partnering 4 april 2011

7/27/2019 Partnering 4 April 2011

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CIVL6021 - PARTNERING

1. IntroductionThe construction industry has an unenviable reputation for cost overruns, delay,

disputation and occasionally incurred in expensive litigation. Stakeholders in the

industry have been looking for alternative ways of structuring projects to avoid these

outcomes. In the early nineties a concept imported from the United States called

"partnering". Before exploring the effectiveness and impacts of partnering on the

construction industry, it is necessary to consider more on the common forms of

contract being used and the associated risks allocation to determine why they are

perceived to have failed the industry.

1.1 The Forms of Contract Commonly used in the Construction Industry

There are three basic forms of contracts commonly adopted by stakeholders:

(a) Traditional

(b) Design and construct

(c) Project management

In Traditional form, the project owner will engage an independent designer

(either a professional engineer or architect) to perform designing the scope ofwork. This is usually done prior to the contract for construction being awarded.

A contractor is appointed for the construction work in accordance with the

design, in usually practice, on a lump sum basis. However, it should be noted

that the final amount payable unlikely to equal the lump sum agreed.

InDesign and Construct engagement the contractor is responsible for both

design and construction tasks as a package. The contractor in this contract

arrangement is often paid on a lump sum basis. And again, it is unlikely that the

amount paid to the contractor will equal this lump sum. However, the advocates

for this style of contracting argue that subject to good management, there is less

potential for cost overruns.

In Project Management form of contract, the project manager/contractor is

engaged as an agent of the owner. The project manager's obligations included

appointing a design professional (engineer/architect) to prepare the design and

manage that professional as agent of the owner, and progressively engage trade

contractors to perform work as and when the design is completed. These


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contractors will usually be engaged on a lump sum basis. Again, when engaging

such trade contractors, the project manager is acting as agent for the owner.

1.2 Typical risk profiles associated with these forms of contract

The generic risks in construction projects are poor design, poor construction,

cost overruns, and time overruns. Although the exact risk profile under each

form of contract can be adjusted by appropriate drafting, the respective risks

associated with each of the traditional forms.

1.2.1 The Traditional form of contractIn this form of contract, the risk of poor design lies with the consultant. The

capacity of the consultant to take such risk will be dependant upon the

adequacy of its insurance policy (professional indemnity).The risk of quality of construction obviously lies with the contractor. Under

most standard form contracts, the contractor is obliged to construct in

accordance with the plans and specifications prepared by the project owner's

consultant. A failure to do so will constitute a breach of contract often entitling

the project owner to instigate a contractual regime requiring the contractor to

rectify the works or to pay the costs of the owner so doing; or pay damages

associated with the breach.

The risk of Cost Overrun in traditional forms of contract, which in majoritycases are "lump sum price" contracts, the lump sum price is subject to

adjustment will depend upon a number of factors. These factors included the

drafting of the contract, the process and the effectiveness of the design

consultant as well as the accuracy of information provided by the consultant

(e.g. the contractor is given geotechnical information which is incorrect).

Failure of such can give rise to breaches of contract entitling the contractor to

damages. Change in the scope of work constitutes a variation in which the

contractor entitles to further remuneration.

Notwithstanding that there are a number of reasons which might give rise to a

change in contract price, it is important to understand that margins earned by

contractors in are extremely low and the risk profile of those contractors is

relatively high. The low profit and significant potential for high risk is one of

the main drivers for the adversarial and contentious nature of the relationship

between contractors and project owners.

The risk of Time Overrun is split into neutral delays, project owner caused

delays and contractor caused delays. In neutral delays such as excessive

inclement weather and social disruptions (turmoil and strike) unrelated to the


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site, the project owner has taken the risk, the contractor will be entitled to an

extension of time and thereby be relieved of the obligation to pay liquidated

damages. The contractor will have to bear his own loss in overheads. In

project owner caused delays, the contractor will be entitled to an extension of

time to relief from liquidated damages and additional remuneration to

compensate for the additional overheads. In contractor caused delays,

contractor must bear its own overheads costs and will not be entitled to an

extension of time and therefore is liable to the owner by way of liquidated or

general damages.

