Procurement strategies for enhancing exploration and exploitation in construction projects

Purpose The purpose of this study is to investigate how procurement strategies may be designed to facilitate exploration and exploitation in construction projects. Design/methodology/approach This paper is based on a literature review of organizational research and construction management literature together with a brief interview study of Swedish clients and contractors. Findings The theoretical and empirical findings propose that small and simple projects with low uncertainty and scarce resources may focus on exploitation to enhance short-term efficiency through traditional procurement strategies including delivery systems that separate the actors and their activities (i.e. pure design-build- or design-bid-build-contracts), fixed price payment and price focus in bid evaluation. Large complex projects with high uncertainty and customization benefit from combining exploration and exploitation to enhance sustainable performance. This requires collaborative procurement strategies including joint specification through early contractor involvement, cost reimbursement coupled with incentive-based payment, bid evaluation based on multiple criteria and collaborative tools and activities in partnering arrangements. Research limitations/implications This paper contributes to organizational learning literature by pinpointing the need for integrating procurement strategies that enhance combination of exploration and exploitation. The main contribution to the construction management literature involves the investigation of how procurement strategies may affect exploration and exploitation, as identified and articulated in the propositions developed in this paper. Practical implications From a practical perspective, the findings highlight the importance of tailoring procurement strategies to project characteristics to enhance a suitable balance between exploration and exploitation in construction projects. Originality/value The explicit focus on the operational project-level is uncommon but relevant in organizational learning literature.