PROCUREMENT PATHS - A POWER PARADIGM
Robert Newcombe, Department of Construction Management & Engineering, University of Reading
KEYWORDS
Construction industry; procurement; organisational power; Traditional System; Construction Management
Summary
Theoretical concepts from the literature on organisational power are used to analyse project organisations in the
construction industry which result from the adoption of different procurement paths. Two procurement paths,
Traditional and Construction Management, are compared in terms of the power bases and processes used by the
project manager. It is postulated that legitimate power is weak in both cases resulting in a power gap between
the power that is given under the contract and the power needed to ensure action. The power gap is bridged
under the Traditional System by a sophisticated system of exchange and reciprocity using a range of 'currencies'
which are valued by the parties. The more egalitarian atmosphere of the Construction Management project
organisation encourages the greater use of expertise and charisma as power bases to bridge the power gap
coupled with the modem management concept of empowerment of all the parties involved, especially the
newly-named specialist trades contractors. The implications of this theory of power and procurement paths for
clients, project managers, project teams and researchers is hypothesised.
Introduction
In the United Kingdom the procurement of construction services has been a perennial preoccupation of
construction literature and industry reports for the last four decades with at least one relevant major report
published in each decade. Many of the reports were sponsored by the industry but few were acted on, giving the
impression of industry 'navel gazing'. The focus of these writings is a comparison of the processes and, more
recently, the performance of the various procurement paths from which a client body may choose in purchasing
the services it needs from the construction industry. A contingency approach to the selection of an appropriate
procurement path captured in client criteria matrices has also been developed as an antidote to the predominant
use of competitive tendering. This in turn has led to an institutionally inspired (RIBA, RICS, CIOB etc.)
concern about the implications of any new approaches on the roles of their members, as witnessed in the all-out
attack on the BPF system when it was first launched in 1983. This preoccupation with the process and
performance of procurement paths and its effect on the roles of the participants has led to the almost total
neglect of the behavioural implications of the various approaches. This neglect is strange in view of the fact
that a good relationship between the parties involved in a construction project is widely recognised by
practitioners as a major predicator of project success. This paper seeks to redress the balance by exploring the
way in which the procurement paths create a power structure for the project. It will draw on the growing body
of theory on power and politics in organisations which has rarely been applied in the project context and never,
as far as the author can determine, been used as a lens through which to view the procurement process in the
construction industry. At this stage a theoretical exploration of the power paradigm of procurement will be
presented; this may be subsequently subjected to empirical testing.
The paper will firstly trace the evolving views about procurement in the UK. construction industry from the
1960's to the present. A brief overview of the literature on power will lead to the selection of concepts and
models which will be used to compare two popular procurement paths
The procurement of construction services
The widely quoted comment on the construction industry from the Emmerson Report of 1962 that, "In no other
important industry is the responsibility for design so far removed from the responsibility for production"
presaged a series of reports in the ensuing decades devoted largely to proposing modifications and alternatives
to the so-called Traditional design-tender-build method of undertaking building work based on Open
Competitive Tendering which had dominated the industry for over 100 years. Two reports in the 1960's
proposed different solutions to what was seen as the failings of the traditional system. Banwell(1964) suggested
the more stringent enforcement of the rules through a process of Selective Competitive Tendering whilst the
Tavistock Report (1966) recommended changing the rules to reflect the inter-dependence of design and
building processes.
The keynote report of the 1970's was undoubtedly the Wood Report (1976), entitled The Public Client and the
Construction Industries, which reproached public sector clients for automatically choosing the Traditional
System without systematically considering alternative procurement paths; as public sector clients sponsored
around fifty per cent of construction work at that time it was a serious criticism of the operation of the industry.
The report was novel in introducing two other innovations which would be taken up in the succeeding decades.
First, it produced a review of the procurement options which were available to clients together with a set of
selection criteria to enable clients to choose the most appropriate method for their particular project; second, it
proposed measures of project performance. The description in the report of the Traditional System as 'orthodox'
and the other methods as 'unorthodox' is indicative of contemporary attitudes to procurement. Criticism in the
private sector came in the NEDC report Constructionfor Industrial Recovery published in 1978 which contains
the bitter comment from a client that, "...the participants in the construction process are excessively concerned
with their roles vis a vis other participants and insufficiently responsive to the needs of the manufacturing
industry".
