dependable flows of information in a project.

Lack of proper communication between parties in a project is recognised as one of the major causes of delays in Malaysian construction industry (Sambasivan and Soon, 2007). Fearne and Flower, (2006) described the absence of coordination and communication integrated along with adversarial and disjointed relationships between involved parties in a project as a primary reason for the perceived poor construction supply chain.

Proper communication between the main contractor and the subcontractor is vital for a project to be successful. An effective communication structure that exists throughout the whole project is essential to ensure project success. There are various aspects that make the communication between the main contractors and contractor to be effective. Main aspects are the means of communication, the timing of communication and amount of information communicated. The means used for communication between the parties in the project is important and requires special attention. Normally, communication among construction parties could be done verbally, face to face or by phone calls, or written such as normal mail, memo, facsimile or other means. However, Eriksson, (2015) noted that more face to face meetings on projects can strengthen integration in construction projects.

Conflicts could rise due to poor communication, when information is communicated from main contractor to subcontractors in the dying moments of a scheduled task. This will likely put pressure on subcontractors because of insufficient time for planning, scheduling, preparation and execution of the task. As a result, the products or work will likely not meet the highest quality, or even less than the desired by the main contractor and this can cause relationship problems between the main contractor and subcontractor (Huang et al, 2008).

ii) Payment problems

In many cases subcontractors claimed to have experienced some form of payment delay from the main contractors that is not linked to any work or service on the part of the subcontractor (CIBD, 2013). These delays in the payment have significant effects on subcontractors who as small companies are more vulnerable to cash flow delays. Payment problems are more prevalent in private sector projects since in public sector projects, subcontractors have some protection from the client (CIBD, 2013).

Payment delays may occur when the main contractor face financial problems during a project usually due to poor management, meagre cost estimates or payments delayed by the owner. Such problems can delay the payment of funds to the subcontractor hence delaying work. In construction, timely payment of the subcontractor is regarded as one of the most serious aspects to resolve in order to create and maintain a long term relationship between the contractor and the subcontractor (CIBD, 2013).

Payment issues have caused lack of trust between the subcontractor and main contractor, and both parties are overtly suspicious in all business dealings. In some cases, the contractor is perceived a poor paymaster and this will complicate the relationship even further (Okunlola, 2015). Payment issues are acknowledged as one of the key determinants of successful relationships between main and subcontractors, with subcontractors reluctant to work with main contractors with a reputation for not paying on time. In this regard legislation has been introduced in many countries, to enforce the right of subcontractors and suppliers to receive payments irrespective of various issues with the main contractor. However, payment problems are still a major issue and require attention.

iii) Non-adherence to the construction schedule

Once a construction project is awarded, its time duration is identified, the completion time of the project is then defined and included in the contract. It becomes the contractor’s objective to schedule his construction activities and that of his subcontractors to meet the identified project duration and ensure project success. Within this schedule a main contractor will allocate work to the subcontractor and that work is supposed to be accomplished with the main schedule in consideration. Hence the subcontractor can be considered as having their own schedule with their own deadline.

A conflict may occur between the contractor and his subcontractors if any of the parties does not adhere to the schedule. This applies to both parties the main contractor and subcontractor because if any party delays the execution of his scheduled construction activities, it will consequently delay the progress of the activities of the other party. Likewise, it is important to insure all the parties stick to the planned schedule to ensure project success (Sambasivan and Soon, 2007).

iv) Revisions

During project execution there is a risk that the client may change specifications or requirement of work to be redone. Enshassi et al (2007) indicated such changes of drawings and specification during execution affects productivity. The low productivity leads to interface problem between main contractor and subcontractor. Problems may occur when the client approve a revision when there is a need to add, delete, or modify the original work-drawings and the scope of work is carried out by the subcontractor. The problems usually occur between the main contractor and subcontractor when agreeing the cost of carrying out the work specified in the revision.