1.2.2 The design and ConstructThe risk profile in design and construct contract in relation to cost, time and

construction is usually the same as that taken by a contractor under a"construct only" contract. The contractor is responsible for both design and

construction. Therefore any defect in the work the contractor must be

responsible. As the contractor is given the task of completing the design to a

design brief, the project owners risk is lost of the control over the final design

and functional expectation. Most of these projects narrowly defined the

aesthetic of the finished product and the performance criteria of novel

mechanical or process engineering in a project brief. This form of contract is

unsuitable for circumstances where the project owner wants aesthetics effectsand special functional requirements.

1.2.3 The Project Management ContractThe essential features of project management contract are the project owner

appoints a "project manager" to act as his agent to manage both the design

process and construction. The project manager undertakes to exercise

reasonable care in his management services. However, the project owner still

facing the risk on design, construction, cost overrun and time overrun.

Because diligence of the project manager it does not definitely warrant that the

project will be built to a particular standard and be completed by a particular

time at a particular price.

The risk of poor design is shared between the project manager and an

independent design consultant employed by the project manager (in its

capacity as agent for the owner). Primary responsibility for the quality of

design rests with the design consultant, except in unusual circumstances, it

will not be liable by the project manager.

The capacity for the risk to be borne by the designer under professional


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indemnity insurance in which insurers are notorious for contesting liability.

In the project management model, therisk in construction is likely rest with

the project owner. The project manager engage a number of trade contractors

who are only responsible for their own works and generally enter into a

contract where it undertakes to complete works in accordance with the

specified standard. Problems do arise where more than one trade contractor is

responsible for the end result. It is not uncommon that trade contractors blame

one another for any defect that might appear in the final work. Similarly,

problems arise where the work of one trade contractor is damaged by the work

of another.

Any risk in cost overrun is rest with the project owner. The project manager is

not responsible for costs, except increases of cost which are a consequence of

the project manager's negligence. Generally, the costs will be the aggregateamount paid the design consultants, the trade contractors plus the fees of the

project manager.

The risk in time overrun is often represented by delays and disruption in

co-ordination difficulties between trade contractors. Logically, the primary

responsibility of coordinating the trade contractors rests with the project

manager. However, even with the best project management, co-ordination

difficulties can arise because of non performance of one or more of the trade

contractors which interferes with the operations of subsequent tradecontractors. Again it is generally the case that the project manager does not

take any risk in relation to time, apart from its general obligation to exercise

reasonable care in the management function.

2. Why Partnering

All stakeholders share the common goal to complete the project successfully with

respect to the prescribed time, budget, quality, and its final functional requirement.

Partnering reduces dispute and litigation; it would save countless non-productive

hours of works by all parties involved in the project. It results

1.Owners money becomes more cost effective2.Contractor and Designer are more profitable.

Stakeholders of the have vested interest in the successful completion of a project

in the following perspectives:

Project owner success of final product and turn over to user Contractor meet specification, profit and timely payment Subcontractor & Supplier meet specification, profit and timely payment Designer properly implement the design that meets the owners expectations


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Partnering can essentially be differentiated into two types:

(1) Project Partnering(Project-specific or Project-by-Project Partnering), and

(2) Strategic Partnering(Multi-project or Long-term Partnering)

Project Partneringis the name given to partnering arrangement for one project only,

while Strategic partnering takes place when two or more firms use partnering

approach on a long-term basis for more than one project or continuing activities.

2.1Principles of PartneringTo achieve the merit of partnering and accomplish the common goal, all parties

vested interest in the project should put away all negative cultural characteristics

and engage in a more productive and open relationship of honesty, trust andsynergy for the project.