By 1983 one group of clients, the British Property Federation, was so frustrated with the industries apparent
inability or unwillingness to improve its service to clients that they took the unprecedented step of producing
their own system of procurement with accompanying contract . The system introduced several innovations
including the appointment of a full time Clients Representative or project manager thus downgrading the role
of the Architect to that of designer only. A further feature of the 80's was the publication of a number of socalled "Client Guides" to procurement (Department of Industry, 1982, and NEDO, 1985). There was even an
academic treatment of the subject by Skitmore and Marsden(1988) under the title, Which procurement system?
Towards a universal procurement selection technique. Following the other precedent set by the Wood Report,
concern about the well publicised poor performance of the construction industry resulted in two reports by
NEDO, Faster Building for Industry followed by Faster Buildingfor Commerce. Both reports used a sample
of projects to conduct a comparison of the performance of different procurement paths in terms of speed of
delivery and related criteria.
The mid-eighties Broadgate project in London was the cockpit for experimenting with a new procurement
method imported from America called Construction Management. Greater client involvement, the appointment
of a Construction Manager at the same time and on the same conditions as the designer, and the elevation of
sub-contractors (significantly renamed Specialist Trade Contractors) to a direct relationship with the client
heralded the first real break with tradition in 150 years. The University of Reading were invited to observe and
participate in the project and the publication of the Construction Management Forum report in 199 1 was a clear
case of theory following practice.
This review is not intended to be comprehensive treatment of procurement in the construction industry nor a
detailed explanation of differences between the various methods which are taken as understood; clarification
can be found by reference to the reports mentioned.
What is clear is that whilst these reports refer, at least obliquely, to the effect of the methods on the postselection behaviour of the project participants there is a lack of analysis of the causes of this behaviour. For that
we must turn to other reports that are more 'academic' in nature and therefore almost unknown in the industry.
Bowley's (1966) incisive analysis of the evolution of the traditional method with its origins in class differences
and 'ruling elites' is still required reading for a deeper understanding of that procurement path. The Tavistock
Institute of Human Relations were commissioned in the mid-sixties to produce two reports on the contemporary
construction industry from a socio-technical and systems perspective. Initially asked to report on how
communications might be improved (Higgins and Jessop, 1965) they concluded that an improvement in
relationships between the parties was likely to more effectively improve communications than any changes in
communication techniques. Their description of an initial project meeting is still a classic of insight. The second
report called Interdependence and Uncertainty (Tavistock, 1966) identified these two features as symptomatic
of the construction industry. Using a socio-technical model they correctly pointed out that, in the traditional
system, a mismatch existed between the interdependence of the construction(technical) process and the
independence of the parties involved(the social system). This dichotomy was captured succinctly in the phrase
'interdependent autonomy'. They also referred to the participants as "Resource Controllers" which has important
connotations in the power literature as has their assertion that a system of informal exchanges existed to enable
the critical mismatch within the Traditional method to be circumvented. Later researchers, notably Morris(1972)
and Cherns and Bryant (1984), acknowledged their indebtedness to the Tavistock findings and attempted to
extend the Tavistock thesis. The subsequent development of concepts and theories within the power paradigm
now offer the opportunity to push the analysis in a new direction.
The power paradigm
Most conceptions of power are based on Weber's (1947) classic definition that power is the probability that a
person can cany out his or her own will despite resistance. Other definitions are, "production of intended
effects", "ability to employ force", "intended successful control of others", "asymmetrical influence relation
between the behaviour of two persons", "the ability to get another person to do something he or she would not
otherwise do", "net dependence of one actor on another actor andlor interdependency among actors"(Bass 1990,
pp.225).
Whilst a comprehensive review of the literature on power is outside the scope of this paper it is important to
identify those concepts which are germane to the exploration of power within the project organisations created
by different procurement paths.
A key theme of the power literature is the view of organisations as coalitions of powerful individuals or interest
groups which pursue multiple goals (Cyert and March, 1963, Thompson, 1967, Pfeffer and Salancik, 1978,
Mintzberg, 1983, Kanter, 1983 and Kotter, 1985).
