Strategic Alliances Between Contractors and Subcontractors-A Tender Evaluation Criterion for the Public Works Sector

Abstract

A strategic alliance is a co-operative arrangement between two or more organisations that forms part of their overall strategy, and contributes to achieving their major goals and objectives. Strategic alliances in building construction may be a useful evaluation criterion in assisting public sector construction managers evaluate and select tenders and encourage more co-operative relationships amongst construction project team members. This paper reviews competitiveness of the Australian building construction industry in the context of the theory of strategic alliances between contracting firms and subcontractors; and explores whether implementing strategic alliances provides contracting firms any competitive advantage over competitors. A theoretical concept of strategic alliances is proposed and appropriate indicators of competitive advantage are developed. An analysis framework comprising six attributes of strategic alliances—trust, commitment, interdependence, co-operation, communication and joint problem solving is described. These attributes were used to collect data from 59 building construction firms in South-East Queensland to assess their respective levels of strategic alliance. The formation of strategic alliance relationships between contracting firms and subcontractors is proposed as a component of the tender evaluation process for public works sector.