There are numerous of definitions of partnering have been derived form past

studies, definitions that emerged in the early nineties applicable to all industries

state that Partnering is one such technique, which attempts to create an effective

project management process between two or more organizations. It aims at

generating an organizational environment of trust, open communication and

employee involvement (Sander and Moore 1992). The definition of partnering

developed for the construction industry in CII, 1991 in the USA states A

long-term commitment between two or more organizations for the purposes of

achieving specific business objectives by maximizing the effectiveness of each

participant resources. This requires changing traditional relationships to a shared

culture without regard to organizational boundaries. The relationship is based on

trust, dedication to common goals, and an understanding of each others

individual expectations and values (CII, 1991). In England, the CIB (UK)

defined partnering to be: A structured management approach to facilitate team

working across contractual boundariesit should not be confused with other

good project management practice, or with long-standing relationships,

negotiated contracts, or preferred supplier arrangements, all of which lack the

structure and objective measures that must support a partnering relationship

(CIB, 1997).

Partnering is the simple process of establishing good working relationships

between contracting parties. When everybody brings his/her real heart towards the

common goal; creation of a high-trust culture will develop among the counterparts

within the project team gradually. This culture requires that team member accept

the mistakes and errors of others and assist them in finding solutions that aremutually agreeable to all of the team members. This is not to say that one or


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more parties can abrogate their contractual responsibility through the partnering

process. On the contrary, each party is faithful to their respective role and takes

responsibility for all actions related to the contract. The study of Chan et al (2002)

grouped the common benefits of partnering in thirteen headings, namely, reduced

litigation, better cost control, better time control, better quality product, efficient

problem solving, closer relationship, enhanced communication, continuous

improvement, potential for innovation, lower administrative cost, better safety

performance, increased satisfaction, and improve culture. Table 1 shows the

matrix of the identified benefits and the frequency of their citation.

Table 1. Source of reference for partnering benefits

Source: Chan et al (2002)


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2.2 Partnering and Total Quality Management (TQM)

The theories of TQM and the principles of partnering are mutually compatible

to each other.

TQM advocates and focuses on customer services.

TQM emphasizes continuous improvement in quality of product and service.

TQM recommends supplier and customer relationship.

Partnering recognizes that construction project is nothing more than

compilation of many processes and the effort of many customer and suppliers.

TQM theories apply through partnering process enhance customer services

thus building up relationships between all involved parties. The project owner,

the main contractor, subcontractors and suppliers will find greater success and

profitability in their respective roles.

2.3 Benefits of Partnering

Partnering benefits all parties including the project owner, the main contractor,

subcontractors, supplier and on-site employees. The fundamental principles of

partnering in commitment, trust, respect, communication and equality are

designed to include proper consideration of the interests of all parties at every

level (CII, 1991; Cowan et al, 1992; Badger and Mulligan, 1995). Partnering

process empowers all the project personnel to accept responsibility and to dotheir jobs by delegating decision-making and problem-solving to the lowest

possible of authority. The range of common benefits illustrated in Table 1

identified the weighting among the merits.

In partnering arrangement, the problems of disputes, claims or litigations are

greatly reduced through open communication and improved working

relationship. Closer working relationship between the project owner,

contractor, and the design consultants provide a better working environment to

all parties. Traditional adversarial relationship between parties transforms to a

trust based relationship (Lazar, 1997; Drexler and Larson, 2000). Partnering

recognizes an implied covenant of good-faith dealing by all parties, within this

atmosphere of cooperation and mutual trust, the parties can jointly determine

and evaluate the design, engineer and construction approaches. The tools for

sharing of gains and risks thus established among parties. Better cost control

is another merit of partnering. It is achieved by alleviating rework, lowering

change order rate and improving problem-solving. Reduce unnecessary delays

by the fair and equitable attitude that resolve many disputes, discrepancies and

changed conditions which arose during construction process, thus achieve


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better time control through the project duration. Partnering facilitates

communication on quality issues, enables earlier recognition of potential

problem and helps develop a quality consciousness. Problem solving is swiftly

responded and handled at all levels within the project team via delegation

mechanism down to the lowest possible level in dealing with problems.