v) Multilayer subcontracting

Multilayer subcontracting or latent subcontracting is the further subcontracting downstream by subcontractors, with or without the knowledge or consent of the main contractor or client (Yoke-Lian et al, 2012). Subcontractors’ usually further subcontract work to be less vulnerable to fluctuation in business, have more flexibility in workforce coordination, and be able to reduce cost of management (Andy NG and Price, 2010). However multilayer subcontracting is one of the major causes of poor construction quality and construction site safety (Yoke-Lian et al, 2012). Multilayer subcontracting also affects the interface between main contractor and subcontractor as the main contractor will lose direct control over project works (Abdullahi, 2015).

vi) Poor quality work

Normally when the main contractor has been awarded the construction contract, they will perform some part of the construction work while another part of the work is allocated to the subcontractor to do. Therefore, the main contractor’s success on the project relies on the temporary bounded interdependent services of the subcontractor (White, 2014). Thus if any of the parties does not perform their work with acceptable standards, their work will affect the other party. Consequently, it will create interface problems between the main contractor and the subcontractor.

vii) Lack of trust

Trust is an ambiguous and complex phenomenon and, has been studied and described by researchers in many ways depending on their discipline and the problems they have been studying. Trust can be described as the belief that someone or something is reliable, good, honest or effective. It is the assured reliance on the character, ability, strength, or truth of someone or something. Humphreys et al., (2003) recognised that a major requirement for success in a main contractor and subcontractor relationship is trust. Hartman and Caerteling, (2010) argued the significance of both price and trust when selecting a subcontractor and concluded they were both important mechanisms. Miller et al., (2001) highlighted that, the increase in the prevalence of unfair practices in construction projects has resulted in dispute and conflict descending from financial self-interest between various stakeholders within the process. Therefore, the presence of a transparent relationship between main contractor and subcontractor can increase the chance of a project being successful.

viii) Health and safety

The construction industry on average has a high rate of occupational injury and fatality than most industries. In this regard safety is a crucial aspect that requires profound consideration in a construction project. It has been noted that the rate of injury increases among contractors and their workers on large and complex projects, particularly those which require a large number of subcontractors (Enshassi et al, 2008). In this regard virtually all general contractors have a requirement to ensure their subcontractors work in a safe manner and to conduct their on-site operations in compliance with relevant safety codes and laws (Clough et al, 2005).

On a project, a contractor may employ hundreds of workers, in addition the main contractor may use the services of several subcontractors who in turn have dozens of workers. There exists a possibility that there will be an injury or a loss of life for anyone of the labourers. However, the responsibility on health and safety will not be clear. Chiang (2008) supported this by indicating that it is apparent that there is confusion about which party is really responsible for jobsite safety.

Subcontractors have been known to rarely employ safety professionals and have no interest in safety work. Tayeh, (2009) believed that subcontractors have no interest in safety matters because most of them believe that safety should be the responsibilities of the principal contractors. According to Arditi and Chotibhongs (2005), the reason for subcontractors’ disinterest in health and safety issues is due to the expense incurred in implementing such a program. On the other hand, the general contractors usually leave the responsibility of safety to subcontractors and may never take an active part in ensuring that the subcontractor is actually necessary safety measures.

Lack of proper safety regulations and standards on the work site, can lead to injury or even loss of life (Tayeh, 2009). This can lead to interface problems as there will be issues of responsibility between the main contractor and the subcontractor. In addition, interface problems may arise when the main contractor enforces safety measures that are too burdensome for some subcontractors to comply with.

ix) Bid shopping

Bid shopping is an unethical practice whereby the main contractor seeks other bids, using the lowest bid as leverage for better offers. Although the main contractor can see bid shopping as beneficial in terms of lower costs and market dynamics, the resulting savings do not come without a price. Subcontractors who have won a contract through bid shopping to the point where they don’t know whether the job will be profitable aren’t likely to exhibit a spirit of trust. Bid shopping promotes lower quality work by subcontractor in an effort to cut costs even more. It can delay project completion due to derisory planning. The Construction Industry Development Board South Africa, (2013) noted that bid shopping damaged the contractor’s reputation, ultimately leading to subcontractors refusing to bid for such a contractor.

