Subcontractors' business relationships as risk sources in project networks

Abstract

Purpose

This paper seeks to address the risks for a main contractor firm's project business that arise from subcontractors' inter‐organizational relationships in complex‐ and dynamic‐project networks.

Design/methodology/approach

Existing project risk management research neglects the management of such relational risks in networks. This paper discusses this un‐researched area by analyzing triads representing sub‐networks of three actors in a larger network. The empirical study employed several semi‐structured interviews in two global contractor organizations. Critical incidents identified in triadic settings were used to explain the logic of how risks arose from subcontractors' inter‐organizational relationships.

Findings

This paper identifies four categories of risk sources characterized by subcontractors' inter‐organizational relationships. The four risk source categories are based on subcontractors' relationships with other subcontractors, the contractor's competitor the contractor's client and non‐business actors (e.g. a local authority or regulatory body).

Research limitations/implications

The empirical study emphasizes the dynamic nature of the risks that business relationships cause in the main contractor's current and future projects and business. Furthermore, the empirical analysis suggests that the risks arising from subcontractors' relationships have an impact on two different layers: the temporary project network layer and the permanent business network layer. The impacts of risk on the temporary project network layer relate to specific sales and delivery projects, whereas the impacts of risk on the permanent business network layer relate often to changes in the network position of the business players.

Originality/value

This paper suggests a novel risk management approach, where risks and opportunities arising from subcontractors' relationships are actively taken into account in subcontractor management.

Citation

Artto, K., Eloranta, K. and Kujala, J. (2008), "Subcontractors' business relationships as risk sources in project networks", International Journal of Managing Projects in Business, Vol. 1 No. 1, pp. 88-105. https://doi.org/10.1108/17538370810846432