Partnering provides a way to all parties to develop continuous improvement,

encourages introduction of advanced technology and innovation through open

communication in design and construction process. Administration cost is

lowered by eliminating defensive case building, simplified administrative

procedures and reduced unnecessary paperwork. Taking joint responsibility to

ensure a safe working environment for all parties reduces the risk of hazardous

working conditions and avoids workplace accidents (Matthews and Rowlinson

1999). Partnering enhances customer satisfaction as the customer is closer tothe construction process and better informed. Contractors obtain a reasonable

and are assured for continued work at predetermined profit margins (Moore et

al, 1992; Back and Sanders, 1996). When people work in a conflict-free

environment will show distinct improvement in the culture. They concentrate

on the job rather than on potential claims, and the morale and effectiveness of

the whole work team is improved (Bloom, 1997).

2.4 Barriers of PartneringMisunderstanding of partnering concept is one of the major barriers in

partnering implementation. Some project participants failed to understand how

the partnering relationship could provide a competitive advantage. Larson and

Drexler (1997) advocated that limited experience in partnering approach

affected the understanding and knowledge of project participants could cause a

failure in partnering. The objective of partnering encourages project

participants to change from their traditional adversarial attitude to a more

cooperative, team-based approach to prevent disputed attitude. The unchanged

traditional adversarial relationship and other inappropriate attitudes hamper

the development of good relationship between contracting parties. Many

parties do not trust other party due to past experiences; therefore it is difficult

to build trust among them. Risk sharing is another barrier to the success of a

partnering project. Trying to take full advantage of the partnering approach

resulted in parties may be unwilling to share the risk. In some cases,

partnering created strong dependency of the partner, Gardiner and Simmon

(1998) explained that partnering did not remove or reduce inter-dependencies,

it could be used to strengthen the relationship and increase the trust between


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parties. Furthermore, partnering is culturally opposed to the traditional

implementation of construction projects. Established a new culture is difficult

or may take time to implement, many organizations are reluctant to change

into integrating culture. Particularly the reluctance appears in bureaucratic

organizations which impeded the effectiveness of partnering. Partnering

requires the commitment of all participants. Participants must have total

commitment to the partnering process. However, uneven level of commitment

is common in practice due to different goals and objectives among parties.

Failure in communication is a common ground which affected the

effectiveness of partnering. Communication should be two-way, clear, and

open, timely response in the same way is expected. Parties do not normally

trust each other completely and are not willing to communicate and exchange

information. Issues and problems are allowed to slide and escalate in thepartnering process. Conflicts among participants are existed when the

partnering team is reluctant to identify, confront and resolve problems.

Partnering needs nourishment throughout the life of a project, joint effort in

maintaining continuous improvement is important to keep partnering going.

After the initial partnering workshop, it is easy to get back to daily activities

and ignore the partnering concept. Training is the essential activity to make

participants to fully understand the concept of partnering. Insufficient training

provided to participants is an obstacle to successful partnering. Topmanagement commitment is essential to the success of the partnering process

in any organization. Top management commitment goes beyond signing the

partnering charter or writing policy letters. It requires an executive to invest

his/her time in early partnering workshops, train staff, and work with industry

counterparts.

In order to improve the productivity and performance of the project, critical

success factors (CSF) in partnering should be identified. They are resources,

management commitment and support, mutual trust, continuous commitment

and willingness, coordination, creativity, effective communication, conflict

resolution, perceived satisfaction of partners expectations and compatible

goals.

3. The Process of Partnering

The partnering process shall be implemented at the very beginning of the project. The

process included the expression of interest, partnering workshop, follow up workshop

and final workshop. Figure 1 shows the process of partnering.


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The most important element in the establishing a partnering relationship is

commitment from the senior management (Mohr and Spekman, 1994). It must be

visible, supportive, ongoing and sensitive to organizational change.

3.1 Partnering Workshop

A well-planned initial partnering workshop is a unique opportunity for all

participating parties to form a cohesive project team leading to the success of the

project. The initial partnering workshop is most important to the partnering

process, because it

Shows commitments of the parties, Helps building up a cohesive project team from all involved parties, Develops problem resolution scheme, Establishes empowerment in all levels of project members, Expedites problem solving path and time via escalation ladder so as to allow

a timely resolution of problem,

Supports profit sharing arrangement (when applicable) Ensures the agreed partnering results, all participants sign the partnering

charter (an example of partnering charter is shown in Figure 2).