Miller and Degn, (2003) concluded that bid shopping affects the relationship between the main contractor and subcontractor as it may lead to a breakdown in trust and collaboration between the parties. The subcontractor will not trust the main contractor as they are under the assumption that the main contactor just wants to take advantage of them. At the same time the main contractor will also be in distrust they will assume the subcontractor will attempt to cut as many corners as possible in order to save costs. Bid shopping therefore creates an adverse business environment that is likely to cause a contentious atmosphere between contractors and subcontractors.

x) Takeover of equipment

This is a clause usually used by main contractors to sanction them the right to utilise the subcontractor’s specialised equipment in the event that the subcontractor cannot perform their work. This would occur usually if a subcontractor goes bankrupt during the course of the project or is terminated. Hence takeover of equipment would allow the main contractor to keep the project progressing by using the subcontractor’s equipment to perform the essential work on the project. Subcontractors would often take issue with the clause as they will be suspecting that the main contractor is abusing them by exercising their right to take the subcontractor’s equipment, but without a reasonable cause. As a result, subcontractors will not be willing to be in a relationship with a main contractor that has exercised this right.

xi) Termination for convenience

This is a contract provision that permits a main contractor to terminate the contract of the subcontractor for virtually no reason but just for the main contractor’s convenience. In some projects, main contractors possess this one-sided right to pay the subcontractor for the portion of work completed and then suspend all work under the subcontract. This right when used by the main contractors, subcontractors see it as heavy-handed and harsh (McCord, 2010). The exercising of this right would therefore negatively impact their relationship with the particular main contractor that engaged in his practice (Sears et al, 2008).

b) External factors

External factors are those impacting the relationship between main contractors and subcontractors but beyond the control of the main contractor or the subcontractor. In general, they are independent of subcontractor’s or main contractor’s performance, but could directly a-ect the success of their relationship or even the project. The influence of these factors on the relationships vary from time to time depending on change in public interests, market fluctuations, policy changes and environmental conditions. These factors include unexpected changes in material and labour costs, environmental issues, change of governmental regulations and laws.

i) Unexpected changes in material and labour costs

The construction industry is characterised by extensive use of heavy machinery, a sizeable amount of material and labour force. The costs for labour and costs for materials are factors that need special attention for the project to be successful (Yik et al, 2006). If either the main contractor or if the subcontractor overlooks something or makes a mistake in the initial cost estimation for the pricing of materials and labour, there will likely be project costs overruns and possibly project failure and this can lead to interface problems. Issues with changes of cost usually arise as a result of inflation in a developing country. Because of inflation material or labour can escalated beyond their estimation, the main contactor or his subcontractor may make a loss instead of profit.

ii) Environmental issues

During project execution there is always a risk that the project will be affected by natural factors for example, weather problems or geological problems. These factors cannot be controlled by human beings accordingly, the factors are called the “acts-of-God” factors (Huang et al, 2008). When there are severe weather conditions it becomes difficult to perform certain construction activities. Consequently, the subcontractor work may be affected possibly causing delays and quality short falls. When such a situation occurs there can be problems between the main contractor and subcontractor.

Besides severe weather, a situation may occur when contractor or his subcontractor may find out that the geological characteristics of the project site ware not as expected. For example, the site may be rocky, having different elevation hence requiring more work than level ground. If the contractor or main contractor submitted a bid for site with normal geological characteristics, losses will be incurred and conflicts may arise between the contractor and his subcontractor (Tayeh, 2009).

iii) Change of governmental regulations and laws

Mortaheb et al, (2010) identified that change of government laws and regulations over the construction industry can affect the relationship between project parties. Issues such as taxation and licenses can affect, the work done by a main contractor or a subcontractor on a project. The work can merely become unfeasible or the quality, duration and costs can be affected, this in turn will affect the relationship between the main contractor and subcontractor.

2.4.3. Impacts of interface problems

Mortaheb et al, (2010) listed a number of impacts that arise from poor interfaces between project parties in Iran. With the use of interviews and questionnaires different viewpoints of owners, contractors, and consultants were collected. From these viewpoints impacts were collected, analysed and prioritized, as follows:

1. time overrun in terms of delay;

2. cost overrun;
3. poor project quality;
2. disputes between different project parties;
3. arbitration;
4. suspension of the work or contract termination; and
5. litigation.

