Abstract
Purpose
The aim of this research is to explore how a programmatic multi-project context influences project-based firms (PBFs) in organizing their relations with other PBFs and suppliers in a project-based industry.
Design/methodology/approach
A multiple case study research is conducted. Data are collected from two case studies in the construction infrastructure sector. Eleven interviews with contractors and other suppliers are the primary source of data collection. The data are complemented by procurement documents and expert consultations.
Findings
The findings show that within a programmatic multi-project context, PBFs settle relations with (1) key partners for program management capacity, PBFs establish relations with (2) main contractors to divide projects and (innovation) tasks, and PBFs intensify relations with (3) suppliers to ensure continuity and expertise.
Research limitations/implications
The study contributes to the body of project management literature by exploring PBF’s relations with other PBFs and suppliers in a multi-project context. Based on empirical data, the study provides a distinction in layers presenting distinct levels of PBF’s supplier relations. This layer structure provides an excellent starting point for future studies exploring the program perspective of PBFs in the integrated supply chain.
Originality/value
Given the increase in programmatic multi-project context for project-based domains, discussed in both literature and practice, this study explores the effect of programs on relations of PBFs with other PBFs and suppliers. The study distinguishes PBF’s relations with the different suppliers in three layers and discusses the characteristics of these relations.
Keywords
Citation
van de Waerdt, G., Volker, L., Vosman, L. and Voordijk, H. (2024), "Developing project-based supplier relations in a programmatic multi-project context: an exemplary case study from the construction industry", International Journal of Managing Projects in Business, Vol. 17 No. 8, pp. 72-91. https://doi.org/10.1108/IJMPB-09-2023-0222
Publisher
:Emerald Publishing Limited
Copyright © 2024, Gijsbert van de Waerdt, Leentje Volker, Lynn Vosman and Hans Voordijk
License
Published by Emerald Publishing Limited. This article is published under the Creative Commons Attribution (CC BY 4.0) licence. Anyone may reproduce, distribute, translate and create derivative works of this article (for both commercial and non-commercial purposes), subject to full attribution to the original publication and authors. The full terms of this licence may be seen at http://creativecommons.org/licences/by/4.0/legalcode
1. Introduction
In a typical project-based industry, such as the construction industry, public–private partnerships are organized around projects (Geraldi and Söderlund, 2018; Söderlund, 2004), where different suppliers collaborate for the duration of a single project (Sydow and Braun, 2018). As a result, supplier organizations, such as main contractors and sub-contractors, are project-based firms (PBFs). PBFs provide unique solutions through projects, for which they use own and other firms’ expertise (Martinsuo and Ahola, 2022). Note that, the constellation of actors, with whom a PBF delivers the project, may differ over individual projects due to the uniqueness and complexity of projects (Anne Skaates et al., 2002).
In project-based industries, the potential benefits of grouping projects under programs receive increased attention (Vosman et al., 2023). Programs are defined as a multi-project framework which bundles related projects with common strategic and business objectives to achieve benefits not to be realized in individual projects (Eweje et al., 2012; Pellegrinelli, 1997). Especially in times of resource scarcity (like limited human capital and raw materials) and increasing project complexities, working in programs can be a potential solution to overcome fragmentation and its negative side-effects, such as low level of innovation, knowledge sharing and knowledge transferring in project-based industries (Vosman et al., 2023).
Although the program literature is extensive, much of the contributions have an intra-organization focus, concerned with only one organization (Artto et al., 2009; Dietrich, 2006; Martinsuo and Hoverfält, 2018). Previous studies that do consider an inter-organizational multi-project context look into project-transcending ways of organizing and developed a conceptualization of multilevel project governing from a practice perspective (Brunet, 2019) or use institutional theory to explore the internal logics of different organizational spaces within a particular program organization (Frederiksen et al., 2021). Even though according to Manning (2017) a multi-project context provides an important challenge for inter-organizational projects, the perspective of programmatic supply chain PBFs remains unfortunately relatively unexplored.
The multi-project context study of Ekeskär et al. (2022) shows, however, significant contributions on the involvement of a third-party service supply provider in a programmatic context. Yet, apart from mentioning horizontal and vertical relations of PBF contractors, they do not discuss or specify these relations in detail. So, besides that a third-party service supply provider facilitates horizontal relations as found by Ekeskär et al. (2022), much is still unknown about the influence of multi-projects on PBF’s relations in the project supply chain. In this context, Martinsuo et al. (2020) call for a further examination of relationships between different organizations in multi-project management. In addition, Martinsuo and Ahola (2022) suggest further investigation in the type of inter-organizational relations of PBFs in multi-project context and the effects of different types of relationships on PBFs. As most of these studies do not provide empirical evidence, we believe it is interesting to investigate the actual implications of programs on PBFs in practice.
In this study, we are particularly interested in how PBFs organize their relations with other suppliers in a multi-project and programmatic context. It focusses on the research gap of a PBF’s inter-organizational relationships in construction programs to explore the effect of multi-project context on PBFs' relations with other PBFs and suppliers. A case study research method is chosen to answer the research question: “How do PBF’s organize their relations with other PBFs and suppliers in infrastructure construction programs?” The study therefore provides an empirical basis for evaluating PBF’s relations in a multi-project context and allows for further conceptualization of supply (chain) management in this specific setting. Furthermore, results may benefit PBFs in other domains than construction to shape supplier relations in a multi-project context.
