Supply chain transactional barriers to design cost management

Abstract

Purpose

The purpose of this paper is to provide a better understanding of the factors that can influence the availability of cost information to support design and production decision making at the early stages of project team formation.

Design/methodology/approach

An investigation of the current practice of the exchange of financial information between supply chain organisations in the UK construction industry that was undertaken using a portal survey with 710 estimators. The survey sought data on the extent and maturity of the relationships that existed between contractors and their supply chain, and the effect this had on the gathering of subcontract price information.

Findings

The data analysis established that a significant difference existed in the approaches adopted by respondent organisations to the collection of subcontract price data for three different procurement approaches, and that main contracting organisations were developing closer relationships with their supply chain.

Practical implications

The paper concludes by suggesting that the use of supply chain price information for pre‐contract negotiation and post‐contract governance can influence the propensity of the supply chain to provide “richer” information on the costs assumptions made within their estimates to improve the empirical basis for future decision making.

Originality/value

The paper takes an original approach to the construction estimating process by considering supply chain price information available to the estimator.

Citation

Ross, A. and Goulding, J. (2007), "Supply chain transactional barriers to design cost management", Construction Innovation, Vol. 7 No. 3, pp. 274-287. https://doi.org/10.1108/14714170710754759