Arising from this is the idea of organisations as interdependent interest groups who control resources with
which they bargain to achieve their own objectives (Cyert and March, 1963, Pfeffer and Salancik, 1978,
Bacharach and Lawler, 1980). In addition to resources, other sources or bases of power available to managers
in organisations are reward , coercive and legitimate power, categorised as organisational since they are
directly linked to the individual's position in the organisation and expert and referent power which are referred
to as personal since they depend largely on the personal attributes of the individual, such as expertise and
charisma (French and Raven, 1959, Burke, 1986, Greiner and Schein, 1988, and Gardner, 1989).
A recent theme is empowerment or power equalisation defined as "the delegation of authority and the
increased involvement of lower-level employees in the control and distribution of resources" (Burke, 1986).
Peters(1987), and Kanter(1983), have also stressed this issue as consistent with the trend towards greater
democracy and participation in contemporary organisations.
A final relevant theme is that the existence of coalitions and the rise of empowerment has created a power gap
resulting From a widening gap between the amount of power granted by the position the individual holds and
that actually required to get the job done (Kotter, 1986, and Rudolph and Peluchette, 1993). The result of this
power gap is that modem managers are required to exercise influence without authority through a system of
exchange and reciprocity (Cohen and Bradford, 1990).
A fuller exposition of these themes will be given as we pursue a power perspective on procurement paths.
An epistemological concern which arises from the foregoing review of the power paradigm is the paucity of
examples of the application of the theories to the "temporary multi-organisations" (Cherns and Bryant 1984)
which are a dominant feature of a project based industry like construction and result from whichever
procurement path is chosen. Such evidence as there is seems to suggest that, in terms of power, temporary
organisations tend to accentuate the effects outlined above (Pfeffer and Salancik, 1978, pp. 147) and therefore
findings on power in permanent organisations are entirely relevant to temporary organisations. The following
discussion is based on this premise.
Procurement paths: a Dower paradigm
Two procurement paths only have been chosen for analysis - the Traditional System and the Construction
Management form. In addition to providing maximum contrast they are also respectively the oldest and the
newest forms of procurement to be used in the UK construction industry.
The Traditional System commences when a client appoints an architect whom he briefs regarding his
requirements. The complexity in designing modem buildings necessitates the appointment of other professional
specialists who, together with the architect, form the design team; the architect and the other professional
advisors are all paid on a fee basis. When the design is 'complete' main contractors from a select list are invited
to tender for the work based on the design drawings and the bills of quantities. The successful contractor
(usually the lowest bidder) signs a standard form of contract with the client which retains the architect as project
manager and arbitrator and the professional team as advisors during the construction production stage of the
project. The main contractor usually sub-contracts the majority of the site work and obtains materials through a
network of Builders Merchants and suppliers. Bowley(1965) and later Ball(1988) postulate that this system
reflects its origins in the British class structure by establishing a hierarchy with a 'ruling elite', e.g. the architect
and, less markedly, the design team and a 'proletariat', namely the contractor's team.
From a power perspective the Traditional path clearly creates a number of potentially conflicting interest
groups, e.g. the client, the design team, the contractor's team, the sub-contractors, the suppliers etc. who form
what Cyert and March call, "a shifting, multi-goal coalition". In simple terms, the clients objectives may be
value for money to a strict deadline, the design team may wish to enhance their reputations for innovative
design, the contractor may favour simple assembly that enhances profits, the sub-contractors may simply be
trying to survive. That the traditional system has been frequently described as adversarial and characterised by
fragmentation and friction is evidence of multiple and conflicting goals. It is also clear from the findings of the
Tavistock report mentioned above that the parties to a construction project are interdependent and control
resources with which they bargain to achieve their own objectives. The standard J.C.T. contract confers
legitimate and coercive power on the architect but offers little opportunity for offering rewards. Each of the
parties has expert power but referent power is a function of personality and thus unpredictable and unreliable.
The architect often finds the legitimate and coercive power illusory because of design changes engendered by
the difficulties in designing a 'perfect prototype' and the skilful use of claims by the contractor. A power gap
therefore emerges where a system of exchange and reciprocity is used to overcome problems and conflicts.
