Procurement of Railway Infrastructure Projects – A European Benchmarking Study

Per Erik Eriksson, Sofia Lingegård, Lena Borg, Johan Nyström

Abstract


This benchmarking study compares how railway investments are procured in five European countries: Sweden, Norway, Germany, the Netherlands, and the UK. In total, 19 procurement managers and project managers were interviewed. This study compares the national rail clients’ procurement strategies regarding: delivery system, reward system, contractor selection, and collaboration model. Historically, these clients have used in-house production. The first step towards a gradually increased usage of the market was to outsource the construction activities while keeping the design and development competence in-house. All five countries have mainly used Design-Bid-Build contracts in their initial outsourcing. However, the last few years there is a discernible trend in Sweden, Norway, the Netherlands and the UK towards allocating more design and development responsibilities to contractors (i.e. Design-Build contracts) and increasing the strategic focus on cooperation. The UK and the Netherlands are forerunners in this trend that can be viewed as a third step in the transition towards a market oriented railway sector. Norway and Sweden is in the middle of this transition, whereas Germany has not initiated this change. The transition towards a gradually increased usage of the market has two main dimensions; degree of cooperation and degree of contractor freedom, which differs among the countries. The UK and Sweden focus on increasing both these dimensions, while The Netherlands and Norway mostly focus on increasing the degree of contractor freedom. Germany still limits both dimensions by performing design and development in-house and letting contractors compete for construction work in Design-Bid-Build contracts. Due to historical and cultural reasons, Deutsche Bahn in Germany is very hesitant to engage in collaboration with external suppliers; focusing on competition is considered more appropriate and less controversial.


Keywords


Competition; Cooperation; Infrastructure Projects; Railway Investments; Public Procurement.

References


Nathanail, Eftihia. "Framework for Monitoring and Assessing Performance Quality of Railway Network Infrastructure: Hellenic Railways Case Study." Journal of Infrastructure Systems 20, no. 4 (2014): 43-55.

Geyer, Anton, and Andrew Davies. "Managing project–system interfaces: case studies of railway projects in restructured UK and German markets." Research Policy 29, no. 7 (2000): 991-1013.

Eriksson, Per Erik. "Exploration and exploitation in project-based organizations: Development and diffusion of knowledge at different organizational levels in construction companies." International Journal of Project Management 31, no. 3 (2013): 333-341.

Tawiah, Paul A., and Alan D. Russell. "Assessing infrastructure project innovation potential as a function of procurement mode." Journal of management in engineering 24, no. 3 (2008): 173-186.

Eriksson, Per Erik, and Mats Westerberg. "Effects of cooperative procurement procedures on construction project performance: A conceptual framework." International Journal of Project Management 29, no. 2 (2011): 197-208.

Chevroulet, Tristan, Liana Giorgi, and Christian Reynaud. "New approach for the assessment of high-speed rail projects and how to contain cost overruns: lessons from the EVA-TREN Project." Journal of Infrastructure Systems 18, no. 4 (2012): 297-304.

Bunge, Mario. Treatise on Basic Philosophy: Ethics: The Good and The Right. Vol. 8. Springer Science & Business Media, 2012.

Eriksson, Per Erik. "Partnering: what is it, when should it be used, and how should it be implemented?." Construction management and economics 28, no. 9 (2010): 905-917.

Bengtsson, Maria, and Sören Kock. "” Coopetition” in business Networks—to cooperate and compete simultaneously." Industrial marketing management 29, no. 5 (2000): 411-426.

Eriksson, Per Erik. "Procurement effects on coopetition in client-contractor relationships." Journal of construction Engineering and Management 134, no. 2 (2008): 103-111.

Uzzi, Brian. "Social structure and competition in interfirm networks: The paradox of embeddedness." Administrative science quarterly (1997): 35-67.

Palaneeswaran, Ekambaram, Mohan Kumaraswamy, Motiar Rahman, and Thomas Ng. "Curing congenital construction industry disorders through relationally integrated supply chains." Building and Environment 38, no. 4 (2003): 571-582.

Lu, Shaokai, and Hong Yan. "A model for evaluating the applicability of partnering in construction." International Journal of Project Management 25, no. 2 (2007): 164-170.

Cheung, Sai-On, Tsun-Ip Lam, Mei-Yung Leung, and Yue-Wang Wan. "An analytical hierarchy process based procurement selection method." Construction Management & Economics 19, no. 4 (2001): 427-437.

Koppinen, Tiina, and Pertti Lahdenperä. "Realized economic efficiency of road project delivery systems." Journal of Infrastructure Systems 13, no. 4 (2007): 321-329.

Nyström, Johan, Jan-Eric Nilsson, and Hans Lind. "Degrees of freedom and innovations in construction contracts." Transport Policy 47 (2016): 119-126.

Eriksson, Per Erik, and J. Hane. "Entreprenadupphandlingar-Hur kan byggherrar främja effektivitet och innovation genom lämpliga upphandlingstrategier?[Construction Contracts-How can developers promote efficiency and innovation through appropriate procurement strategies?]." Construction procurement–How may construction clients enhance efficiency and innovation through appropriate procurement strategies (2014).

