A Cultural Perspective on Stakeholder Management In The Hong Kong Construction Industry

Steve Rowlinson, Tas Yong Koh and Martin Morgan TuuliDept of Real Estate & Construction, The University of Hong Kong

Content

Stakeholder Management Relationship Management Case Studies

- Public housing project- Civil engineering project

Lessons Learned Conclusion

Stakeholder ManagementProject stakeholders A person or group of people who have a vested interest in the

success or failure of a project and the environment within which the project operates (Olander, 2007, p. 278).

Primary stakeholders People who have a legal contractual relationship to the project E.g. clients; contractors; quantity surveyor; suppliers, etc.

Secondary stakeholders People who influence or are influenced by the project but are

otherwise not regularly engaged in transactions with the project E.g. local communities and general public

The challenge for project team To maximize the positive stakeholder’s influence, and; To minimize the negative influence is minimized (Walker et al., 2008).

Relationship Management

It is all about…

Case Study A

Project description: Three 41-storey blocks of

Public Rental Housing Estate Contract type: Traditional +

special conditions

Innovative procurement initiatives: Guaranteed Maximum Price

(GMP) packages Sharing of “pain & gain” between

client & contractors Rewards on creativity &

improvement efforts on works

Case Study A (cont.)

Remarks: Project dispute resolution system Evolving the notion of corporate social

responsibility (CSR) throughout the organization

Main Contractor

Client

Enhance PerformanceReduce Confrontation

SubcontractorsSuppliers

Implications

1. Passive reaction among the subcontractors and junior staff members

Members of the lower echelon are adoptinga minimalist approach– contribute by carrying out instructions

Engaging with the external stakeholder doesnot readily contribute to their immediate works

Issue: engaging the lower echelon of the project organisation so that a uniform and positive attitude can be inculcated

2. The lack of a structured approach to project stakeholder management

The deficiency is particularly acute with external stakeholder management

Guidelines for managing external stakeholders had not been established

Parochial mentality of the construction fraternity in terms of external stakeholder management

Implications

3. No allowance for additional resources for stakeholder management

No provision of additional resources available for the main contractor under the contract

Parties are committed to making the project a success in most if not all aspects

As a pilot project the ensuing image issues and the high stakes involved especially for the two primary stakeholders of the client and main contractor (Mahesh et al., 2007), the main contractor resorted to adsorbing the extra costs.

Case Study B

Project description: 1.1km elevated viaduct dual three-lane carriageway

(average 65m above ground) connecting a tunnel to a cable-stayed bridge

Initial contract period of 40 months, re-measurement type, using traditional design-bid-build approach

Project site is reclaimed land surrounded by industrial facilities, container terminals and an educational institution

Many different stakeholders due to the size, location, and technical complexity of the project

Case Study B

Case Study B

Case Study B

Implications

1. Analysis of the incidents show how stakeholder management on a Hong Kong infrastructure project manifests itself.

When issues affect all stakeholders, there is a tendency to reach an agreement quickly

Culture specific dynamics manifested themselves in the positions different stakeholders took on issues general tendency for rule following or

adherence strictly to the contract Fear of blame culture pervasive in public

project settings Confucian value system

Implications (cont.)

2. Progress being made towards public engagement on projects in Hong Kong

Use of the traditional procurement arrangement is still prevalent

Arms-length mindset still prevalent When combining traditional procurement

systems with collaborative partnering initiatives, there is still little evidence of real partnership manifestation

A shift in culture appears a viable option for project delivery in Hong Kong.

Lesson Learned

tradition, custom and practice, politics and culture have a major influence on stakeholder management in Hong Kong

incorporating other stakeholders into the development process has moved forward slowly no evidence of resistance to change,

rather an inertia grounded in the traditional values of society and the structure of government departments

Hofstede’s dimensions of culture Confucian values of harmony and conflict

avoidance are often an opposing force to the drive for stakeholder empowerment.

evidence from the case studies that a culture change is taking place

Conclusion

Impediments to relationship management progress in Hong Kong:

Relationship management should be a consideration in choosing project delivery process and cannot be implemented effectively on existing projects

Resistance to alliance contracting exists throughout the industry

“it isn’t the way we do things”, lack of trust

Not a one-off process Continuously facilitated and maintained, implemented at all levels in

the project. Facilitation is essential to break down barriers and to enable blame-

free and open communication.

Individuals need to be educated and trained Not everyone is suited for relationship management, HR

issue