This paper is structured as follows. Section 2 presents the relevant theory on programs, PBFs, relations in multi-projects and aspects of inter-organizational relations. Section 3 discusses the methodological approach taken in this research. Subsequently, the results are presented in Section 4. Section 5 consists of a discussion, and Section 6 closes off with a conclusion on the main findings, limitations and suggestions for further research.
2. Theory
2.1 Programs as a form of multi-project context
In literature, program management is found among a wide variety of terms and concepts to describe project management and project studies (Geraldi and Söderlund, 2018). Program management is a form of multi-project organizing, where multiple projects are implemented and controlled in a parallel or sequential mode (Martinsuo and Ahola, 2022; Martinsuo and Hoverfält, 2018). Although program management may have its similarities with other forms of multi-project management, it is distinguished by a group of (repetitive) projects with an overall goal or mission (Eweje et al., 2012; Fathi et al., 2007; Turner, 2009). “The approach is used to implement strategy, to develop and maintain new capabilities, to manage complex information systems (IS) implementations and many other business changes” (Pellegrinelli et al., 2007, p. 41). In this study, the definition of program management is adopted from Shehu and Akintoye (2009), who describe it “as an integrated, structured-framework that co-ordinates, aligns and allocates resources, and plans, executes and manages a number of related (…) projects to achieve optimum benefits that cannot be realised if the projects are managed separately” (p. 704).
There is a consensus that programs achieve their benefits by managing projects all together instead of independently (Frederiksen et al., 2021; Lycett et al., 2004). If managed well, programs can be more effective and efficient than projects (Lycett et al., 2004). Other benefits are manifested in the allowance for inter-project learning in programs (Arnoldussen et al., 2017; DeFillippi and Sydow, 2016). Furthermore, programs may increase innovation because organizations are able to spread the investment over multiple repetitive projects (Arnoldussen et al., 2017; Eriksson and Szentes, 2014). Empirical evidence of this performance increase is unfortunately still lacking.
2.2 PBF’s relations in a multi-project context
In project-based domains like construction, organizations operate in projects through which the PBFs provide unique solutions by utilizing their own and other firms’ expertise (Martinsuo and Ahola, 2022). The constellation of actors may differ over various projects (Anne Skaates et al., 2002), where, for example, in the project-based construction industry, the fluctuation of actors may be even classified as high (Manning, 2017). Such a fluctuation in actors is, however, not unique for the construction industry. Project-based industries consist of temporary supply chains, where difficulties arise because of process fragmentation and multiple relations between PBFs in the supply chain (Aloini et al., 2015). The relations formed by PBFs with the other actors in a multi-project context can be distinguished by horizontal and vertical relations (Ekeskär et al., 2022). Vertical relations refer to the relationship between a PBF and its suppliers, which may be perceived as a common fluctuating relation for project-based industries. PBFs generally develop stable vertical relationships with suppliers if they recognize benefits of economies of scale, which is often the case (Ebers and Maurer, 2016). The horizontal relations, however, are relationships between PBFs on the same level and relatively novel for the multi-project context. To facilitate and coordinate relations among PBFs and projects in the construction industry, a third-party logistic provider (TPL) may be required (Ekeskär et al., 2022). As shown in the work of Ekeskär et al. (2022), PBFs in the construction industry cooperate and compete simultaneously on inter-project issues. Actors involved in both cooperation and competition is referred to as coopetition (Bengtsson and Kock, 2014). Cooperation benefits the process because PBFs can learn from mistakes and successes of fellow PBFs. While competition keeps PBFs sharp and motivated to perform, coopetition is considered to be a driver for knowledge seeking, market expansion and technological progress and directly linked to innovation (Bengtsson and Kock, 2014; Park et al., 2014). We therefore consider the differentiation in horizontal and vertical relations as a useful structure to distinguish inter-organizational relations of PBFs in a multi-project context.
2.3 Supply chain relations in a multi-project context
The nature and characteristics of inter-organizational relations have been largely discussed in previous studies (Adami and Verschoore, 2018; Steen et al., 2018). While the division of relations into “ties” by Steen et al. (2018) may be perceived as extensive, the distinction of relations in inter-organizational networks by Adami and Verschoore (2018) is explicit, which suits this explorative study into supply chain relations in a multi-project context. Adami and Verschoore (2018) distinguish between three distinct aspects for governing project networks, namely (1) supply, (2) contractual and (3) information networks. Basically, in a network, partners are related to each other which can either be by supply, contract or information aspect. While the supply aspect of relations refers to the management and control of transactions, such as goods and services, it is also associated with the power and authority distribution between actors (Kim et al., 2011). Interestingly, according to Ekeskär et al. (2022) it is possible for contractors in multi-projects to share resources, such as sub-contractors. So, main contractors may have the same sub-contractors in a multi-project context. The contractual aspect of a relation relates to the control of one company over another (governance), provided by formal involvement and formal power of contracts (Kim et al., 2011). The contractual relation differs from the supply relation because not all supply relations are accompanied by contractual relations (Adami and Verschoore, 2018). So, partners can have a relation with all aspects but may as well be connected by only one or two relation aspects. Lastly, the information aspect of relations refers to the routine activities, associated with the actual operation of the project network. Information exchange is claimed as an informal instrument of governance (Adami and Verschoore, 2018).
