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collaborative long term relationships in uk construction industry

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					Assessing the benefits of long-term relationships between contractors and
subcontractors in the UK

A. Mehmet Haksever, Ismail H. Demir and Omer Giran

Istanbul University, Department of Civil Engineering, Construction Management Group, Avcilar,
Istanbul, 34850, Turkey
haksever@istanbul.edu.tr

Keywords
Long-term relationship, contractors, subcontractors, Japan, UK.


ABSTRACT

This paper addresses the issue of long-term relationships (LTR) between contractors and their
subcontractors in the UK construction industry. The research was prompted by the awareness that
although the practice of LTR is common in Japan, it is not generally considered so in the UK.
Consequently, many potential benefits of such relationships are not widely taken advantage of.
Initially, the Japanese experience is examined and characteristics of LTR are defined. Then these
are used as a basis for a questionnaire survey of UK contractors. In the UK business environment,
commercial pressures tend to reduce the weight placed on a successful working relationship. This
is confirmed by demonstrating commercial factors are considered more important than
relationship-related factors in the selection process. However, the gap between these two factors
does not appear to be significant. Furthermore, the results show that contractors who are in a mode
of LTR with their subcontractors have mainly experienced indirect benefits such as effective
communication, less conflict and risk. Far fewer claim to have experienced lower costs or shorter
times. Some implications of the results are discussed and suggestions for further LTR research are
made.

INTRODUCTION

The UK construction industry has been experiencing an exceptional change in the last two decades
due mainly to political and economical pressures. One of the major changes is that an increased
amount of construction activity is now being subcontracted. It is reported that over 90% of
construction work is subcontracted in the majority of contracts. This suggests that the contractor is
at greater risk if the sub-contractors fail, as more risk is passed to the latter (Gray and Flanagan,
1989).

This changing situation makes the role and performance of the subcontractor critical to project
success, yet subcontracting does not have a glamorous image in the UK (CSSC, 1988, 1989). This
is due to many reasons such as large numbers of bankruptcies, high levels of disputes and claims,
and poor performance. The uneasy and short-term nature of the relationships between contractors
and subcontractors could partly account for this negative image. A great amount of friction,
dissatisfaction and mismatching of goals were reported by various authors in their investigations
into the relationships between contractors and subcontractors in the UK (Gray and Flanagan, 1989;
Winter and Preece, 2000). Each party's viewpoints have been reported and contrasted. It is
interesting to quote a statement that could reflect contractors' point of view regarding the working
relationships with their subcontractors:

      “Whilst we try to maintain a good working relationship and ensure repeat business
      with approved specialists, the competitive tendering system means we must see
      price as the overriding feature and frequently this means an inability to offer repeat
      business.”(Gray and Flanagan, 1989)



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The statement above could be a fair indication of the reason why relationships between contractors
and subcontractors are short-lived in the UK. As a consequence, an opportunity to accumulate
skills and knowledge gained from working with the same subcontractor is lost. To overcome this
limitation, Gray and Flanagan call for a new working relationship where the contractor can
maintain all his sub-contractors at a high level of efficiency and thus have the ability to complete
the work. It is suggested that this can be achieved by working with the same subcontractor
consistently over a long period of time, that is, on a long-term relationship (LTR) basis (Bennett,
1991; Bennett and Jayes, 1995). This suggestion is based on a close investigation of the Japanese
construction industry where LTR plays a major role in the achievement of efficiency and business
success (Bennett et al., 1987).

