TR160: Information Technology and Purchasing Strategy: Two Necessary Enablers of More Efficient Construction Processes

Can the construction industry profit from the strategic operational efficiencies associated with IT without changing its current mode of contracting? Or is organizational change a prerequisite for successful adoption of IT in AEC?

In this paper we provide a model of how both the deployment of information technology and adaptations of purchasing strategies can serve as enablers of business process re-engineering to improve competitiveness in the construction industry. We focus, on two types of re-engineering strategies, 1) concurrent engineering, and 2) outsourcing to low cost countries and investigate how they relate to the alignment of contracting and IT strategies. Concurrent engineering offer substantial schedule savings but can also result in more communication and the potential of being locked-in to a relationship with a misbehaving business partner. Outsourcing to low cost regions is another re-engineering strategy. However, in the absence of the re-alignment of information technology and purchasing strategies, this strategy is probably not be feasible given the extra communication costs and contractual uncertainties.

The model includes elements from transaction cost economics applied to re-engineering projects in AEC. The presentation of the model is followed by a case study that investigates the mitigation of transaction costs in the context of re-engineering the structural steel design and procurement process.