Hallgrim Hjelmbrekke, Ole Jonny Klakegg and Jardar Lohne
The purpose of this paper is to describe how the concepts of business models and project governance can enhance value creation in building projects.
Abstract
Purpose
The purpose of this paper is to describe how the concepts of business models and project governance can enhance value creation in building projects.
Design/methodology/approach
Based on theory derived from management literature, the authors outline a framework combining a project’s business case and governance functions with the business model of the design team. This was tested in two major projects and evaluated in three expert workshops.
Findings
The research reveals that the business model of the design team focus on efficiency rather than on the client’s strategic objectives. This entails a need for project governance functions. The framework presented shows promising capability of aligning the project with client strategy. The authors believe there is significant value in transferring these ideas and knowledge across national boundaries.
Practical implications
The research identifies a gap between business objectives and outcome. The value creation approach in the client organisation diminishes into the way project governance is implemented in some projects. The conceptual framework provides the industry with a new tool for improving its knowledge and practice.
Originality/value
First governance model derived from strategy theory that combines strategy and governance in one holistic model.
Details
Keywords
Hallgrim Hjelmbrekke, Ola Lædre and Jardar Lohne
From a project owner's perspective, it is obvious that a project shall contribute to achieving the organisation's strategic goals. The purpose of this paper is to find out what…
Abstract
Purpose
From a project owner's perspective, it is obvious that a project shall contribute to achieving the organisation's strategic goals. The purpose of this paper is to find out what project owners can do to ensure value creation in their projects, what owners actually do in the few cases in which they are actively involved in ensuring value creation and what is the result of their choice.
Design/methodology/approach
The authors have analysed 12 projects in the Norwegian construction industry, using a qualitative approach. A general business framework for understanding projects has been applied in order to identify possible shortcomings and success factors. The authors have used semi-structured in-depth interviews combined with questionnaires for data collection.
Findings
The study reveals an absence of project strategy, resulting in projects which only to a small extent achieve strategic goals. This lack of strategic perspective in project management is also recognised by the research literature as a common tendency. Traditional project management approaches concentrate on time, cost and quality, instead of on providing strategic success. Based on business literature, the authors identify the value proposition and the customer value proposition as being essential.
Practical implications
The authors recommend construction project owners – as described in the literature – to appoint a project sponsor responsible for communicating a value proposition and business rationale to the project supplier. The sponsor should also be responsible for aligning the suppliers’ customer value proposition with the owner's strategy. The authors recommend that the project sponsor be supported by a project governance body. This will help project owners to ensure value creation in their projects, as described in the literature. The authors pinpoint a need for bridging theory and practice.
Originality/value
The originality of the paper lies in introducing insights from business literature to the construction industry. In the value proposition the owner defines the benefits the project is to provide. The customer value proposition is the statement where the supplier aligns the proposed project output with the project owner's needs. The project governance body is responsible for ensuring this communication process.