The networks of supply, contract and information interact. For example, collaborative contractual ties and mutual understanding of it support the development of informal ties, resulting in information exchange and knowledge sharing (Hällström et al., 2021). In other words, the information aspect of relations may benefit from well-designed contractual agreements. In this context, a well-designed contractual agreement is one that supports collaborative practices (Hällström et al., 2021). Also Ekeskär et al. (2022) mention that information exchange may be promoted by contractual arrangements and the coordination of roles (Martinsuo and Ahola, 2022). It is therefore important to take all three aspects into account when studying supply relation in a multi-project context.
2.4 Conceptual framework
The concepts discussed above are integrated into a conceptual framework (See Figure 1). The conceptual framework is based on the distinctions in relations made by Ekeskär et al. (2022), where relations for main contractors (PBFs) exist in horizontal and vertical relations. Derived from Adami and Verschoore (2018), each of the horizontal and vertical relations is assumed to be based on three aspects: (1) information exchange, (2) contractual relation and (3) supply of goods or services.
3. Methodology
3.1 Research design
The study follows a multiple case study research method to allow for in-depth research of a contemporary event on which the researcher has no control (Yin, 2018), such as the inter-organizational relations between PBFs as a phenomenon in an actual setting as studied in the context of this study. Furthermore, the main research question is a “how” question for which qualitative case study research is suitable (Yin, 2018). Since this research is a study on a relatively new phenomenon, where much information is unknown, a case study allows for a rather flexible approach because relatively less pre-structuring is required (Verschuren et al., 2010).
For this study, a strategic sample of representative cases with similar features is selected to make the findings more generalizable and robust (Verschuren et al., 2010; Yin, 2018). It was sought for a (1) programmatic multi-project context within a (2) project-based industry, where (3) PBFs engage in the program and access is granted by the actors involved. A replication design is followed to find similar results (Yin, 2018) by applying the same protocol in the multiple cases. To guide the data collection and analysis, the multiple case study was featured by prior development of a conceptual framework based on the latest theoretical insights into the topic (see Figure 1). To increase the validity, the study depends on multiple sources of evidence, i.e. forms of data collection such as interviews, documents and expert consultations (Yin, 2018).
3.2 Case description
The case concerned a large multi-year plan of construction activities of one of the biggest municipalities in the Netherlands, including the renovation of around 830 bridges and 205 kilometres of quay walls that are potentially at the end of their functional lifetime. The multi-year plan, consisting of several programs, is one of the first on such a scale in the Dutch project-based construction industry. Two programs within this large multi-year plan are chosen as suitable cases for this study. Both programs are procured by several collaboration agreements (CAs), with a framework agreement as contractual basis. A framework agreement is a long-term contract between a public client and one or more supplying parties. Per program two to three contractors were contracted. Note that the CA mainly contains agreements on how to collaborate on a program level but no further details about the actual construction activities of the quay walls or bridges. Such details are included in separate project agreements (PAs). For each project within the program a separate PA is formed, leading to several individual project contracts between a contractor and the client based on the general CA conditions. In this study, a total of two of the programs were included, studied as two separate cases, with the following specificalities (see also Table 1).
Case A is the Program Renovating Quay Walls (PRQW) which is still in its development phase. This program consists of the execution of repetitive projects, in this case, the renovation of quay walls, to be performed in a subsequent and parallel order. The CA entailed a commitment to collaboration for a period of 6 years with optional extensions to maximum 10 years for the design of quay walls. Three main contractors were awarded a contract for this program. Note that some contractors consist of a combination of contractor firms executing the work together. Furthermore, the main contractors hire sub-contractors (suppliers) to execute parts of the scope for them.
Case B concerns the Program Safety Measures (PSM) for emergency calls. Whenever the functioning status of a quay wall, bridge or street finds itself in a potentially dangerous situation, the contractors are to develop a solution in a short term to fix the problem and execute the work. Two main contractors have been awarded a collaborative agreement within this program for a period of 6 years. Like case A, contractors can exist of a combination of several contractor firms and the contractors may as well hire sub-contractors (suppliers) to execute work for them.
3.3 Data collection
Multiple data sources and data collection methods were examined to strive for reliable data collection through data triangulation (Verschuren et al., 2010; Yin, 2018). To collect the data, we conducted informal chats with experts in the field and interviews and collected underlying documents. Interviews were the primary source of data; document review and informal discussions are considered secondary data complementary to the interviews. Interviews are recognized for their direct focus on case study topics and insightfulness (Yin, 2018). Informal chats with experts occurred when discussing in between findings of the research. The experts were all professionals who have been working in the construction industry with public clients and PBFs. The experts guided the research in interpreting in-between findings. Strategic documents established between client and contractor, such as selection and contractual documents, were reviewed to guide the interviews and verify findings.
The participants of the individual interviews were chosen in such a way that all the contractors of both programs were represented. Every contractor firm involved in the CA contracts delivered at least one interviewee. For case A, all tactical and operational key officers from the three contractors and one of the strategic key officers were interviewed. The contractors’ program managers and their assistants were chosen as interviewees for case B. These people were chosen because they are most involved in composing the contractors’ relations, having good insights in the development of the contractors’ relations with other suppliers for the programs. This resulted in a total of 11 interviews, with interviewees all from the contractor side. Duration of the interviews was between an hour and one hour and a half. As conversation started, questions were asked related to the background of interviewees. Subsequently, questions were posed in a semi-structured manner. The question topics were related to with whom relations were formed by the PBFs, what the relations consist of and why these relations were formed in that specific way. The semi-structured setup allowed for follow-up questions to achieve more in-depth answers. The interviews lasted until all relations of the PBFs in the program were discussed. Near the end of the interviews, there was room for the interviewees to discuss important (neglected) items. The interviews were closed by expressing appreciation towards the interviewees for their participation.
