The ‘transaction X-ray’: understanding construction procurement

This paper presents the results of a case study, the Construction Case, which examines procurement practices within the UK construction supply chain and compares these with a more general UK sample taken from non-construction sectors. Using a qualitative methodology, the approaches to relationship management and buyer value perception are graphically mapped, using an innovative ‘transaction X-ray’ technique. The Construction Case considers procurement transactions conducted at various points along the construction value chain: the client, the construction firm and the specialist contractor. Recognising that the research design favours a small sample size, and thus limits generalisability beyond the boundaries of the case, the paper finds that construction industry procurement operates in an adversarial and largely arm’s-length manner. While procurement practice is found to share common aspects with other industrial sectors, the case demonstrates that the construction industry is more adversarial and less collaborative than is the average found across the other sectors examined. The paper outlines a useful framework whereby construction practitioners can evaluate elements of procurement practice within their own organisations, and also signposts the required direction for future research in order to reflect the gap, suggested by the case, between current normative theory and construction procurement practice

Professional buyers and the value proposition

Lusch (2011) considers Service-Dominant Logic (S-DL) to be an appropriate lens through which to view supply chain research, and suggests it be used to better understand value. The authors, accepting a founding premise of S-DL that value is phenomenologically determined by the recipient, adopt a qualitative methodology to penetrate the inherent complexity and commercial confidentiality of the buyer-seller relationship. In particular the authors make a comparative evaluation as to how the wider, psychological needs of the buyer interact with the effects of the organisational goals of their businesses. The study uses a longitudinal research design, involving web-based diaries and follow-up interviews to develop the empirical understanding of the dominant patterns of buyer value perception that, within the context of the investigation, both challenge extant thinking and informs the debate regarding the approaches to combining value creation and value capture (Skilton, 2014). The explanations offered suggest that exchange value achieves a greater buyer focus than utility value, and acknowledges the relative importance of buyer value perceptions that are not directly aligned with organisational objectives. These findings, it is argued, may cause organisations to reflect on their procurement policies and procedures as they seek to engage with potential suppliers