A normative model for alliance partnering in the South African engineering & construction industry

Abstract

To maintain and improve competitive positions and to satisfy the ever changing market demands, international service offering and contracting strategies has undergone an evolution over the past two to three decades. This evolution includes a change from a self sufficiency strategy to opportunistic outsourcing followed by vertical integration and long term contractual relationships which emphasises the lack of alignment and synergies between the engineering service providers and the client companies. This situation most often resulted in win-lose situations, mistrust, additional cost, poor performance and litigation. The need for maximum value-add through-out the engineering value chain for purposes of improved competitive advantage and overall business performance, has placed an emphasis on alliance partnering strategies to be implemented to the benefit of the service provider as well as the client company. Although alliance partnering has been the topic of various literature studies and although it has been implemented in a number of developed countries in various industries, there appears to be no uniform approach to the concept, as well as disagreement on the successes proclaimed in theory compared to the nature and extent of real benefits experienced by alliance partners in the Engineering and Construction Industries in South Africa. The main objective of this study is to develop a generic normative model for alliance partnering suitable for application in the Engineering and Construction Industry as a service industry to the Petrochemical Industry in South Africa. Key conclusions drawn from the findings of a literature study as well as an empirical study on this subject were used to develop a generic normative model for application in the initiation, development and management of an alliance partnership in the engineering and construction industry in South Africa. The normative model also reflects the secondary objectives of this study, namely: o determining and defining the benefits of alliance partnering in terms of which alliance partnering are considered to be successful; and o determining and defining the factors impacting on successful alliance partnering. It is clear from the research results that reciprocal value addition between service providers and owner companies can be managed more effectively by implementing an alliance partnering strategy. It is however noted that despite the inherent benefits of an alliance partnering strategy, the failure rate of this strategy is reported to be significant.