Only one interview was conducted through Microsoft Teams due to logistical and time issues, and the remaining interviews were held in person. Note, the main language of the interviews was Dutch because smoother conversations were expected when speaking in native language. Furthermore, the interviews were recorded, as proposed by Yin (2018). The interviews were transcribed in full of the audio recordings. The transcriptions were sent to the interviewees to verify the data and to make sure inaccurate data were eliminated.
3.4 Data analysis
The technique used to structure the data is open coding, where data are compared, labelled and classified (Verschuren et al., 2010). What followed was an iterative process of labelling, coding and categorizing, conducted in the software program ATLAS.ti., where codes and categories were compared to each other and literature theories, to find patterns, insights and concepts (Verschuren et al., 2010). The multiple case study allowed for a higher abstraction due to cross-case analysis on the findings, where, even for a case study existing of only two cases, the technique of cross-case analysis is relevant (Yin, 2018).
At first, through the open-coded labels, a distinction was made between inter-organizational relations. During this analysis, it was found that besides horizontal and vertical relations, as described by Ekeskär et al. (2022), also inner circle relations are established by PBFs. It emerged from the data that PBF’s first tender in collaboration with “key partners” for the program. Together they form a consortium of partners contracted by the public client. Within this inner circle, horizontal and vertical relations were categorized as three layers: (1) a key partner layer, (2) an inter-organizational layer between main contractors and (3) a supply chain layer.
Subsequently, within these layers, it was sought for what the relations consist of. The open codes were deductively categorized based on the pre-defined categories: (a) supply, (b) contractual and (c) information aspects of Adami and Verschoore (2018). So, for example, within the main contractor layer (2), the code “sharing knowledge” and “sharing innovative ideas” were grouped under the information (c) category, whereas in the supply chain layer (3), “long-term agreements” was categorized under the contractual (b) aspect category. Some iterations took place to arrive at the final code and category system for the inter-organizational layers. Further analysis took place by examining the codes and categories and validating these results within the author team. Reasons for establishing the type of relations and the implications the PBF’s relations management were sought for in the data. This led to several themes for each of the inter-organizational layers, answering the main research question on how PBFs organize their relations with other PBFs and suppliers in infrastructure construction programs. The empirical data confirmed horizontal relations (between main contractors) and vertical relations (between a main contractor and suppliers) as mentioned by literature and also showed inner-circle relations (within a consortium/partnering of several contractor) in programs. The inner-circle, horizontal and vertical relations are visualized in three inter-organizational layers: (1) a key partner layer, (2) a main contractor layer and (3) a supply chain layer. The initial conceptual framework (Figure 1) is therefore extended as shown in Figure 2.
4. Results
We found that PBFs settle relations with key partners, establish relations with other main contractors and intensify relations with suppliers in a programmatic context, which is further explained in this section. We discuss the findings on how PBFs organize their relations with other suppliers in a program in four separate and one overarching section. Figure 2 shows key partners which consist of individual contractors in a consortium or in main-contractor, sub-contractor structure, in the key partner layer (1). Main contractors with other main contractors in the main contractor layer (2). And main contractors and their suppliers in the supply chain layer.
The remainder of this section first visualizes the transformation from the abstract framework to the cases. Subsequently, the findings of the two case studies are presented in parallel. Aspects of the within-case analysis of both case studies about collaboration with the supply chain are presented, and findings from the cross-case analysis are incorporated as well. Note that hereafter whenever the term contractor or main contractor is used, it refers to the consortia or main contractor awarded with the program.
4.1 Inter-organizational layers from a main contractor perspective
In order to explain the inter-organizational layers of the program, the “one-dimensional” framework of Figure 2 is transformed into a “two-dimensional” framework in Figure 3. Figure 3 consists of the same graphics to visualize the main contractors, suppliers and their relations as in Figure 2. However, Figure 3 better visualizes how all main contractors are related and suppliers of main contractors within the program overlap.
To show the results in a more detailed manner, Figure 4 shows how the relations and main contractors as depicted in Figure 3 are projected on the PRQW case. Hence, Figure 4 visualizes the three layers: (1) key partners (red circle); (2) main contractors (blue circle) and (3) supply partners (green circle). Figure 4 also shows where the relationships consist of in relation to their (a) supply, (b) information exchange and (c) contractual base. The next sections elaborate on the findings per layer.
4.2 Settle relations with key partners for program management capacity
The key partners layer (1) (see red circles in Figure 4) is the first inter-organizational layer composed by contractors as supply partners. The contractors form relations in this layer during the selection and tendering phase of the program. The key partners are defined as partners with whom one is tendered to get the contract for the program awarded. Each relation consists of the three aspects: supply, contractual and information.