2.4.4. General solutions to interface problems

The following are the suggested means to minimize relationship problems on construction project, hence increase probability of project success:

- Othman, (2002) suggested that in order to achieve smooth execution project activities during the construction phase, a balanced flow of information between main contractors and subcontractors is crucial.
- Akintan and Morledge (2013) suggested the Last Planner System Approach (LPS) as a means of managing challenges between main contractors and subcontractors. The last planner system approach is a production tool developed to improve planning on construction projects. Its essential objective is to build trust amongst project participants using factors such as: collective pull-based planning, measurement, learning, and continual improvement.
- Kadefors (2004) affirmed, in order to build trust among parties, fairness is fundamental. Therefore, it is essential to have a more equitable distribution of project risks between the main contractor and subcontractor to engender trust between the two. By sharing risks, the parties see the projects as a collective enterprise, thus strengthening the chances of project success.
- Mignot (2011) advised that project participants need to eradicate stereotypes, ideologies and do away with their professional delineations to be able to trust one another. Stereotypical behaviour among project members causes members of a particular professional group to separate themselves from others, within the same work environment, who they perceive as not sharing their professional orientations. These behavioural stereotypes can form barriers between subcontractors and main contractors.
- Akintan and Morledge (2013) stressed that there must be a system that ensures a prompt and sustained sharing of information between the main contractor and subcontractor. In addition, the parties must have an understanding that if information flow is affected or knowledge sharing is hindered it will eventually affect the level of trust between them thus compromising the project.
- Fah (2006) recognised that in order to solve problems and minimise its negative effects on a project, a proper plan should be devised. Therefore, actions that are to be taken to reduce problems should be well researched with the problem and its root causes comprehended. Planning for problem solving should be collective encouraging partnership between the parties.
- Jin et al (2013) noticed that many interface problems are often linked to the imbalance of power existent in the relationship. Despite subcontractors being vital to the main contractor’s success, subcontractors are often taken for granted. The interface between the two groups are increasingly controlled by head contractors disregarding that maintaining high quality relations is beneficial to both the main contractors and subcontractors. Imbalance of power between head contractors and subcontractors can be eliminated by forming partnership based relationship that are based on mutual objectives and fair contracts.
- Khalfan et al, (2005) advocated that with mutual cooperation and harmonisations main contractors and subcontractors can secure project success. Through an integrated supply chain, the skills of subcontractors can be evaluated and used to enable incremental improvements and innovation in a project. In addition, subcontractors are often divorced from the main contractor’s decision making processes. Therefore, in order to enhance value creation in construction projects subcontractors should be integrated into the decision-making processes as well.
- (Enshassi et al, 2012) recommended that main contractors should issue the financial payments to the subcontractor on time, as it enables the subcontractor to cover expenses, purchase the required materials and pay for the labours on time, therefore ensuring the completion of the works without delay. Moreover, contractors are also recommended to supply and store the required materials early to ensure the continuity of the works and evade the shortage of materials on site. Whereas for the subcontractor, Enshassi et al, (2012) suggested the use of all safety measures, the utilisation of modern techniques for management of labours and materials, the proposing of suitable and reasonable prices that ensure acceptable margin of profit for them and lastly the employing of a sufficient number of qualified technical staff.
- Andy NG and Price, (2010) identified 18 site coordination problems and 16 essential causes to problems leading to poor site coordination in building projects from literature review and advice from experienced industrial practitioners. They then grouped the causes into three categories, namely staffing related causes; technical related causes; and management system related causes. Using a questionnaire survey, they found that management system related problems were well above technical related causes and staffing related causes. As a result, they suggested that main contractors should focus their efforts in the management systems, especially communications, hence forth develop more efficient and effective site coordination and this is likely going to lead to improved subcontractor performance in construction projects.
- Rajput and Agarwal (2015) advocated that the documentation between main contractors and subcontractors regarding designs, drawings, plans, schedules and management systems should be clear and complete. They suggested that if the main contractor is not content with the performance of subcontractors they must issue warnings to the subcontractor before assigning part of the work to a new subcontractor. Moreover, the main contractor should inform the initial subcontractor well in advance. The parties should also consider their financial conditions and plan carefully in order to not face problems of financial crisis during a project. To the subcontractors, Rajput and Agarwal (2015) suggested that they should do their work with respect to terms and conditions which are given in the contract document. Conforming to required standards and finishing work within the required time. To do so the subcontractor should possess high quality material and sufficient experienced labour.