Bennett et al. (1987) argue that the great success of the Japanese building industry depends on
long-term relationships. Japanese contractors overcome many of the problems discussed above by
working together with tightly knit families of subcontractors for decades. Nearly all building work
in Japan is undertaken by the subcontractors, who enjoy a paternalistic family relationship with the
contractors. They depend on their „father‟ contractors for future work. Many of the subcontractors
will have worked for particular contractors over many years, and in many cases they will work only
for the one contractor. This special relationship means that at the bid and award stage the contractor
generally stipulates the contract price, instead of letting the subcontractor estimate the price for the
work. The subcontractor trusts that the contractor will fairly represent his interests. Subcontractual
relationships are more likely to be based on negotiation than competition. This means that conflicts
simply do not arise about payment and claims for additional expense. This approach also helps to
stem the paper chase. The subcontractor can get on and worry about the technical and engineering
issues rather than get involved in cost checking everything. In return for all these advantages, the
contractor goes to great lengths to try and provide continuous employment and fair recompense for
the subcontractors. These long-term relationships are based on trust and a sense of brotherhood.
Contractors set tough standards, but help their subcontractors to achieve them. They pay a fair
price for work and feel responsible for ensuring that their subcontractors are profit making and
have opportunities to grow. In return, subcontractors strive to deliver the agreed works to the
specified standards. They are willing to try new methods and feel responsible for proposing ways
of improving quality, productivity and so on (Bennett, 1991). Similar but less formal and less
certain relationship exist throughout the multilayered structure of Japanese contracting.

While the practice of LTR is very common in Japan and its benefits are widely acknowledged in
practice and literature, it is not generally considered so in the UK. As a consequence, an
opportunity that LTR could offer seems missing in the UK construction industry (Haksever et al.,
1995). The Japanese experience could be a good example to support the argument that LTR should
be exercised in the UK as well. However, one may argue that, due to different business and
corporate environment in the two countries, there is a slim chance that LTR could be used in the
UK. As Table 1 shows, relationship-related business environments are quite different in the UK
and Japan.

Table 1 Relationship-related business environment in UK and Japan
                          UK                                      Japan
General Environment       • Individualism                         • Group orientation
                          • Business relations based upon         • Business relations based upon trust and
                          competition                             human relations
Corporate Level           • Short-term view of the business       • Long-term view of the business
                          • Business contact based upon           • Human relations based business
                          competition on price and quality        contact forging long-term relationships
Source: Adapted from Bennett, et al. (1987) Capital & Countries Report: Japanese Construction Industry

It may seem that the table above supports the claim that LTR is merely something Japanese and


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difficult to be implemented in the UK environment. In Japan LTR has developed as a natural
consequence of the business culture. However, this is not the case in UK business. This might be a
reason that makes UK practitioners hesitate to accept that LTR is workable. Furthermore, there is
little empirical evidence as to whether or not the use of LTR in the UK generates the benefits
proposed in the literature.

The discussions above pose two important questions in studying LTR issues: (1) To what extent are
relationship-related factors considered important above others for invitation to bid and in final
selection when sub-contracting? (2) Have the benefits of LTR been experienced by UK contractors
or are those benefits merely speculated in the literature? If experienced, which benefits are most
common?

The objective of the paper is to investigate these two issues in order to demonstrate the current
status of LTR practice in the UK construction industry. It is hypothesized that benefits of LTR are
widely experienced by the contractors in such relationships but relationship-related factors are
overtaken by commercial factors at the point of subcontracting. To fulfil the research objective, a
questionnaire survey was conducted with randomly selected contractors in the UK.

The paper next reviews the characteristics and constructs of LTR, and presents the research
methodology employed for this investigation. Then, findings regarding the importance of
relationship-related factors in the selection process and contractors‟ experienced benefits of LTR
are discussed. Finally, some suggestions for further LTR research are made.

CHARACTERISTICS OF LTR

The word „long-term‟ gives scant understanding of LTR since it connotes the longevity of a
relationship. Although duration of a relationship has its place in understanding LTR, it is not
sufficient to explain LTR concept fully. LTR must base on a collaborative relationship and it must
have a long-term orientation. Kelly (1983) supports this view claiming that long-term orientation of
parties in an existing relationship seems to be a better indicator of closeness in relationships than
the length of the relationship. Kelly and Thibaut (1978) define the long-term orientation as the
perception of interdependence of joint outcomes that are expected to benefit the parties in the long
run.

