Beruflich Dokumente
Kultur Dokumente
1, January 2015
DOI: 10.7763/JOEBM.2015.V3.150 29
Journal of Economics, Business and Management, Vol. 3, No. 1, January 2015
II. LITERATURE REVIEW subcontractors together under the same entity [50]. It is a
fallacy to assume that the main contractor and subcontractors
A. Construction Performance are equal in nature. The main contractor who has financial
Traditionally, a construction project is considered capability will normally have more than one project at any
successful when it is completed on time, within budget, and time and is primarily concerned with the administrative and
of acceptable quality regardless of the complexity, size, and tendering works. In contrast, 89.5% of subcontractors are
the environment within which it is constructed [19]-[22]. from small to medium-sized enterprises, which have unstable
However, construction performance is subject to many financial backgrounds and business management practices
variables and unpredictable factors. The performance of [28]. Thus, it is important to study supplier and main
parties, resource availability, environmental conditions, and contractor separately and a study on supplier-contractor
contractual relations contribute to construction performance partnering within the construction industry is deemed
[23]. necessary.
Based on the previous literature, most problems arose from
B. Supplier-Contractor Partnering
contractors inefficient site management, poor site
coordination, improper planning, financial difficulties and Normally, the winning contractor will always divide the
problems with subcontractors [6], [23]-[30]. This can be project into multiple subcontracts; this is because the main
explained by the fragmented nature of the construction contractor does not possess certain skills and expertise.
project which consists of numerous parties which in turn Generally, 85% of construction tasks are executed by the
makes the project difficult to coordinate [31], [32]. Each of subcontractors, thus subcontractor performance will
the parties is involved at different phases of a construction determine the success or failure of any project [18], [51].
project and differs in terms of work activities, technologies Sambasivan and Soon [6] argued that a high degree of
and experience [33]. Such complex relationships may subcontracting often leads to a high risk of time overruns and
adversely affect a project's performance or lead to disputes causes inefficiencies to the local construction industry.
and confrontational relations between the parties if they are General contractor-subcontractor transactions involve a
not managed properly [34]-[37]. significant amount of uncertainty and the reliance on
Moreover, the construction industry is a very competitive subcontractors places much stress on the subcontractor-main
high-risk business. Many problems, such as poor cooperation, contractor relationship. 75% of total costs are derived from
lack of trust and ineffective communication may result in purchased materials and services [52]. Thus, the greatest
adversarial relationships between contracting parties [38]. potential cost savings lie within subcontractors emphasizing
Besides, the shift of responsibilities from the client to main the importance of managing suppliers. The main contractors
contractor through integrated contract has increased the also believed that in order to perform productively, they have
dependence of main contractor on subcontractors. Kadir [39] to work closely with subcontractors by developing closer
argued that coordination problems between main contractors working relationships [53]. Unfortunately, most of
and subcontractors is a major hindrance to work progress. relationships between main contractors and subcontractors
For instance, late issuance of revised construction drawings are often strained and adversarial [54].
to subcontractors can cause rework due to construction errors. In order to overcome these problems, partnering is
In order to perform effectively, contractors and their recommended to reduce the adversarialism between the
subcontractors must understand how their actions affect each parties by encouraging better integration and cooperation
other. This is because the parties in the construction project [55]. Numerous definitions of partnering have been derived
are interdependent and failure of any of the parties will from previous studies. Few scholars use partnering
seriously affect project quality and execution [34]. Latham interchangeably with collaboration [56]. Nonetheless, the
[40] and Egan [41] reports suggested that construction most referred definition was developed by the Construction
performance can be improved through greater teamwork not Industry Institute (CII) which defines partnering as
only at the site and organizational level but also with clients A long-term commitment between two or more
and suppliers; which can be implemented through partnering. organizations for the purposes of achieving specific business
Besides, there is a consensus among researchers that objectives by maximizing the effectiveness of each
supplier-contractor relationships may directly affect participant resources. This requires changing traditional
construction performance [42], [43]. relationships to a shared culture without regard to
There has been scant research undertaken to understand organizational boundaries. The relationship is based on trust,
supplier and contractor relationships in Malaysia. Previous dedication to common goals, and an understanding of each
studies in Malaysia focused on issues pertaining to the causes others individual expectations and values (CII, 1991).
of delay, procurement, construction methods, payment and Previous studies on client, consultant and contractors
defects [3], [6], [44]-[48]; while empirical evidence in relationships; indicates that partnering has a positive impact
supplier-contractor partnering impacts on performance is still on project performance, not only with regard to time, cost
lacking. This is supported by Bemelmans et al., [49] who and quality; but also improvement in profit margins and
argued that most of the literature focuses on the aspects of reduced litigations. Weston and Gibson [57] revealed that
partnering conditions, characteristics, barriers and partnering project performs better than those projects
subcontracting issues. Supplier-contractor research in the managed in an adversarial manner. Moreover, partnering
construction industry is still under-researched. enhance better risk management within both upstream and
Critically, past studies include the main contractor and downstream relationships which in turn help to improve user
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Journal of Economics, Business and Management, Vol. 3, No. 1, January 2015
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Journal of Economics, Business and Management, Vol. 3, No. 1, January 2015
5,828 contractors and based on Krejcie and Morgan table [20] A. A. Othman, J. V. Torrance, and M. A. Hamid, Factors influencing
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