Contractor-supplier relationships in the construction industry - A case study

Abstract

The supply chain in the construction industry includes several actors, influenced by the project-based nature of the industry. The majority of studies concerning the interactions and collaborations between actors to improve the supply chain has concerned contractors, subcontractors and clients and resulted in developed procedures, such as partnering. However, the relationship between supplier and contractor has generally not been mentioned in those cases even though this relationship has a substantial impact on the supply chain process. This thesis aims to analyze possibilities and suggest recommendations to improve the supply chain process with an enhanced collaboration between supplier and contractor, by studying the relationship based on high-involvement relationships. The empirical findings are based on a case study of the relationship between a supplier and a contractor in the construction industry. A total of 11 interviews, distributed between the companies, has been conducted and constitutes the data on which the case study is based on. The studied relationship possesses several aspects of a high-involvement relationship without a formal mutual strategy. It was found that the fundamental feature of the relationship was social bonds through personal relations. Additional bonds such as knowledge-based bonds, technical bonds and legal bonds should be increased to enhance the high-involvement relationship. In order to implement a long-term orientation and commitment mutual long-term agreements should be created. Those agreements should be formalized in accordance with intermediate partnering in long-term, but in short-term partnering is not realistic to implement in the examined relationship. By increasing the influence of the supplier, through adding services and procedures to the range of their supply, the relationship and thereby the supply chain could be improved.