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Evaluating Project Teaming Strategies for Construction of Taipei 101 Using Resource-Based Theory

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Evaluating Project Teaming Strategies for Construction of Taipei 101 Using Resource-Based Theory INTERNATIONAL JOURNAL OF PROJECT MANAGEMENT International Journal of Project Management 23 (2005) 483–491 www.elsevier.com/locate/ijproman Evaluating project teaming strategies for construction of Taipei 101 using resource-based theory Ren-Jye Dzeng *, Kuo-Sheng Wen 1 Department of Civil Engineering, National Chiao-Tung University, 1001 Ta-Hsieu Road, Hsinchu 30050, Taiwan Received 18 May 2004; received in revised form 5 November 2004; accepted 25 February 2005 Abstract Taipei 101, the tallest building in the world in 2004, is a super-large project that required many resources, exceeding a single con- tractorÕs capacity, and the project owner had to seek additional specialist contractors for the resource gaps. This paper presents an analytical model for the ownerÕs teaming strategies on the inclusion of additional contractors. The proposed model, based on the resource-based theory and the fuzzy Delphi method, allows the owner to identify critical resources required by the project, evaluate the capacities of the contractors, and identify the resource gaps. The paper also compares the analytical result with the ownerÕs actual decisions, and explains their differences. Ó 2005 Elsevier Ltd and IPMA. All rights reserved. Keywords: General management (strategy); Contractual (international projects); General (managing project); Project teaming; Procurement 1. Introduction which specialist contractors will be employed, in addi- tion to the prime contractor, because the success of Taipei 101, developed by Taipei Financial Center the project requires a sufficient provision of critical re- Corp. (TFCC), was designed by local architect C.Y. sources, such as trade know-how and special equipment Lee & Partners and was managed by Turner Interna- and materials. The prime contractor may provide gen- tional Ltd. It is a 101-story building that is officially eral resources (e.g., tower cranes and hoists) common the tallest building in the world today, being 508 m in to specialist contractors and maintain safety on the site. height and having a total floor area of 412,500 m2 Sometimes, as in the case of Taipei 101, the prime con- [21,26]. The US$700-million Taipei 101 project, initiated tractor may form a joint venture, encompassing several by Taipei city government, used a BOT (Build-Operate- firms, in order to ensure there are sufficient resources Transfer) approach with a 70-year concession period of available. property use. TFCC adopted a fast-track approach and As the construction project of Taipei 101 comes to an started foundation construction in January of 1998, be- end, this study was intended to review and rationalize fore the architectural design had been finalized [15,26]. the ownerÕs decisions in construction project teaming, In the construction of such a super-large project, the from the resource perspective, using resource-based the- owner often plays an important role in determining ory. A fuzzy Delphi survey approach was adopted to identify the critical resources required by the project. The capability of KTRT, the prime contractor, was as- * Corresponding author. Tel.: +886 35731982, fax: +886 35716257. E-mail addresses: [email protected] (R.-J. Dzeng), sessed for each critical resource, in order to identify [email protected] (K.-S. Wen). the resource gaps. The capabilities of the additional con- 1 Tel.: +886 35720327. tractors were also assessed to determine if they had filled 0263-7863/$30.00 Ó 2005 Elsevier Ltd and IPMA. All rights reserved. doi:10.1016/j.ijproman.2005.02.004 484 R.-J. Dzeng, K.-S. Wen / International Journal of Project Management 23 (2005) 483–491 the gaps and had better capability than the prime While this study focuses on the project ownerÕs deci- contractor. Finally, the ownerÕs decisions were com- sions of when to acquire specialist contractors, from the pared against the survey results and discrepancies perspective of resource-based theory, several researchers explained. (e.g., [23,3,20,25]) have identified criteria for pre-qualify- ing and mechanisms for selecting prospective contrac- tors or subcontractors from the perspective of the 2. Resource-based theory and construction teaming owner or the prime contractor; this information may be used subsequently, once the owner has determined According to Hoskisson et al. [11], Mahoney and whether or not to hire a specialist contractor. Pandian [16] and Yasemin and Mahoney [28], re- source-based theory is related to the resource-based view (RBV) of the firm in the field of strategic management 3. Classification of resources research, which focuses on the firmÕs internal strengths and weaknesses relative to their external opportunities Barney [2] divided a firmÕs resources into physical and threats. Traditional strategy models, such as Por- capital resources (e.g., equipment), human capital re- terÕs five forces model [22], relies heavily on the analysis sources (e.g., experience), and organizational resources of a companyÕs external competitive environment. In (e.g., a firmÕs formal