Existing literature and practitioner thinking

STRATEGIC PROCUREMENT
FOR LARGE INFRASTRUCTURE PROJECTS
Dr Franziska Drews
UCL – 14.03.2019
First Things First…
• What procurement are we talking about?
• What are we buying?
• Which perspective do we take?
• What steps are involved?
• Do you have any examples?
2
1. Packaging â–º 2. Selecting â–º 3. Contracting
What if?
3
But what if?
4
What if?
5
Oh no…..
6
Motivation
• Existing literature and practitioner thinking largely limited to
• risks
• commercial efficiency
• Governance
• Existing research on continuous organisation with continued existence (i.e.
not project)
• We spend a lot of money on this! Shouldn’t we do better?
*McKinsey (2016)
7
Theory
Organization
Boundary
TCE
Organization
Identity
Power
Capability
8
Organization Design Literature
• Traditional focus on TCE &
capabilities
• Theory suggests 4 perspectives
(Santos & Eisenhardt 2005)
But:
• Research focus on long-term,
rent-seeking, product-based
firm in efficient market
• limited knowledge as to how
perspectives interact
• no empirical work on all 4
perspectives jointly
“Why do firms exist?”
“Who are we as an
organization?”
“Why does a particular
firm differ?”
“How does a firm
dependent on its
environment?”
Methods
Data:
• 66 semi-structured interviews
• archival documents, internal &
public domain
• specialist press
• non-participant observation
Analysis:
• built 4 detailed, factual accounts
• used the 4 perspectives as
preliminary codes (based on
Santos & Eisenhardt 2005)
• single case and later cross case
comparison
9
Terminal 2 – LHR
Thames Tideway
Crossrail
Olympics 2012
4 Case Studies:
Research Questions
1. How does each of the four perspectives – power,
identity, TCE and capability – contribute to the
design of organisational boundaries of the
capital-intensive project-based organization?
2. How do the four perspectives interact in the
setting of the boundaries in capital-intensive
project-based organizations?
10
Boundary Design Conceptual Framework
CHOICES:
TCE & CAPABILITIES
create organisational
boundaries within the
constrained solution space
(i.e. the funnel) to design
the project delivery
organisation
Choices based on TCE
and Capabilities create
organisation boundaries
INITIAL SITUATION:
Infinite number of
theoretically possible
choices (arrows) as to how
to design the
organisational boundaries
CONSTRAINTS:
POWER & IDENTITY
limit choices that can be
made to set the
organisational boundaries
OUTCOME:
Designed organisation
structure of the project
delivery organisation,
including both buyersupplier boundaries and
supplier-supplier
boundaries
The organizational structure of the project delivery organization is best understood
as the outcome of a search to balance cost efficiency and capabilities considerations,
within a solution space constrained by power and organizational identity.
11
Constraints
Power & Identity
Limit choices that can be
made in designing
organization architecture
Choices
TCE & Capabilities
Create organization
boundaries w/i
constrained solution space
12
Why do we care?
Research Implications
1. We explain how each of the four perspectives contributes to the
design of the organization boundaries in this setting, including any
differences to existing organization design literature
2. We show how the four perspectives interact through constraints and
choices in designing the organization architecture
Practical Implications
1. We provide a cognitive framework as to how different perspectives
interact to form organizational boundaries
13
Key Findings
TCE
“I had an organisation who scored technically pretty much perfect, but they were
bloody expensive. So in reality I had to discount [them, because] we can’t afford
them” (T2 – Senior Commercial Manager)
Capability
“[…] what we want are the people, the teams with the right competence, and also
with the right behaviours. (TTT – Senior Procurement Manager)
Power
“there was a lot of political pressure and a lot of intervention from the mayor’s
office and the ‘great and good’ in London” (LO 2012 – Senior Procurement
Manager)
Identity
“It isn’t about building the railway; It’s about getting the money into the economy.
The railway is a by-product, as far as the politicians are concerned.” (Crossrail –
Head of Procurement)
Details on CONSTRAINTS
14
Details on CHOICES
Boundaries
Package
Horizontal Complexity
Vertical Complexity
Horizontal: Scale of Capabilities
Vertical: Range of Capabilities
H
V
High
High
L ow
L ow
15

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