Construction literature concerning LTR usually concentrates on partnering (CII, 1991; CIDA,
1994; Bennett and Jayes, 1995; Baden Hellard, 1995; Stephenson, 1996; Smyth, 1999; Bresnen and
Marshall, 2000; Li, et al, 2000). Investigation of partnering showed that it possesses many of the
characteristics of LTR. It was felt to be essential that the two terms were defined and distinguished
from each other before further investigation. This distinction is very blurred, in work done on
partnering, many areas of common ground with LTR were found.

The view advocated in this paper is that partnering, while similar to, is actually a business tool for
the development of LTR. Partnering is described as:

      “A management approach used by two or more organizations to achieve specific
      business objectives by maximizing the effectiveness of each participant's resources.
      The approach is based on mutual objectives, an agreed method of problem
      resolution and an active search for continuous measurable improvements.”
      (Bennett and Jayes, 1995)

While it is not a legally binding relationship (CII, 1991), it is a commitment to work together that
enables each party to better plan their operations for the coming years. The central purpose of
partnering is to increase productivity. Bennett and Jayes explain that once this aim has been
achieved the greater productivity can be used to pursue other secondary goals. For example,
productivity gains can be used to lower prices, increase profits, raise wages, increase quality, invest


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in research etc. Partnering recognised that modern industry depends on linking individual
processes into tightly integrated yet flexible production systems. The tight integration of processes
that lies at the heart of all modern production systems is best achieved by people who have worked
together for a long time. Partnering can be of two sorts; project and strategic. Project partnering
uses the techniques described, but only for the duration of a single project. Strategic partnering
uses the same techniques, but also makes a commitment to work together in the future.

In this paper partnering is seen as a tool for development of LTR. Others would include; strategic
alliances, joint ventures and consortiums. Partnering is a deliberate business action that seeks
business benefits through closer ties between companies. LTR is the ultimate result of this action.
Partnering is required to foster the relational factors required by LTR, such as trust and
commitment. This is the justification for this paper concentrating on the relational aspects of LTR,
which much partnering research has not emphasized, rather than the procedures and benefits of the
approach. The presence of commitment to the relationship and trust between the parties are seen as
an essential component of LTR.

The issue of relational aspects of firm interaction have been central to a recent paradigm shift
within the thinking of the marketing discipline. This shift has been a realization that in the present
global economy firms must co-operate with other firms to function, and that the ability to co-
operate is an essential business skill (Kalwani and Narayandas, 1995).

Studies in the marketing field show two major patterns in addressing characteristics of buyer/seller
long-term relationships. The first pattern looks at the behaviours of firms inclined to continuous
relationships. Kalwani and Narayandas (1995) comment that the move away from the traditional
adversarial model towards collaborative long-term relationships initiates the forming of
partnerships or strategic alliances. Macneil (1981) recognized that in departing from the traditional
mode, firms require the establishment of relationships that have an orientation toward closeness
and the achievement of relation-specific goals. Consequently, managing relational-specific assets
becomes critical to the firms in a relational mode (Anderson and Narus 1990, Anderson and Weitz
1989, Heide and John 1990). Expectations of continuity of a relationship are also accounted for
understanding behaviours of firms in long-term relationship (Noordewier et al., 1990).

Ganesan (1994) contrasts behaviours of firms in long-term orientation to those without; this is
shown in Figure 1. He states that firms with a short-term orientation are concerned only with the
options and outcomes of the current period, whereas firms with a long-term orientation focus on
achieving future goals and are concerned with both current and future outcomes. In addition, firms
with a short-term orientation rely on the efficiencies of market exchanges to maximise their profits
in a transaction, whereas firms with a long-term orientation rely on relational exchanges to
maximise their profits over a series of transactions.

