Innovative Application of Downstream Alliances By Steven J. Mason MSc 24th November 2000

Introduction Research aims. §Research aim was to examine downstream alliances in the construction supply chain whether they exist and how they work §Research methodology was via three means Literature review Structured questionnaire Semi-structured interviews

Overview and definition §Partnering:- cornerstone of Latham & Egan §Problem resolution + mutual objectives + continuous improvement = Partnering

Expert populations

Results §Downstream alliancing contributes approx 38% to Main contractors & 30% Subcontractors turnover §Slow start or cautiousness

Results :- Reasons and benefits for §M/C - viewed alliances with one eye on the big picture long term commitment §S/C - saw early input as vital to reduce conflict used alliances as means to become leaner

Results:- Culture and measurement §M/C do not have to carry out change preferred Kpi’s §S/c’s viewed change as necessary bespoke measurement focusing on project integration/ problem solving

Results:- Contractual and supply chain §M/C ranked charters over contracts preferred back to back contract arrangements. §S/C's acutely aware of contracts and power §would prefer to collaborate

Results:- Actual benefits §M/C’s :- share rewards and look towards s/c’s as problem solvers §S/C’s :-yet to receive rewards and are generally not treated as equal stake holders

Conclusions §Main contractors :- §use s/c’s to achieve project goals and keep the gold ie partner upstream, traditional downstream. § discard s/c’s at a whim. §believe that the culture for alliancing has always been in existence §conduct bid shopping

Conclusions Subcontractors:- §use alliances for competitiveness. §recognise change is vital. §accept that m/c’s will generally subbie bash.

Conclusions §S/c’s ask more of themselves than m/c’s Win win will work if there is §Contract incentivisation §Long term work §feasible shared rewards

Further Research Trust Culture Money

Appropriateness Matrix Relationship between §Risk §Cost §Value

Balanced relationship §High risk / Low value §High risk / High value §Low risk / Low value §Low risk / High value §Arms length §Long term § Simple management §Competitive

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