The contractual aspect becomes clear when looking at the formalization of the relationships. Interestingly, the contractors in both programs took different approaches in formalizing the relationship with their key partners. Some contractors chose to form consortia, such as joint venture or general partnership, while other contractors approached the program with a main-contractor, sub-contractor structure. The consideration for different structures is explained by one of the interviewees: “In the basis you try to execute the scope on our own. If you can, you tender for yourself. (…) So, one of the reasons can be that you do not have a competence in-house. And we often chose, when the volume is large enough, to partner in a combination.” Such considerations may be different for other companies. Despite the chosen structure, all key partners formalized their long-term relationship by formal agreements.
Furthermore, several contractors’ consortia put the emphasis on making sure there is capacity and capability for the management of multiple projects within the program. As one of the interviewees mentioned, “[The key partner] realized they could not handle the planning and promises for this program themselves. (…) Now I assist the [key partners] in getting people ready to operate no longer in the traditional role as contractors, but to put on another attitude [as contractors] towards the program.” The main contractors aim to learn over the projects, which requires project-transcending, or in other words, program management skills. The need for program management was also mentioned by another interviewee, as he gave reasons for why their construction company became key partners with a construction management firm: “[Our key partner] is good in setting and managing a plan of approach. And secondly [the key partner] is good in managing a program, they are tactically capable. In the basis we are a construction company, which is why we strengthen each other. So, in the key partner layer, the contractors (PBF’s) settle relations with other contractors to ensure program management capacity.
4.3 Establishing relations with main contractors to divide projects and (innovation) tasks
The second inter-organizational layer entails the relations between main contractors (2) (see blue circle in Figure 4). These relations were based on information exchange, without direct contractual agreements between the main contractors. Note that only the formal conditions in both programs, which are set by the client, mention the wish for formal collaboration between the contractors.
Contractors, especially from the PRQW, seemed willing to establish relations and share knowledge with each other as well as towards the client to achieve a successful program. The contractors wished to be early involved in preparing and dividing the projects to bring in their knowledge and expertise. “We [want to assist in] programming and setting up the project, so that we can help in making the right decisions for the client. (…) We make these plans together [with other main contractors] and for that we meet together.” Furthermore, the main contractors share knowledge on the organizational process, as “We take on project-transcending tasks that should not be dealt with in the operation. We share knowledge on organizational processes and design processes, for example, on how to transition from one design phase to another.” Another respondent mentioned how the main contractors divide investment in tasks and product: “This is a collaboration in which [all main contractors] invest together. We share a collaboration coach with the other [main contractors]. For example, [another main contractor] developed a risk management planning system for all [involved contractors]. So, we all take on tasks to standardize.” This shows that the main contractors established relations with other main contractors to divide projects and (innovation) tasks.
The question arises why the contractors were willing to establish relations with other contractors and share information since this is not common in competitive industry practices, as mentions by an interviewee: “It is new to share information among contractors (…) to suddenly share firm sensitive information.” At first, it may just be due to contractual obligation set up with the client, which the main contractors meet on a regular basis. Another reason, mentioned by interviewees, was that the contractors now see the benefit of working together to improve each other’s processes and together achieve a successful program. One respondent also mentioned a general shift in the market to intensify collaboration, partly because of the current scarcity in human capital and resources.
The willingness for collaboration could also lie in another organizational aspect originating from the client, namely past performance. At the start of the PRQW, the contractors were assigned, in consultation, to certain areas within the program. The idea was that contractors receive projects within their assigned area and assessed on performance of their work by key performance indicators (KPIs). The KPIs are used to determine whether the agreement at program level is terminated in between when underperforming, but also possibly extended after 6 years when performing well. In this concept, they do not compete directly against each other but rather against themselves. In the PSM, the projects were equally divided in the first year. After that, projects were assigned based on KPI scores. The best-performing contractors were to receive most and largest projects. So, in PSM, contractors competed for the same projects within the program. Consequently, comparing PSM and PRQW, contractors in the PRQW are more open to establish relations to share knowledge and to share developments of project management tools with fellow contractors than in PSM.
Although not explicitly mentioned, the rivalry aspect in the PSM may be perceived as a barrier in fully collaborating and sharing knowledge within the established relations. The contractors in PSM are in coopetition, as they both compete and cooperate, which was confirmed by the fact that several interviewees referred to the other contractor as a competitor. On the contrary, in interviews with key officers from the PRQW, no one referred to the other contractors as rivals. The contractors in the PRQW are in collaboration. Considering the statement that contractors in PRQW do not compete against others, but against themselves, it seems even beneficial to share knowledge with each other since utilizing each other’s expertise and knowledge will result in better performance, which in turn will lead to higher KPI scores. With higher KPI scores, it is more likely that the program-level agreements are extended. This perspective may explain why contractors in the PRQW want to establish relations and to share knowledge and divide tasks.
To establish relations with other main contractors to divide projects and tasks, competent individuals seem to be a key factor. In PRQW, key officers on strategic, tactical and operational levels were requested in the CA with the client. A request for roles in contracts can also occur in regular projects. However, in the program, the tactical key officer is new and specifically established as a project-transcending role. According to the contract, the tactical key officer is responsible for project division, capacity of teams and team performance.
As mentioned earlier, knowledge exchange between main contractors is not common practice in the construction sector. The fact that knowledge exchange occurs in this program is unique, and the tactical key officers embody this information exchange (see also Figure 5). The exchange occurs within formal coordination meetings attended by the client and all tactical key officers, as well as outside the formal meetings. Interviewees agree that a tactical key officer requires other competences than a “standard” project manager. An interviewee mentioned about the tactical role that “We search for people suitable to execute this task, because it is a different role than the traditional role that the client or contractor have fulfilled in the last thirty years.”