We will now attempt a deeper penetration of the Traditional System using the exchange and reciprocity theory
of Cohen and Bradford. Their starting premise is that:
"A key current problem .....is finding ways to develop mutual influence without the formal authority to
command", and further, "The way influence is acquired without formal authority is through the 'law of
reciprocity' - the almost universal belief that people should be paid back for what they do, that one
good (or bad) deed deserves another".
The exchange can be of money such as the settlement of a claim for loss and expense, or services, e.g. a faster
response time, or sentiments such as gratitude, admiration or praise. "Whatever form exchanges take, unless
they are roughly equivalent over time, hard feelings will result". To establish equivalence some sort of
'currency' needs to be worked out, implicitly if not explicitly, to keep the parties in the exchange feeling fairly
treated. Cohen and Bradford go on to point out that:
"If the basis of organisational influence depends on mutually satisfactory exchanges, then people are
influential only insofar as they can offer something that others need. Thus power comes from the
ability to meet others' needs. A useful way to think of how the process of exchange actually works in
organisations is to use the metaphor of 'currencies'. This metaphor provides a powerful way to
conceptualise what is important to the influencer and the person to be influenced".
They then suggest a number of major currencies that are commonly valued and traded in organisations such as
vision, excellence, ethics, resources, co-operation, information, recognition, visibility, reputation, inclusion,
personal support, challenge, involvement, etc. The problem then is to establish "exchange rates1' because of the
"natural differences in the way two parties can interpret the same activity, establishing exchanges that both
parties will perceive to be equitable can be problematic. Thus it is critical to understand what is important to the
person to be influenced". What is valued by the architect may not be valued by the contractor!
Cohen and Bradford consider that:
"To make the exchange process effective, the influencer needs to (1) think about the person to be
influenced as a potential ally, not an adversary; (2) know the world of the potential ally, including the
pressures as well as the person's goals and needs; (3) be aware of key goals and available resources that
may be valued by the potential ally; and (4) understand the exchange transaction itself so that win-win
outcomes are achieved".
The need for one party to see the other as an ally rather than as an adversary is reiterated throughout the
literature and reports cited earlier.
Viewed from this perspective the Traditional procurement path sets up a system of weak formal legitimate
power which is supplemented by a crucial and sophisticated exchange and reciprocity system in which
recognised 'currencies' are 'traded' between the parties involved in a construction project. Interestingly, the
Tavistock report (1966) concluded that it was only this informal 'horse trading ' mechanism which enabled
projects to be completed on or near time, even at all; the formal system could not cope with the interdependence
and uncertainty present in building projects.
By contrast, it can be argued that the Construction Management (CM) procurement path sets up a rather
different power configuration which is characterised again by a weak legitimate power base but a better
opportunity for the exercise of the personal power of expertise and charisma coupled with the empowerment
of all the parties especially the specialist trades contractors.
Drawing on the work of Rudolph and Peluchette(l993), it is evident that an alternative way of closing the
power gap is possible under Construction Management because of the less contractual and confrontational
nature of the system. Both the design team and the Construction Manager are appointed at the same time on a
fee basis. The trades contractors tender for work packages and when appointed are expected to contribute to the
design and management of their package; their status is thus raised from the derogatory level implied by the
term 'sub-contractor' and further enhanced by their direct contract with the client. It follows that the client's
involvement in the project is much greater than under the Traditional System. The potential conflict between the
designer and the Construction Manager is removed by putting both on the same footing and the trades
contractors, although competing for packages, are given equal status to the designer and the Construction
Manager by virtue of their direct access to the client.
A much more democratic 'pluralistic' organisation has thus been created in which partnership
coalition is the password to success.
rather than
Given this scenario, Rudolph and Peluchette postulate that the manager (C.M.) can adopt two possible
responses to narrow the power gap -power accumulation and empowerment.
Power accumulation requires the manager "to become adept at amassing power from sources other than those
that stem from the job. This would include cultivating personal power bases, as well as generating power
through information acquisition, network formation and visionary agenda setting (Kotter, 1982 , Kanter, 1989)".