Figure 1: The Partnering Process

Source: Abudayyeh (1994)


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Participation of CEO/Executive level is an essential element for a successful

partnering. The presence of CEO/Executive levels is a clear indication of the

commitment of the company in partnering. CEO/Executive levels involvement

is related to the establishment of the corporate partnering philosophy.

CEO/Executives attendance with their counterparts in the workshop strongly

supported the building of relationship and understanding among parties. The spirit

that developed will ultimately assist in resolving issues in an equitable manner

throughout the course of the project.

Figure 2: Partnering Charter


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3.2 Location and Facilities

The venue where the workshop takes place should be close to the job site. It

should be chosen in the neutral place that does not belong to any participating

parties. The reason is that a neutral facility provides an environment where team

members can come together in non-threatening surroundings and develop into the

project team. It also removes the members from their normal works thus

eliminates distraction and interruption.

An experienced facilitator is important to assist the key managers from each

organization in developing the agenda for the workshop. The facilitator is also

responsible to produce the written record of the workshop and furnish it to the

team participants. This permanent record can then serve as the basis for future

reference should issues arise during the course of the project.

3.3 Team Building

Build up a partnering team with all involved parties of a project is built up among

different levels of the participants. Parties from various firms do have different

cultures and ways of communication. The workshop facilitates identifying the

effective communication methods and reporting paths most applicable for the

project. Through open discussion in the workshop, participants share experiences

and map anticipated problems of the project. Everyone attending the workshop

expresses views and ideas to the anticipated problems and suggests solutions viabrainstorming. All team members have issues to bring up at the workshop. Ideas

are discussed and shared. All emerged resolutions are recorded as reference of

implementation. Unresolved problems are also recorded for further action. A

Plan of Action is established by setting up ownership and expected time of

resolution.

The process of experience sharing and brainstorming enhances understanding and

communication, forming an atmosphere for everyone to know each other and

work together before the commencement of the project. Through an effective

initial partnering workshop, a sense of work together as a team will be built up

among all.

3.4 Resolutions of Partnering Workshop

a) EmpowermentEmpowerment is the delegation of suitable authority and responsibility to the

team members at all levels of the project. Empowerment shall be given to the

lowest possible level in the construction site. In this arrangement, members

whom are closest to the problem could make timely decision within their


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scope of their given power.

b) Escalation Ladder (Issue Resolution Matrix, Communication Matrix)Establish highest extent of decision-making power to all levels of the project

among all partners within the partnering team for problem resolving. Time

limit will be set up for all levels to evaluate and resolve their problems. If a

problem cannot be resolved within the time frame or the problem is beyond

their authority to make decision, it will be reported to their immediate

supervisor for further action within the allowable time limit. The problem will

therefore be escalated to the suitable decision makers to resolve within a

limited time frame.

The following table (Table 2) is an example of Escalation Ladder which isfictitiously prepared to illustrate the arrangement and significance.

Table 2: Delegation of Power by means of Escalation Ladder

3.5Expanding the Partnering TeamOwnerContractorDesigner, are not the only key players in the project.

Subcontractors and Suppliers play an important role. There are a number of key

subcontractors and suppliers have been appointed before the commencement of

the project, they are also invited to the workshop and join the cohesive project

team as members. Their participation in partnering workshop, joining the project

team and signing in the charter signifies their importance in the project. The

views and concerns of subcontractors and suppliers are heard and addressed

because other members in the project team value their participation as parties of

the partnering process and their performance is vital to the success of the project.

Of course subcontractors and suppliers are given greater respect to the employer

and the contractor as their respond to their participation as team member, they also

incur greater expectations and assume responsibilities towards the success of the

project. More subcontractors and suppliers will be added as the project goes along,

and key subcontractors and suppliers are selected to become members of the

project team and invited to join the mid-partnering workshop.