Interestingly, the main contractors put up candidates with different backgrounds, regarding position in the firm, for the role of tactical key officer. Their positions vary from company director, business unit director and project (program) leader. What they have in common is the mindset to establish relations with other main contractors to collaborate and to share knowledge to achieve a successful program. So, the individual tactical key officer is important for establishing relations with other main contractors. In the PSM, the client did not demand roles on three levels from the contractors as in the PRQW. Differences between the cases with regard to the main contractor layer are presented in Table 2.
4.4 Intensify relations with the suppliers to ensure continuity of workflow
The last inter-organizational layer concerns relations between a main contractor and the supply chain (3) (see green circles in Figure 4). Regarding the choice of sub-contractors, or other suppliers, there were only some contractual clauses in the CA that prescribe such parties should meet general terms and norms. Thus, the contractors are independent in composing their network. This means that supply chains of contractors can overlap (see Figure 6). The relations in this layer consist of contractual agreements, supply and some information exchange. When comparing to projects, the same supplies (and thus suppliers) are required to execute renovation of quay walls.
Regarding the contractual relations, there are several forms of formal long-term relations varying from framework or intention agreement to references used in the tender phase. Interestingly, especially in-house contractors of both the PRQW and the PSM seem to recognize the benefit of framework contracts, which are used in combination with a pricelist to simplify delegating work to sub-contractors. It prevents negotiating prices repeatedly. Durations may differ from one year to the duration of a program. The framework agreement is formed from a strategic perspective because it requires less time to delegate the work to sub-contractors. For such a framework contracts, evaluation of the bids is not merely on price. Instead, it appears to be on service, quality and additional value to the program. In that way, the contractor tends to transfer the clients program ambitions to the supply chain. The application of framework agreement for the supply chain seems to be an influence of working in programs on the contractual network of contractors. Also, because the framework agreements are project-transcending, but within the period of the program, in that way, lessons learned can be considered in sequential projects in the program.
On the other hand, contractors may not need contract to “bind” sub-contractors for the long term; they can manage as well with informal incentives. An informal incentive in general is, if a sub-contractor performs well on the first project, it is likely that it will be involved in sequential projects. Then the sub-contractors must prove themselves on the first projects within the program. This structure, where the only legal basis is project contracts, can keep the market competitive, in contrast to long-term contracts such as framework agreements. The latter is acknowledged by outsourcing and in-house contractors. Contractors which outsource their work want to remain flexible to choose the best sub-contractor on price/quality ratio. “For a framework agreement one should be convinced of a sub-contractor’ knowledge and expertise.” In-house contractors wanted to remain flexible, for all it could be that they invest in a certain technique in the future to be able to execute the work themselves.
The example of main contractors aiming for long-term relationships with suppliers shows how the relations between main contractors and their supply chain develop in a program. Apparently in a program, main contractors want to intensify the relations with their suppliers. A driver to intensify relations seems to be the continuous flow of projects. Due to the program character, the main contractors need stable supply chain relations in the standardization and realization of projects over time. An interviewee of the main contractor states that, when the program functions, “Then there is a change in role and relation with the supplier, the supplier will then deliver his insight for the planning [for the coming 6 years], and I need him for capacity and availability, which makes [the supplier] co-creator of the planning.” So, the continuous character of the program causes intensified relations with the supply chain, while at the same time continuity is also an important pre-condition for the main contractors themselves. Main contractors from both PRQW and PSM mentioned that as long as there is no sight on a continuous flow of projects, there is no need to invest in supply chain collaboration.
4.5 Synthesis of the findings
Summarizing, relations between actors were distinguished into three inter-organizational layers: (1) key partners, (2) main contractors and (3) supply chain partners. The relations in the programs were based on a combination of information exchange, contractual agreements and supply of goods. The program setup provided room to enhance relations between main contractors, all PBFs and other suppliers. As main contractors settle relations with the key partners, establish relations with other main contractors and intensify relations with their suppliers, the influence of programs was most visible in the main contractor layer. The relations established between main contractors are unique and certainly not business as usual in the construction industry. It makes it even more unique that within the relations, main contractors share information without an underlying contractual agreement. The main contractors utilize the relations to divide projects and tasks.
The relations in the key partner and supply chain layers may not be as novel as the findings on the main contractor layer; nevertheless, the deeper exploration of the relations resulted in interesting findings since it showed that in programs the main contractors aim for long-term relationships with their suppliers and even want to formalize it. They intensify the relations with suppliers to ensure continuity and involve the suppliers in an earlier stage and benefit from their expertise. Looking at the key partner layer in the programs, there is more focus on settling relations with key partners to ensure project management capacity.
Hence, the findings on these two cases show how programs influence the relations of PBFs with their supply chain. We found that two important characteristics of programs were explored which influence the enhancement of relations. At first, the lack of competition created by the program setup stimulated the main contractors to establish relations with other main contractors. Second, for the supply chain layer, a continuous flow of projects from the client creates more urge for main contractors to intensify relations with their suppliers. These are important insights when setting up new programs on a multi-project basis with the aim to connect PBFs and intensify their relations within the project supply chain.