                 Present sight:                                                Future vision:
                 Discrete transaction                                  Relational transaction

                  Low                                                                 High
                                        Probability of future interaction
                        Figure 1 Behaviours of firms in long-term orientation

The second pattern examines the constructs or antecedents influencing the buyer/seller working
relationship (Anderson and Narus 1984, 1990). A good example of this approach can be found in
the work of Ganesan (1994). He suggests that long-term orientation in a buyer/seller relationship is
a function of two main factors: mutual dependence and the extent to which they trust on one
another. Although long-term relationships can be characterized in various ways, four constructs
are recognised as key characteristics and essential components of long-term relationship. They are
trust, commitment, dependence, and expectations of future interactions. LTR is required to foster
these relational factors.


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An LTR approach to construction projects would decrease contracting uncertainty. First, the
contractor would not feel obliged to protect themselves as rigidly from unanticipated contingencies
in the contract. This should reduce the bid price and reduce the use of litigation. Second, there
would be a decrease in the workload uncertainty, as the subcontractor would be able to predict the
future workload more accurately. Again, the presence of trust and commitment would reduce the
concern over asset specificity and the potential for opportunistic behaviour. It is the checks against
these that help to increase the cost of buildings.

Additionally, although LTR would not eliminate all project uncertainty the continuous, committed
and trusting nature of the relationship will be very helpful in reducing the cost consequences of
such uncertainty and will certainly reduce the lawyers‟ bills. While it may be argued that this is
somewhat „pie in the sky‟, such an attitude needs changing and that the academic community
should be the leader in this change. As a final comment it should be remembered that the Japanese
have 102 lawyers/head compared with 134 in the UK (The Economist, 1992). While these may not
be all involved in construction law such a difference in figures must say something about the
difference in approach.

For this study, the relationship between contractors and their sub-contractors has been selected.
The objective of the study would be to identify how LTR is perceived and practised in the working
relationship of these parties. To perform such an investigation there are questions in two critical
areas, which must be addressed.

Selection procedure: Since the nature of the construction industry is project based, so the selection
process of the project team for each project becomes an important concern. Analysis of the
selection procedure will aim to test the hypothesis that contractors tend to repetitively select
favoured sub-contractors. This implies some acceptance of the benefits of an LTR. However, a
secondary hypothesis will be that this acceptance is not overt and contractors will tend to de-
emphasise this relationship, while emphasizing transactional attributes.

Perception of LTR benefits: In what areas do contractors feel the benefits of LTR accrue? This
question is intended to highlight the areas where the measurement of LTR benefits should be
focused. Have they any experience of such benefits or are they largely hypothetical?

THE SURVEY

A questionnaire survey of 53 contractors in the UK was carried out, each firm receiving 5
questionnaires. Altogether, 45 completed questionnaires were returned representing a 17%
response rate. Only top-level management personnel were asked to complete the questionnaire.
Job positions of the respondents vary and include titles such as chief executive officer, procurement
director, contract administrator and so on. Common characteristics of the respondents are: first,
they have a vast amount of experience in the industry with an average of 23 years; second, they are
in a position that could reflect overall company policy. These two criteria justify the reliability of
the data source for an LTR study in that they are the right people to be approached to seek
information on the experienced benefits of LTR and assess the importance of the selection factors
for both invitation to bid and final selection.

Subcontractors chosen by the respondents for the questionnaire vary in trade. More than half of the
respondents have had a relationship with the subcontractor for more than 10 years, see Table 2.

Table 2 Longevity of relationship of the respondents with the subcontractors
Longevity of relationship with the
                                             less than 5      5-9          10 – 19        over 20
subcontractor (years)
Number of the respondents                        4             18              16            7



                                                  5
Although it is difficult to draw a norm by which LTR could be distinguished from non-LTR, it is
reasonable to propose that the minimum of over 5 years of relationship is sufficient to allow an
opportunity to have repetitive business and thus to experience its benefits. All the respondents with
LTR are either satisfied or very satisfied with their chosen subcontractors.

