Choosing a Project Team: The Effects of Interdependence and Prior Transacting in Engineering, Procurement and Construction (Epc) Projects

This dissertation produces several important findings. First, I find that one needs to treat two key activities/transactions of a customized project---design and manufacturing---on a discrete basis. In specific, technological and architectural uncertainties, typically associated with customized projects, prevent project contractors to specify ex ante finalized outlook of the manufactured component. Because adaptations are frequent on customized projects, a firm with better access to information that facilitates adaptation owns governance advantage. I find that empirical results are consistent with the idea that project designers own an informational advantage over manufacturers in making ex post governance choices. Consequently, contractors choose to internalize design activities as a way of minimizing transaction costs associated with ex post contracting. Secondly, I find that contractors are cognizant of suppliers' capabilities to acquire team-specific problem-solving techniques, which are consequently reused on future projects. Contractors use this information to assemble teams of suppliers with prior joint experience. Which team of suppliers is hired depends on the nature of a component and on the strength of uncertainties that surround component realization. Thirdly, I find that various temporal considerations associated with realization of customized projects affect the selection of supplier teams. In particular, when an individual component requires a modular approach to its realization, the manufacturing process for that component is likely to be chronologically independent from manufacturing processes of other components. Thus, when one of the components is built modularly, architectural uncertainty between interdependent components is likely to increase and exacerbates integration. To minimize the problems associated with integration, contractors hire teams of manufacturers with prior joint experience.

Name thesis:degree_name

Ph.D.

Level thesis:degree_level

Dissertation

Discipline thesis:degree_discipline

Business Administration

Grantor

University of Illinois at Urbana-Champaign

Year dc:date

2015

Author dc:creator

• Madunic, Marko

Contributors dc:contributor

• Joseph Mahoney
• Glenn Hoetker

• Economics, Commerce-Business

Language dc:language

eng

Identifier

(MiAaPQ)AAI3347442

OAI identifier oai:identifier

oai:www.ideals.illinois.edu:2142/84569