Competition and Collaboration are not mutually exclusive

Competition and Collaboration are not mutually exclusive

2010

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DOI: https://doi.org/10.60164/23i2c1c5g

Author: John Strickland

Citation:

‌Strickland, J. (2010). Competition and Collaboration are not mutually exclusive. Lean Construction Journal 2010 pp 76-85.

Abstract:

Purpose: The purpose of this essay is to help advocates of the integrated approach respond to the ubiquitous challenge of “how do I know I couldn’t have gotten it cheaper unless I bid it?” by explaining how an integrated project approach need not compromise the owner’s ability to benefit from competitive pricing and may well deliver lower cost than traditional competitive bidding

Findings: The integrated approach may provide a more effective level of competition and can lower the risk for both the owner and the contractor in ways that may not be fully recognized by those making contracting decisions and allows the owner to have far greater cost certainty, especially during early stages of the project. Competitive pricing can be secured on the key areas over which the contractor has discretion without a detailed design. An integrated approach can actually enhance competition by making the project more attractive to contractors, largely because it reduces their risk. This reduction in risk is not merely shifting the risk to the Owner or to others, but represents reducing the risk across the board. The reduction in risk is accompanied by an improvement in project collaboration, communication and culture that may be the biggest benefit of the approach. The commercial arrangements can take many forms, and owners do not necessarily need to use the excellent Integrated Form of Agreement.

Limitations: The integrated approach is not likely to work in organizations that pre- suppose that service providers must be coerced by market pressure to deliver their best pricing.

Implications: Projects need not be difficult and confrontational. Using an integrated approach can lead to lower risks, lower costs, and shorter schedules than the traditional design-bid-build method.

Value for practitioners: This paper will help practitioners contrast and compare integrated and traditional contracting approaches and recognize where an integrated approach might lower their risk and cost. The paper provides practitioners with a line of logic to counter the common argument that the lowest price is always found through traditional competitive bidding.