Managing value creation: the business model approach in construction

Abstract

In tendering competitions, construction companies are forced to offer equal value. Low costs and operational flexibility are thus more important factors in competition than the ability to satisfy customer needs – a basis for value-based competition. The aim of this research is to illustrate how the business model approach can be used in analysing and managing value creation of a construction company. A business model framework is presented and its use is illustrated with three cases from the Finnish construction industry. Cases highlight the importance of analysing and aligning the different elements of business models relative to each other. The framework provides a systematic way to analyse organisation’s value creation logic and a tool to communicate that logic to anyone. Thus, it supplements the other prevailing approaches that aim to improve the value-creation capability of construction companies.

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