2.5. Partnering

Projects in the construction industry are organised, controlled and executed by many parties with different knowledge and skills such as architects, engineers, suppliers and subcontractors. Because of their diverse knowledge and understanding, the parties might have different goals and objectives in a project, causing conflicts and induce adversarial relations (Widen et al, 2014). Therefore, there is need for coordination between the multiple project parties to ensure the smooth sailing of projects. Partnering is seen as a means of moving away from this adversarial relationship in construction projects to a more collaborative method of managing projects (Khalfan & Swan, 2007).

The notion of partnering practised today is not a recent phenomenon. The first broad application of partnering as a procurement method was in the USA with Arizona State Highways and the US Army Corps of Engineers in the 1950s (Hong Kong CIC, 2012). The partnering projects delivered cost savings and reduction in project time delivery. In the early 1990s partnering was adopted in the Australian and the United Kingdom construction industries. Success experienced with project partnering in the UK led to many private sector organisations entering into strategic long-term arrangements. The UK and Australian partnering experience was transferred to the South African and Hong Kong construction industries. Today, the total use of partnering agreements and arrangements around the world has increased markedly (Hong Kong CIC, 2012)

2.5.1. Definition of partnering

There is no definite definition of partnering as partnering projects can differ from each other and because it is difficult to define the exact factors that a partnering strategy consists of (Widen et al, 2014). Partnering is generally understood as a commitment by parties involved in a project to work closely or cooperatively, instead of competitively and adversarial. It is a long term commitment between two or more organisations to implement a structured collaborative approach that facilitates team work across contractual boundaries for the purposes of achieving specific business objectives (California Department of Transportation Division of Construction, 2013).

The intention of having a joint relationship using partnering, is to reducing disputes hence improve cooperation and enhance efficiency by shortening the length of time taken to solve disputes and complete works, thus reducing costs and increasing margins. Therefore, for partnering to be successful, all parties involved must appreciate the benefits of collaborative team effort in a project. There should exist a relationship that is based on trust, dedication to common goals, and an understanding of each other’s separate expectations and values. This attitude and commitment must be steered by a commitment from the top management and adopted down at all levels within all organisations involved (Hong Kong CIC, 2012).

2.5.2. Types of partnering

Partnering has been categorised in different ways by various researchers. The categorising employed is usually based on the duration of the partnering arrangement. Here partnering can be either project partnering or strategic partnering where project partnering is based on a single project whilst strategic partnering is based on a long term commitment (Meng, 2012). However, for this research partnering methods are classified using Hong Kong Construction Industry Council (Hong Kong CIC, 2012) method where partnering arrangements are categorised based on contractual status.

a) Non-contractual partnering

A Non-contractual partnering arrangement is not legally binding meaning it does not change the terms of contract or the contractual relationships that exist between the parties. Here the contract can act as an insurance policy should the parties retreat from their roles and responsibilities under the partnering agreement (Skeggs, 2003). It involves the building of harmonious working relationships between stakeholders by aligning of shared goals and objectives. Through this development of trust and shared goal there is an increase in the likelihood of project success. Non contractual partnering can be applied to both strategic partnering and project partnering environments. There is no set arrangement for adopting non-contractual partnering as a result it can be applied to traditional contracts and in alternative procurement methods (Hong Kong CIC, 2012). An important aspect that normally exists in a non-contractual partnering environment is the project charter.

i) Project charter

A project charter sometimes referred to as a partnering agreement, is a non-binding document that typically comprises a statement of basic principles and objectives that are envisioned to guide and govern the relationship between the parties in a partnering arrangement. Parties involved in the arrangement will sign on the document therefore it serves as evidence of a moral commitment by all parties to act in a collaborative manner in the best interests of the project and work together. A partnering charter is developed during the initial workshop in the partnering process.

[...]