5. Discussion
5.1 Implications for research
This explorative research contributes to the literature on PBF’s relations in an inter-organizational programmatic context, contributing to the research gap as addressed by Martinsuo and Ahola (2022) who suggested to further investigate inter-organizational relations of PBFs in programs. Our empirical study showed that PBFs settle, establish and intensify relations with suppliers in a multi-project programmatic context, leading to several implications for further research and practice.
At first, PBFs establishing relations with other PBFs to divide projects and tasks, witnessed at the level in this research, is an interesting finding for research. In the PRQW case, the PBFs were willing to share knowledge and innovations within the established relations. In contrast to what Ekeskär et al. (2022) found on coopetition in horizontal relations, the PBFs in PRQW cooperated without competition within the established relations with other PBFs. Program conditions such as the lack of mini-competition for projects, combined with positioning of competent individuals on project-transcending roles, are considered factors that drive contractors in the PRQW towards cooperation instead of coopetition. The PBFs in the PRQW perceive the cooperation in sharing knowledge and innovation necessary to achieve a successful program. This is in line with the previous study of Park et al. (2014) who posed that firms can generate high innovation performance when the intensity of cooperation among partners is high. However, Park et al. (2014) add that for such high innovation performance by firms, moderate intensity of competition should exist as well. According to literature, high innovation performance is best gained by coopetition, as for coopetition the actors are required to compete and cooperate simultaneously (Bengtsson and Kock, 2014). The findings of this study question whether this statement holds for programs, as more innovation is witnessed in cooperation.
For a PBF to establish relations, Ekeskär et al. (2022) identified the necessity for a TPL provider which facilitates cooperation between actors in a multi-project context. However, such a TPL provider is not found in the main contractor’s layer in this study. Apparently, the third parties at meso level are not necessary to establish relations between PBFs to facilitate inter-project coordination and cooperation in the programs. Rather, this coordination role is recognized at the micro level in individual roles. The contractors have their own tactical key officers who are expected to manage project-transcending activities and resources and to facilitate collaboration. Where the experience and emotional intelligence of managers are already perceived as important for the success of projects (Sposito et al., 2024), for programs, like portfolios (Jerbrant and Karrbom Gustavsson, 2013), even other competences are expected from individual management roles; specifically, roles concerned with an inter-project focus, such as the tactical key officers, require other competences. It underwrites the research of Miterev et al. (2016) on competences of program managers, which stated that specific competences are required for management of programs. Hence, our study confirms the competences such as emphasis on communication skills, contextual awareness (not the project but the process), planning and control and team building (collaboration).
In the supply chain layer, PBFs intensify relations as they aim for long-term relationship with their suppliers in a program. Interestingly, in intensifying the relations, main contractors (PBFs) bind their suppliers informally and formally. The PBF’s informal relations, as mentioned by Martinsuo and Ahola (2022), are identified in this study as long-term relations based on a short-term agreement. Interestingly, the “informal” long-term relations develop by the incentive that if a supplier performs well, it will be invited for sequential projects. In that case, the incentive is not incorporated in the contract; rather, it is an informal incentive. This is in contrast with the findings of Steen et al. (2018), who described incentives to be part of the contract. Apparently in programs the incentives can be separate from the contracts and more informal or relational based. Furthermore, purchasing supplier management in programs seems to differ from more regular supplier management approaches, as proposed by Kraljic (1983). In this study, PBFs intensify the relations with suppliers to ensure continuity. Interestingly, PBFs may use short-term agreements for these strategic long-term relations, which contrasts with regular supplier management. On the other hand, the long-term agreements in the program were partly established, to prevent repeatedly negotiation of prices, while Kraljic (1983) devotes this efficiency of process to the non-critical, short-term items. So, apparently in programs the characteristics and corresponding strategies for non-critical and strategic goods are perceived different than in previous portfolio management studies.
Lastly, programs, which bundle projects with common goals or mission, are recognized in literature as beneficial for learning, innovation and efficiency (Arnoldussen et al., 2017; Frederiksen et al., 2021; Lycett et al., 2004). However, the interviewees mentioned lack of continuity of projects as a hindering factor for the latter mentioned benefits. Our data point out that promise and foresight of future projects, referred to in literature as shadow of the future (Zhang et al., 2021), may not be taken for granted to automatically result in success. In this context, Zhang et al. (2021) state that it is not necessary for parties to struggle for immediate benefits if they have strong expectations for future cooperation. However, even though contractors in our programs had sight on repetition of projects in the future, they struggled with the lack of projects. Interviewees mentioned the need for consecutive projects to start and preserve the inter-project learning curve and to establish long-term relations with the supply chain. These findings imply that in construction programs, the shadow of the future may be applicable, whenever there is a continuous consecutive repetition of projects right from the start.
5.2 Implications for practice
The implications for practice are twofold. At first, the research leaves practical implications for contractors (PBFs) operating in programs. For example, contractors valued the participation of project management companies in programs more than in projects. So, one could say that a multi-project context relates to additional value of project management firms. Looking at the layer between main contractors, the establishment of relations between PBFs may be a success due to competent individuals on roles with an inter-project focus, such as tactical key officers. Program-competent individuals focus on collaboration, industrialized thinking and management of the process. A relation was observed between the level of inter-project focus of individual roles and the nature of competences, being more process focussed, which benefits the establishment of relations to divide projects and tasks. Another implication for PBFs is the aim of contractors for long-term relationship with the supply chain. Either by relational incentives or by formalized contracts, the contractors aim to bind parts of the supply chain for a long term. In some cases, the contractor decided to form strategic framework agreements with the supply chain, to prevent repeatedly negotiation of prices. So, a relation was observed between contractors in a program and the contractual aspects of relations in the supply chain layer, which develop towards long-term relationship.