The absence of the 'hard bargaining' present in the Traditional System encourages this approach.
Empowerment in this context refers to the specialist trades contractors who acquire power by virtue of their
enhanced status and by a greater involvement in the strategic decisions which effect their work. Rudolph and
PeIuchette posit that there are two empowerment strategies - participation and motivation.. Participation as a
means of empowerment is well accepted and understood although it may not be appropriate in all situations, e.g.
where managers lack the skill or confidence in using such techniques or subordinates lack the willingness,
expertise andlor experience to participate in activities or decisions. This last problem has dogged attempts to
raise the profile and status of former 'sub-contractors' to their new enlarged role as specialist trades contractors.
The solution to this problem may lay in using motivation as an empowering strategy.
"From a motivational viewpoint, managers can empower subordinates by engaging in practices to enhance the
subordinate's feelings of personal mastery and self-determination". Four practices are identified, all of which are
currently in use on projects using the CM approach.
(1) Creating success experiences by structuring goals and tasks in such a manner that success is
possible thus providing opportunities for the development of greater self-confidence and feelings of
personal mastery.
(2) Creating modelling experiences by encouraging the individual or group to observe and model or
imitate the successful performance of others.
(3) Verbal persuasion can be used by charismatic leaders to raise the self-confidence and willingness
of people to 'have a go'.
(4) Creating positive emotional experiences can be achieved through the association of positive
emotional states with performance enhancement by the use of retreats or seminars off-site. Training
and induction courses would come under this category and are a common feature of CM projects.
The use of these approaches on previous and present CM projects has been made possible by the unthreatening
atmosphere created by this particular procurement path in contrast to the adversarial attitudes engendered by the
'hard bargaining' context of the Traditional System.
Discussion and Im~lications
This paper has attempted to link two apparently disparate themes, construction procurement paths and the
theory of organisational power, into a new theory of power on construction projects. By contrasting the
ostensibly hierarchical Traditional system with the potentially democratic Construction Management form it is
theorised that completely different power processes operate in each case.
The Traditional System represents the old 'class-based' division between 'management' and 'workers' where
position power based on a hierarchy of command is exercised by the project manager, i.e. the architect; this
hierarchy is established by the process inherent in the Traditional System and by the form of contract used. The
extent to which a hierarchy exists on a particular project depends on the individuals involved; position power or
formal authority can be severely weakened by the need to bargain over changes arising from design
inadequacies. However, the potential for establishing a hierarchy and the use of an authoritarian approach to
managing is a feature of the system which has led to disastrous consequences on some well publicised projects,
most recently the British Library project.
Construction Management is based on the modem management principle of empowerment or power
equalisation and reflects the trend towards a more pluralistic society. Whilst ultimate authority rests with the
client, as indeed it should, the encouragement of participation by all the parties in decision making coupled with
the democratic distribution of power provides a radical new basis for conducting construction projects. Current
management thinking (Peters, 1987,1992, Kanter, 1983, 1989, Morgan, 1993) suggests that this is the only way
to run successful organisations now and in the future.
So what are the implications for the parties involved in construction projects of using the power paradigm to
dissect current construction industry practices in procurement?
For clients the selection criteria normally used to select a procurement path may be less important than the
realisation that procurement paths create power structures which can dramatically effect the ultimate success or
failure of the project. The fragmentation and friction engendered under the Traditional System may make the
lowest tender seem very expensive indeed.
For project managers , particularly those contracting firms thinking of jumping on the CM band-wagon, the
question is whether they have the skills and nerve to operate in a system where adversarial attitudes are absent
and their well developed bargaining skills are virtually irrelevant. Working in an empowered organisation will
be very frightening for people used to the Traditional System.
Project team members must also realise that with increased participation and greater power sharing comes the
responsibility to think bigger and manage better. The sub-contractor mentality must go along with the label.
For researchers the power paradigm offers a rich unexplored seam to mine in the context of procurement paths
which may confirm that the selection of a procurement path should be based on more important criteria than
time, cost and quality! The achievement of these performance criteria can only follow a relationship based on
mutual respect and power sharing between the parties to a construction project.
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