Clients, Contractors, and Consultants: The Consequences of Organizational Fragmentation in Contemporary Project Environments

Abstract

Deregulation, privatization, and outsourcing are changing the organizational environment for projects in infrastructure industries (e.g., power generation projects). An important trend is the increasing use of management and engineering consultants on behalf of clients but, sometimes, also acting as supplier representatives in situ. We argue that very little research has been devoted to these arrangements. The paper focuses on the effects of such organizational fragmentation for the execution of large-scale engineering projects. Three problems are identified: the problem of coordination, the problem of the absent customer, and the problem of learning. On a theoretical level, the paper points to important aspects of coordinating engineering work in nonrecurring project business. On a practical level, the paper highlights the need for clients to assess consultants from a broad perspective, including their abilities to build a cooperative project environment and establish problem-solving and conflict-resolution arrangements.

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