Client

Side

Contractor

Side

Time limit for

Decision Making

Name Position Name Position

Mr. Chan Executive Director Mr. Lee CEO One week

Nancy Project Director Robert Director Four days

Henry Project Manager Tony Project Manager Two days

Mary Engineer Jim Coordinator One day

John Works Supervisor Michael Foreman Half day


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4. Value Engineering in PartneringThe gain-sharing scheme is an opportunity for contractor to propose alternative means

or materials to achieve a product of equal or greater quality and value for a project.

Value engineering is not favorable in the construction industry due to reasons as

follow:

Designers were often offended by the idea that someone would come up withbetter ideas than that they had spent considerable time designing.

Owners have not encouraged the submission of proposals because they donot want to hassle with them.

Contractors are reluctant to submit proposals because they may noteventually be benefited contractually, deduction of contract sum often result

when the proposals are adopted.

The partnering workshop provides an excellent opportunity to allow this synergism totake a hold and produce innovative results. The skills and innovation that

contractors, designers and owners bring together and set the stage for exciting value

engineering opportunities to the project. In partnering workshop, VE idea is

modified to make it consistent with the one-team approach. So that VE proposals are

no longer considered solely the contractors idea. A term value engineering joint

proposal (VEJP) is given.

Contracts performed under partnering mechanism often include arrangement to share

some of the savings with the contractor. Usually if a contractor submits an idea and itis implemented, the owner will split the savings based on a predetermined formula

such as 50-50 or 40-60 etc. This is VE paradigm.

The concept of continuous improvement of TQM is very important to partnering

process. To ensure whether the performance of the partnering team is continuous

improving mechanism - theJoint Evaluation, must be established for the assessment

and evaluation. Performance standard should be established in accordance with the

goals and objectives of the partnering charter. Since measurable objectives are

established as discussed in previous item (partnering charter portion), an open and

candid evaluation should be executed jointly by all the team members in formats and

patterns setup to fit those goals and objectives are essential.

5. Mid-project Workshop

Any project duration exceeds 12 months should organize mid-project workshop for

every key project participants to attend. The main purpose of mid-project workshop

is to introduce new comers (new employees of the parties, new subcontractors, and

new suppliers) review the performance of the project under partnering with the

established joint evaluation mechanism. Bring up the Pros and Cons, and formulate


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resolution to problems encountered. A facilitator is needed either from outside

source or elected within the project. Review and appraise the performance with a

true heart is most important; it would help to enhance past successes and rectify

shortcomings of the project.

6. Close-out Workshop

A close-out partnering workshop to bring the full team together to review and

celebrate the success or to learn the lesson of less success objectives. This can be

done under the guidance of a facilitator or assigned a team leader from the team.

Award should be given to honor the success of the team and also the selected

partnering champion. Awards or plaques present to one or several individuals who

truly exemplified the principles of partnering on the project.

It is advisable that the team members be asked to make one final rating of the teamand its performance against the charter. The evaluation or assessment of the teams

progress should be a part of the close-out workshop. The ultimate result is that the

partnering team moves forward to the next project with a greater resolve for more

significant successes.

6.1 Lessons Learned

Subsequent to a number of studies on partnering, the followings are points

consolidated the experiences of participants who have involved in partneringprojects:

1. Use outside facilitation at your partnering workshops until the owner andindustry are mature in the process.

2. The partnering workshop is the beginning of the process and should not be seenas the whole of partnering.

3. No project over 12 months in duration should go without having a mid-projectworkshop.

4. Take time to develop and apply the issue escalation process.5. Develop and use the team evaluation process with consistency and commitment.6. Use all partnering tools in every project.7. Decide early on whether record keeping will be done and then measure only

those necessary areas.

8. Top management commitment ultimately determines if an organization issuccessful and profitable in the partnering process.