structure). Hitt et al. [10] viewed contrast, the resource-based view is grounded in the per- afirmÕs resources as the input for its business process, spective that a firmÕs internal environment, in terms of and divided them into tangible resources (e.g., financial its resources and capabilities, is more critical to the resources) and intangible resources (e.g., patents). Grant determination of strategic action than is the external [8] viewed resources as the foundation for firm profits environment. Rather than being defined by the compet- and the major source of firm capabilities, and divided itive environment, Barney [2] and Grant [6] argue that them into financial resources, reputation, physical re- the parameters of a firmÕs competitive strategy are criti- sources, human resources, technological resources and cally influenced by its accumulated resources. In other organizational resources. Grant [9] re-organized re- words, what a firm possesses would determine what it sources into four categories, namely tangible resources, accomplishes. intangible resources, human resources and communica- Each organization is a collection of unique re- tive & interactive abilities. sources and capabilities that provides the basis for its This study considered the characteristics of building strategy and the primary source of its returns. A capa- construction projects, as well as the applicability of the bility is a capacity for a set of resources to integra- aforementioned resource categories, and divided con- tively perform a task. Readers interested in the tractor resources into assets and capabilities. The assets difference between RBV and other theories of firms include tangible assets (e.g., plant, construction equip- may refer to Conner [5], who compared RBV with five ment) and intangible assets (e.g., patented construction theories that have been significant in the evolution of methods, in-house geographic data) while the abilities industrial organization, including neoclassical theoryÕs include technological management abilities, operational perfect competition model [17], Bain-type industrial abilities, innovation abilities and experience with high- organization [1], the Schumpeterian competition [19], rise buildings. Chicago School responses [7] and transaction cost the- ory [27]. RBV seems particularly appropriate for examining an 4. Teaming of project Taipei 101 ownerÕs strategic teaming for a construction project be- cause such a project requires valuable and various re- The owner of Taipei 101, Taipei Financial Center sources from team companies. A super-large project Corporation (TFCC), first awarded the foundation normally requires resource capabilities exceeding what work to local contractor, Da-Hsin Construction Co. a single contractor can provide and needs several con- Later, TFCC selected KTRT, a consortium of Tokyo- tractors to work as a team. Construction project team- based Kumagai Gumi Co., Taiwan Kumagai Construc- ing can be viewed as a strategic decision process which tion Co., and two other local contractors, RSEA will ensure that sufficient resource capabilities can be Engineering Corp. and Ta-Yo-Wei Construction Co., provided by the team as a whole. Thus, in a fast-track as the prime contractor, for an amount of US$590 mil- project, the process includes identifying the critical re- lion [26]. Kumagai Gumi Co., founded in 1898, has built sources required by the project, assessing the capabilities many skyscrapers, such as the 62-story AT&T Gateway provided by existing team members (whose contracts Tower in Seattle. Taiwan Kumagai, a branch of Kuma- have been tendered) for each critical resource, determin- gai Gumi Co. Ltd., was established in Taiwan in 1974. ing the resource gaps, and adding new team members to RSEA is the largest and the most capable heavy con- fill the resource gaps. struction enterprise in Taiwan, which also has great R.-J. Dzeng, K.-S. Wen / International Journal of Project Management 23 (2005) 483–491 485 experience in large building and infrastructure projects, quantitative values, the fuzzy Delphi method (FDM) such as the Jeddah Control Tower in Saudi Arabia. [4] was used in Step 2. Ta-Yo-Wei Construction Company, established in Since its inception by Dalkey and Helmer [6], the 1976, has been an important player in public works pro- Delphi method has been widely accepted as an effective jects (e.g., bridge and road constructions) in Taiwan [15]. forecasting tool, and has been used in a wide range of After determining the prime contractor, TFCC also applications, such as trend forecasting, knowledge cap- selected several specialist contractors, including the joint turing, public policy conglomeration and planning, etc. venture of Nippon Steel Corp. and China Steel Struc- The reported advantages of this method include: the ture Co. Ltd. for structural steel work; GFC Ltd. for ele- pooling of expert talents; the anonymity of experts, vator and escalator work; Gartner Ltd. for curtain wall thus avoiding domination of a group by individuals; work; Motioneering Inc. for the wind tuned mass dam- and iterations, with structured feedback from group re- per (TMD); and Samsung Corporation for interior sponses, to help reach a consensus [4]. One weakness of decoration.
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