Bajari, Patrick, and Steven Tadelis. "Incentives versus transaction costs: A theory of procurement contracts." Rand journal of Economics (2001): 387-407.

Ballebye Olesen, H. What can public procurers learn from private? An explorative study of Sweden. Forskningsrapport beställd och finansierad av Konkurrensverket (2008).

Korczynski, Marek. "The low‐trust route to economic development: inter‐firm relations in the UK engineering construction industry in the 1980s and 1990s." Journal of Management Studies 33, no. 6 (1996): 787-808.

Kadefors, Anna. "Trust in project relationships—inside the black box." International Journal of project management 22, no. 3 (2004): 175-182.

Badenfelt, Ulrika. "The selection of sharing ratios in target cost contracts." Engineering, Construction and Architectural Management 15, no. 1 (2008): 54-65.

Boukendour, Saïd, and Will Hughes. "Collaborative incentive contracts: stimulating competitive behaviour without competition." Construction Management and Economics 32, no. 3 (2014): 279-289.

Love, Peter ED, Peter R. Davis, Robert Chevis, and David J. Edwards. "Risk/reward compensation model for civil engineering infrastructure alliance projects." Journal of Construction Engineering and Management 137, no. 2 (2010): 127-136.

Kumaraswamy, Mohan M., and Aaron M. Anvuur. "Selecting sustainable teams for PPP projects." Building and Environment 43, no. 6 (2008): 999-1009.

Caldwell, Nigel D., Jens K. Roehrich, and Andrew C. Davies. "Procuring complex performance in construction: London Heathrow Terminal 5 and a Private Finance Initiative hospital." Journal of Purchasing and Supply Management 15, no. 3 (2009): 178-186.

Kadefors, Anna. "Fairness in interorganizational project relations: norms and strategies." Construction Management and Economics 23, no. 8 (2005): 871-878.

Hatush, Zedan, and Martin Skitmore. "Contractor selection using multicriteria utility theory: an additive model." Building and environment 33, no. 2 (1998): 105-115.

Bosch‐Sijtsema, Petra M., and Theo JBM Postma. "Cooperative innovation projects: Capabilities and governance mechanisms." Journal of Product Innovation Management 26, no. 1 (2009): 58-70.

Chan, Daniel WM, and Mohan M. Kumaraswamy. "A comparative study of causes of time overruns in Hong Kong construction projects." International Journal of project management 15, no. 1 (1997): 55-63.

Assaf, Sadi A., and Sadiq Al-Hejji. "Causes of delay in large construction projects." International journal of project management 24, no. 4 (2006): 349-357.

Yasamis, Firuzan, David Arditi, and Jamshid Mohammadi. "Assessing contractor quality performance." Construction Management & Economics 20, no. 3 (2002): 211-223.

Bygballe, Lena E., Marianne Jahre, and Anna Swärd. "Partnering relationships in construction: A literature review." Journal of purchasing and supply management 16, no. 4 (2010): 239-253.

Bayliss, Roger, Sai-On Cheung, Henry CH Suen, and Shek-Pui Wong. "Effective partnering tools in construction: a case study on MTRC TKE contract 604 in Hong Kong." International Journal of Project Management 22, no. 3 (2004): 253-263.

Olsen, Bjørn Erik, Sven A. Haugland, Edgar Karlsen, and Geir Johan Husøy. "Governance of complex procurements in the oil and gas industry." Journal of Purchasing and Supply management 11, no. 1 (2005): 1-13.

Eriksson, Per Erik. "Partnering in engineering projects: Four dimensions of supply chain integration." Journal of Purchasing and Supply Management 21, no. 1 (2015): 38-50.

Woksepp, Stefan, and Thomas Olofsson. "Credibility and applicability of virtual reality models in design and construction." Advanced Engineering Informatics 22, no. 4 (2008): 520-528.

Gibbert, Michael, Winfried Ruigrok, and Barbara Wicki. "What passes as a rigorous case study?." Strategic management journal 29, no. 13 (2008): 1465-1474.

Statskontoret. På rätt väg? Uppföljning av Trafikverket och Transportstyrelsen. [On the right way? Evaluation of the Swedish Transport Administration]. Rapport 2015:14.

Hunold, Matthias, and Christoph Wolf. "Competitive procurement design: Evidence from regional passenger railway services in Germany." (2013).

Schwilling, A. & Brunge, S.. 20 years of German rail reform and Deutsche Bahn AG – Achievements and challenges, Roland Berger Strategy Consultants, Germany (2014).

Norwegian Ministry of Transport and Communication. National Transport Plan 2014-2023, English version. Meld. St. 26 (2012 – 2013) Report to the Storting (2013).

Jernbaneverket. Procurement Strategy. Jernbaneverket homepage, (2015).


Full Text: PDF

Refbacks

  • There are currently no refbacks.




Copyright (c) 2017 Per Erik Eriksson, Sofia Lingegård, Lena Borg, Johan Nyström

Creative Commons License
This work is licensed under a Creative Commons Attribution 4.0 International License.
x
Message