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7. Partnering Experiences in Hong Kong

The first two design and construct projects in Hong Kong used partnering approach

were the North District Hospitaland the Tseung Kwan O Hospital (Chan et al,

2002). Initial partnering workshop for the former was conducted after tender butbefore contract award. The workshop for the latter was launched by the contractor

according to the provisions of the construction contract. Application of partnering

was also implemented in the Kowloon-Canton Railway Corporation (KCR) and

Mass Transit Railway Corporation (MTRC) in the West Rail and Tseung Kwan O

Extensions respectively (Bayliss, 2000). Apart from the infrastructure developments,

The Hong Kong Housing Authority (HKHA) and the Hong Kong Housing Society

were also actively nurturing a partner culture in the public and semi-public sector

residential developments (Chan et al, 2001). Since then another hospital projects the

Haven of Hope Hospital usedpartnering. Both projects are reported successful.

Chan et al (2002) tabulated 48 partnering projects of various natures undertaken by

public and private sectors at that time in Hong Kong (Table 3).


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The outstanding achievement in the Tseung Kwan O Extension (TKOE) was

recorded. The project used partnering approach and resulted in very significant

saving in cost. Partnering have contributed to the last $ 4 billion of savings that

brought the out-turn cost down to $ 17 billion from the originally budgeted $

Table 3: Partnering Projects in Hong Kong

Source: Chan et al 2002


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30.5 billion. The project was completed 16 weeks ahead ofschedule.

In TKOE, MTRC established a Partnering Steering Group interacted with the

contractors consistently. The group arranged a list of partnering activities to handle

the project, these activities included:

Monthly partnering meetings Performance monitoring according to standardizedformats Multi-contract workshops Other opportunities to interact, including shared offices, social events etc.

Developments on the above partnering model, including clearer gain-share

pain-share agreements were later incorporated in the Tsim Sha Tsui station

extension project and the Tung Chung Cable Carproject.

Partnering is mandatory on Housing Authority projects, and it is worth studying

its influence on project outcomes. Some other Government Works Departments

have reportedly had different types of experiences on their initial partnered

projects. Some said that partnering was good, until there was a major problem,

after which relationships were spoiled and parties reverted to adversarial

contractual approaches. Observations on the applicability and potential benefits

from partnering and the possible obstacles in the Hong Kong project revealed

inadequate partnering culture developed among participants. It can be reflected by

the attitudes of inadequate trust and communication which have been rooted

deeply under the experiences of adversarial traditional contracting system.

8. Differences between Partnership, Joint Venture and Partnering

Partnership

Partnership is a relationship in which two or more people, organizations, or countries

work together as partners; they carry on a business in common with a view of profit.

Under partnerships losses will have to be shared as well as profits. Partnership is a

legal binding agreement between parties. It is often long term and dissolution is

complex.

Joint venture

Individuals or companies may enter into a joint venture agreement to workcooperatively on a project or contract. A joint venture shares common elements of a


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partnership agreement. With joint ventures there must be joint management and

control, although not necessarily equal. There must be contribution to the enterprise,

some property, money, effort, skill and knowledge. As distinguished from a

partnership, a joint venture commonly has a single purpose.

Partnering

Partnering attempts to create an environment where trust, team work and prevention

of disputes, foster a cooperative bond to everyones benefit to facilitate the

completion of a successful project. The major difference between partnering and

partnership or joint venture is, partnership and joint venture are legal binding

relationship while partnering is non-legal binding and voluntary relationship.


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Reference

Abudayyeh, O. (1994), Partnering: a team building approach to quality construction

management, Journal of Management in Engineering, ASCE, 10(6), 1994, pp.26-29

Badger, W.W. and Mulligan, D.E. (1995), Rationale and benefit associated with

international alliances, Journal of Construction Engineering and Management, ASCE,

12(1), pp.100-111

Bayliss, R.F. (2000), Project partnering a case study on MTR Corporation Ltds

Tseung Kwan O Extension, Proceedings of the Millennium Conference on

Construction Project Management Recent Developments and the Way Forward

2000, Hong Kong

Back W.E. and Sanders, S.R. (1996), Partnering in a unit price environment, Project

Management Journal, 27(2), pp. 18-25

Bloom, M.J. (1997), Partnering A better way for doing business, 1997, The MITRE

Corporation, Badford, Massachusetts.

Cowan, C., Gray, C., and Larson, E. (1992), Project partnering, Project ManagementJournal, 22(4), pp. 5-12

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