SELECTION FACTORS FOR SUBCONTRACTORS

The selection process is important because the nature of the contractor-subcontractor relationship is
project-based. As discussed earlier, commercial factors are generally seen as overriding features in
the selection process. However, it is important to analyse where relationship-related factors are
placed in the process in order to investigate how the value of long-term relationships is perceived
by the contractors. This analysis enables us to see the relative importance of relationship-related
factors over others for invitation to bid and final selection.

A total of 12 selection factors were identified from various literature sources and presented to the
respondents. A three-level scale of not important, important and very important was used to
indicate the level of importance. In order to rank the relative importance of the selection factors for
invitation to bid and final selection, each answer is given a weight of; not important (1), important
(2) and very important (3). A score of each factor is calculated by the following formula: Σ n x w
where n is the total number of respondents giving a particular answer and w is the weight of that
answer. For this analysis, 45 respondents‟ answers are usable. This means each selection factor
has got a chance of scoring a minimum of 45 (n x 1) and maximum of 135 (n x 3). The ranks and
scores of the selection factors are presented in Table 3.

Table 3 The ranking of importance of selection factors for sub-contractors
Rank      For invitation to bid                          For final selection
1         Experience of similar projects (111)           Previous project performance (117)
2         Previous project performance (108)             Current work load (114)
3         Previous disputes (106)                        Lowest bid (113)
4         Previous experience with the sub (101)         Previous working relationship (111)
5         Previous working relationship (99)             Previous disputes (111)
6         Technical/managerial capability (95)           Experience of similar projects (110)
7         Current work load (92)                         Previous experience with the sub (106)
8         Reputation (87)                                Technical/managerial capability (104)
9         Bank reference (84)                            Bank reference (101)
10        BS 5750: quality systems (75)                  Reputation (98)
11        Location of the sub-contractor (74)            BS 5750: quality systems (80)
12        N/A                                            Location of the sub-contractor (77)

As Table 3 shows, the top three factors considered important for invitation to bid are: experience of
similar projects, followed by previous project performance and previous disputes with a close range
of scores. The top three places in the final selection are previous project performance, current
workload and lowest bid, also with a close range. Overall, commercial factors are considered more
important in both stages. On the other hand, relationship-related factors, which are underlined, are
ranked middle-top for invitation to bid and middle for final selection. This result confirms that
commercial factors are considered more important in the selection process, reflecting the short-
term and commercial-driven attitude of the industry. It also confirms earlier studies in that the
industry‟s attitude has not changed; at least as far as contractors are concerned.

However, it must be noted that the gap between commercial and relationship-related factors in
terms of their relative importance is not very significant. An implication of this is that if it is


                                                   6
demonstrated that benefits of LTR are experienced by UK contractors, this could support an
argument that relationship-related factors should be given higher priority. In this regard, the next
section examines whether or not respondents experience the benefits of LTR when it is used.

EXPERIENCED BENEFITS OF LTR WITH THE SUBCONTRACTORS

This section aims to find out whether or not contractors in a mode of LTR with their subcontractors
have experienced benefits and which benefits are experienced most. To fulfil this objective, 15
major potential benefits of LTR from the literature have been identified and presented. These
benefits are categorized into 6 groups, which are cost/price, time, quality, risk, conflict and
communication. The respondents were given the freedom to choose a subcontractor they wish to
consider, as long as the chosen subcontractor fits the criteria, which are that they know the
subcontractor very well and they have been working together for a long time. They were then
asked to indicate to what extent they experienced the benefits of LTR with their subcontractors. A
five point agreement scale of strongly disagree, disagree, undecided (neither disagree nor agree),
agree and strongly agree was used to indicate the level of experienced benefits. However, in the
analysis of the data, strongly disagree and disagree options are combined into one group due to a
small sample size. The same is also done for strongly agree and agree at the other end of the scale.

