An empirical study of partners' collaboration in construction joint venture (CJV) projects and its impacts on project performance in Hong Kong

Abstract

The Joint Venture (JV) contracting method has been widely adopted in the construction industry over the past few decades as an effective means of delivering new large-scale, technically complex building and infrastructure projects. However, the industrial practices have also recorded unfavourable project outcomes (e.g. delayed completion, cost overrun, poor quality, and intractable disputes) arising from joint venture construction projects. An extensive desktop literature review has indicated a lack of systematic empirical research focusing on the underlying motives and benefits of and difficulties in applying construction joint ventures (CJVs), so as to better understand the root causes of success or failure. Under the umbrella of relational contracting (RC) strategies, successful application of CJVs is underpinned by multi-partner collaboration, which implies the determinant role of effective collaboration behaviours in shaping the success of CJVs. This research study aims to identify the perceived motives and benefits and potential difficulties of implementing the joint venture contracting method, and to measure the impact of collaboration amongst the joint venture partners on the overall performance of construction joint venture projects in Hong Kong. The specific research objectives are set out as follows: (1) To identify the key motives and benefits of applying CJVs and the major difficulties impeding CJV success, and analyse their relative importance. (2) To solicit and compare the perceptions of CJV participants at different working levels on the assessment of the practical issues pertaining to CJV application. (3) To develop the measurement attributes and determine the factors of collaboration for CJV projects. (4) To determine a list of key performance indicators (KPIs) for measuring CJV project performance. (5) To develop a model for investigating the relationships between a set of collaboration attributes of CJV partners and various performance measures of CJV projects. In achieving the stated research objectives, mixed research methods were applied in this study. Various research data were collected through structured interviews, questionnaire surveys and case studies. The survey respondents ranked "Increasing credibility of pre-qualification during tender" and "Spreading / Sharing financial risk" as the two most significant motives for establishing CJVs, whereas "Inconsistent management styles amongst JV contracting parties" and "Incompatible organisational cultures amongst JV contracting parties" were perceived as the two most challenging difficulties associated with CJVs. These research findings have provided some valuable insights into the role of collaboration in motivating a wider use of CJVs and contributing to the success of CJVs. Moreover, four grouped factors of collaboration attributes containing 24 behavioural aspects of CJVs were derived using exploratory factor analysis (EFA) based on the four key processes underpinning the proposed conceptual model of collaboration in CJVs. The identified four grouped factors of collaboration attributes included: (1) Mutual trust and teamwork spirit; (2) Team skills development and mutually agreed quality, safety and health standards; (3) Proper management of financial and human resources and gain-share/pain-share mechanism; and (4) Effective communications and information sharing. A set of ten key performance indicators (KPIs) were further developed and weighted by the industrial practitioners for measuring various performance outcomes of CJV projects. A structural equation model (SEM) was generated for examining the relationships between a set of collaboration attributes of CJV partners and various performance measures of CJV projects. The SEM results unveiled significant positive relationships between the four grouped factors of collaboration attributes and two broad categories of performance measures: generic measures and JV-specific measures. Multiple linear regression analysis was then conducted to reveal the distinct impacts of different grouped factors of collaboration attributes on individual KPIs for CJV projects. The regression results indicated the varied contributions of different grouped factors to individual KPIs. The present study has enriched the existing knowledge base of CJVs in providing a sound platform for in-depth understanding and improvement of collaboration amongst the CJV partners. The four identified grouped factors of collaboration attributes have enabled industrial practitioners to periodically measure, evaluate and monitor the levels of collaboration behaviours amongst the CJV partners. Another practical value of the research findings is to shed light on the achievement of desirable CJV project performance through the effective collaboration amongst the CJV partners. Although the research context is limited to Hong Kong, the research findings may also be generalised to its neighbouring countries or regions (e.g. Mainland China, Singapore, and Japan) aiming for successful application of CJVs. Similar research studies could be launched in other geographical locations, especially those western countries like the United States, United Kingdom and Australia, in order to fully understand the similarities and differences between the East and the West in terms of CJV partners' collaboration behaviours and its impact on the performance of CJV projects.