Second, the study identifies the potential effect of program conditions, established between client and contractor, on the inter-organizational layers of contractors. The conditions influence the relations formed by main contractors. The conditions in the PRQW included assigned areas for each main contractor over which projects were divided. As a result, the contractors did not have to compete for projects based on KPIs. This lack of competition seemed to make contractors more willing to share information with co-contractors. So, the level of competitiveness established in the formal conditions is related to the level of information sharing in the main contractor layer. Furthermore, the tensions in the predictability and continuity of projects affect the contractors’ organization, especially in intensifying relations with the remainder of the supply chain. Contractors are cautious in formalizing long-term relationships with their supply chain, which in the end may also have its effect on the information exchange between contractors and the supply chain. A relation was recognized between the degree of continuous workflow and degree of long-term relations with the supply chain.
6. Conclusions
In this study we aimed to explore the effect of working in programs on PBF’s relation with other suppliers in a multi-project context. A case study on two cases related to infrastructure construction works in a Dutch municipality was conducted to answer the main question: “How do PBF’s organize their relations with other PBF’s and suppliers in programs?” The results distinguish three inter-organizational layers from the perspective PBFs in programs: (1) a key partner’s layer, (2) a main contractors’ layer and (3) a supply chain layer. Within the layer of main contractors (2), the main contractors establish relations with each other to divide projects and tasks. The research not only confirmed the possibility of coopetition between main contractors but also explored the potential for full cooperation between main contractors in programs. The establishment of relations and full cooperation between main contractors is caused by a lack of competition for projects and appointment of competent individuals on project-transcending roles. In the key partner layer, the contractors settle relations with key partners, with a focus on project management capacity. Lastly, in the supply chain layer, relations are intensified between main contractors and their suppliers. Contractors aim for long-term relations with sub-contractors and suppliers to ensure continuity. The long-term relations can be formalized in framework agreements, or they can be based on informal incentives. The findings of this explorative research leave implications for research and implications for practice, for both contractors and public clients.
This study has several limitations. First, in this study only the programmatic way of working is considered as an influencing factor on the PBF’s relations. However, it may well be other factors, such as current scarcity in resources and capital, force contractors to re-organize and adjust relations within their inter-organizational networks. In that sense, it cannot be posed with certainty that the relations are explicitly influenced by working in programs only. Second, in terms of external validity, this research only consists of two case studies, which make findings less generalizable. Third, this research focuses on contractors as PBFs and did not include interviews with supply chain partners. Actively involving other parties of the supply chain would probably have resulted in other findings on inter-organizational relations.
The research leaves suggestions for future research. At first, future studies could verify and validate the structure of three inter-organizational layers in other project-based situations of contractor supply chains. Second, for these studies, it is recommended to investigate more mature multi-project programs with continuous flow of projects, where contractors and their suppliers have had time to complete their relations in all layers and executed some projects. Such studies may be able to better investigate the influence of programs on the contractual and information exchange aspects of the relations in the supply chain layer. Third, future studies may investigate whether within the main contractor layer, cooperation is more beneficial to achieve program goals than coopetition. Lastly, future research may study the effect of programs on supply chain relations from the perspective of other PBFs in the supply chain. For example, take the perspective of sub-contractors. Apparently, main contractors do not have to have all parts of the scope in-house; thus, they can leave investments to sub-contractors, as it became clear from the key partner layer. Furthermore, interviewees mentioned that in a mature program with continuous projects and standardization, sub-contractors and suppliers may become more important in the supply chain layer. On top of that, sub-contractors may have relations with more than one main contractor in the program. Therefore, we suggest to also study the effect of programs on the inter-organizational relations of sub-contractors and further facilitate inter-organizational collaboration in a multi-project context.
Figures
Figure 1
Conceptual framework of multi-project supply relations based on Ekeskär et al. (2022) and Adami and Verschoore (2018)
Overview characteristics of the cases
Feature | PRQW | PSM |
---|---|---|
No. of clients | 1 | 1 |
No. of main contractors | 3 | 2 |
Agreement/contract | Collaboration agreement and project agreements | Collaboration agreement and project agreements |
Time period | 6–10 years | 6 years |
Program stage | Mainly design | Design and execution |
Scope | Quay walls | Bridges, quay walls, sink holes |
Source(s): Table by authors
Overview of differences in relations between the cases in the main contractor layer
PRQW | PSM | |
---|---|---|
Division of projects within the program | As long as a contractor performs well, it will be assigned to projects within “his” project area | The contractor which performs best receives the best projects |
Type of information exchange | Process plans, novel tools and ideas | Some project/process details |
Moments of information exchange | In and outside coordination meetings | Mainly in special orchestrated meetings |
Willingness of information exchange | Open to share, as long as everyone contributes | Willing to share, but also hesitant. Refer to the other main contractor as competitor |
Organization of roles | Three layers of key officers were requested: strategic, tactical and operational | Mirrors the client’s organization, has a project manager and a project leader |
Source(s): Table by authors
Conflicts of interest: This research is not funded by any entity in the public or private domain and, as such, has no conflict of interest.
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