The result shows that contractors who have worked with their sub-contractors in a mode of long-
term relationship have experienced most of the benefits of LTR. The summary of the analysis is
shown in Table 4. The most experienced benefit is better co-operation. It is followed by better
team spirit, more confidence of success and effective communication. 8 out of 15 benefits have
been experienced by more than 70% of the contractors.

Table 4 Experienced benefits of long-term relationship
Category            Benefit                               Disagree     Undecided        Agree
Time                fewer time overruns                   6 (12.5%)    7 (15.5%)        32 (71.0%)
                    shorter project completion time       6 (12.5%)    18 (40.0%)       21 (46.5%)
Cost/price          lower bidding price                   9 (20.0%)    18 (40.0%)       18 (40.0%)
                    fewer cost overruns                   5 (11.1%)    13 (28.9%)       27 (60.0%)
                    less supervision cost                 11(24.4%)    18 (40.0%)       16 (35.6%)
Quality             better quality                        2 (4.4%)     15 (33.3%)       28 (62.3%)
                    fewer defects                         3 (6.7%)     12 (26.7%)       30 (66.6%)
Risk                more willingness to share risk        6 (13.3%)    8 (17.8%)        31 (68.9%)
                    more confidence of success            0 (0.0%)     4 (8.9%)         41 (91.1%)
                    less project risk                     6 (13.3%)    6 (13.3%)        33 (73.4%)
Conflict            fewer disputes                        2 (4.4%)     8 (17.8%)        35 (77.8%)
                    fewer claims and litigation           3 (6.7%)     3 (6.7%)         39 (86.6%)
                    better co-operation                   0 (0.0%)     0 (0.0%)         45 (100 %)
                    better team spirit                    0 (0.0%)     3 (6.7%)         42 (93.3%)
Communication       more effective communication          0 (0.0%)     6 (13.3%)        39 (86.7%)

It is interesting to note that most of the benefits which achieved over 70% agreement fall into the
risk, conflict and communication categories. These categories could be characterized as indirect
benefits, while time, cost/price and quality as direct benefits. The contractors have experienced
more indirect benefits than direct ones. In addition, a close examination of the experienced direct
benefits of LTR reveals that the least experienced are in the cost/price group, followed by time and
quality. This aspect of the result can be a possible explanation for the less common practice of
LTR among contractors in the UK. Contractors who have not been in an LTR mode may be
reluctant to use it due to the characteristics of indirect benefits, which are qualitative in nature and


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difficult to observe in an explicit manner. It may be common sense that these indirect benefits
should eventually contribute to direct ones by creating a better working environment and reducing
risks. However, contractors who do not use LTR may need to be convinced about this contribution
in the first place, although it is very difficult to prove it in the short term. Nevertheless, it should
be emphasized that although most of the contractors that participated in the questionnaire have not
achieved as many direct benefits as indirect ones, they all are satisfied or even very satisfied with
their subcontractors and maintain a relationship for a long period of time. This provides strong
evidence that LTR is not merely something Japanese and should be beneficial to UK contractors if
they are in such a relationship.

STRATEGIC LTR RESEARCH ISSUES

The important implications of the findings above are two-fold. First, researchers in LTR studies
should not concentrate only on such direct benefits when attempting to measure and promote the
benefits of LTR. This may lead to a narrow understanding of the benefits of LTR. Alternatively,
further research should look into the qualitative nature of LTR benefits in terms of risk reduced,
effective communication and better working environment. Second, in order to promote LTR in the
construction community, there is a need for a technique that can be used to demonstrate in a more
explicit manner the contribution of indirect benefits to overall project performance.

The next logical step is to identify key questions that should be addressed for further LTR research.
The lack of interest and research on the subject has been one of the main concerns of the authors.
In this section, a set of important research questions will be proposed to introduce a broad research
agenda. For that purpose five main questions have been identified. These are: 1) What are current
working relationships between practitioners in the UK construction industry? 2) How to measure
the benefits of LTR? 3) How to launch and maintain LTR? 4) What are the barriers to implement
LTR in current UK practice and its potential risks? 5) How is LTR exercised in the Japanese
construction industry? These questions are briefly discussed below.

Current working relationships: There are very few studies available which shows the nature of the
current working relationships. The starting point for an LTR research project should be to
investigate current practice in order to understand which characteristics of LTR are currently
present in the relationships between construction companies. This requires investigating the
current relationship from the perspective of LTR. The nature of the relationship between
companies that are involved in the construction industry varies depending on the nature of their
work. Companies in the construction industry can be broadly separated into two groups. First,
those providing professional advice, such as design and engineering consultants. Second, those
providing a product, such as contractors, subcontractors and materials suppliers. The way business
relationships are arranged will differ for each group. Therefore, this requires investigation of
individual relationships, for example, those between clients and contractors, contractors and
consultants, contractors and sub-contractors and so on.

Measurement of LTR benefits: Currently, LTR is not common in the UK construction industry.
One of the reasons for this is the difficulty in „selling‟ it as an idea. To overcome this limitation it
is essential to develop some form of measurement through which the benefits of LTR can be easily
understood. It is important in this case that a holistic view of the benefits is taken. That is, such
things as quality, time, cost, value for money, improved company performance will be taken into
account.

Launch and maintenance of LTR: The development of LTR can be seen as a two-stage process.
First, the company itself must cultivate a long-term orientation. Second, after this internal attitude
adjustment, LTR amongst project participants may be built. For each of these stages guidelines are
required. Guidelines need to be not only for the building of LTR but also, importantly, its
maintenance. This process requires the identification of macro issues such as cultural,



                                                   8
environmental, economic, political and industrial dimensions and also micro issues which are on
the personal, project and company level.

Barriers to and risks of LTR: As LTR is uncommon in the UK, there must be barriers to its
development. These should be identified so that they may be overcome. Such research must be
performed remembering that LTR may not be feasible in the UK business environment. Detecting
such barriers should lead to adaptations of LTR to UK practice. Additionally, risks associated with
LTR should be honestly and overtly researched and discussed. If the UK experience leaves one
party in an LTR open to opportunism and its costly consequences, the errors that occurred should
be highlighted and responded to.

LTR practice in the Japanese construction industry: As with much of today's management and
working practice, the LTR approach to construction has been observed in Japan. Consequently,
before the approach is adopted in the UK, a full understanding of LTR in Japan, including cultural
factors, must be acquired. Upon achieving this, factors which do not exist in the UK must be
filtered out. If such factors exist then their impact upon the approach must be gauged and
adaptations for UK factors made.

Future studies about long-term relationships in construction industry should focus on these areas to
bring better understanding and rigor to research in this subject.

CONCLUSION

The paper demonstrated that the benefits of LTR mentioned in theory and achieved in Japan have
been experienced by most of the UK contractors who have worked with their subcontractors in an
LTR mode. Most experienced benefits are indirect ones such as less risk, less conflict and more
effective communication. The direct benefits such as cost/price, time and quality are not
experienced as much. Furthermore, it is confirmed that relationship-related factors are not
considered as important as commercial factors at the point of subcontracting. These findings
explain why LTR is not commonly practised between contractors and subcontractors in the UK
construction industry characterized by short-term and commercial-driven attitudes.

The result of this paper suggests that future studies should give emphasis to the qualitative aspects
of the LTR benefits and take a global view. Also, more research is needed into inter-organisational
relationships in construction upon which further LTR research can be based. Furthermore,
additional studies are needed on the subject to shape up LTR theory in the context of the
construction industry and their outcomes should constantly be disseminated to practitioners to
promote the implementation of LTR.

Today's business environment requires more co-operation and collaboration between organizations
to improve business performance and thus achieve value for money for their clients. LTR is a pro-
active response to it.

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