2. A Cultural Perspective on Stakeholder Management In The Hong Kong Construction Industry Steve Rowlinson, Tas Yong Koh and Martin Morgan Tuuli Dept of Real Estate & Construction, The University of Hong Kong

3. Content  Stakeholder Management  Relationship Management  Case Studies - Public housing project - Civil engineering project  Lessons Learned  Conclusion

4. Stakeholder Management Project stakeholders  A person or group of people who have a vested interest in the success or failure of a project and the environment within which the project operates (Olander, 2007, p. 278). Primary stakeholders  People who have a legal contractual relationship to the project  E.g. clients; contractors; quantity surveyor; suppliers, etc. Secondary stakeholders  People who influence or are influenced by the project but are otherwise not regularly engaged in transactions with the project  E.g. local communities and general public The challenge for project team  To maximize the positive stakeholder’s influence, and;  To minimize the negative influence is minimized (Walker et al., 2008).

5. Relationship Management It is all about…

6. Case Study A Project description:  Three 41-storey blocks of Public Rental Housing Estate  Contract type: Traditional + special conditions Innovative procurement initiatives:  Guaranteed Maximum Price (GMP) packages  Sharing of “pain & gain” between client & contractors  Rewards on creativity & improvement efforts on works

7. Case Study A (cont.) Remarks:  Project dispute resolution system  Evolving the notion of corporate social responsibility (CSR) throughout the organization Main Contractor Client Enhance Performance Reduce Confrontation Subcontractors Suppliers

8. Implications 1. Passive reaction among the subcontractors and junior staff members  Members of the lower echelon are adopting a minimalist approach – contribute by carrying out instructions  Engaging with the external stakeholder does not readily contribute to their immediate works  Issue: engaging the lower echelon of the project organisation so that a uniform and positive attitude can be inculcated 2. The lack of a structured approach to project stakeholder management  The deficiency is particularly acute with external stakeholder management  Guidelines for managing external stakeholders had not been established  Parochial mentality of the construction fraternity in terms of external stakeholder management

9. Implications 3. No allowance for additional resources for stakeholder management  No provision of additional resources available for the main contractor under the contract  Parties are committed to making the project a success in most if not all aspects  As a pilot project the ensuing image issues and the high stakes involved especially for the two primary stakeholders of the client and main contractor (Mahesh et al., 2007), the main contractor resorted to adsorbing the extra costs.

10. Case Study B Project description:  1.1km elevated viaduct dual three-lane carriageway (average 65m above ground) connecting a tunnel to a cable-stayed bridge  Initial contract period of 40 months, re-measurement type, using traditional design-bid-build approach  Project site is reclaimed land surrounded by industrial facilities, container terminals and an educational institution  Many different stakeholders due to the size, location, and technical complexity of the project

11. Case Study B

14. Implications 1. Analysis of the incidents show how stakeholder management on a Hong Kong infrastructure project manifests itself.  When issues affect all stakeholders, there is a tendency to reach an agreement quickly  Culture specific dynamics manifested themselves in the positions different stakeholders took on issues  general tendency for rule following or adherence strictly to the contract  Fear of blame culture pervasive in public project settings  Confucian value system

15. Implications (cont.) 2. Progress being made towards public engagement on projects in Hong Kong  Use of the traditional procurement arrangement is still prevalent  Arms-length mindset still prevalent  When combining traditional procurement systems with collaborative partnering initiatives, there is still little evidence of real partnership manifestation  A shift in culture appears a viable option for project delivery in Hong Kong.

16. Lesson Learned  tradition, custom and practice, politics and culture have a major influence on stakeholder management in Hong Kong  incorporating other stakeholders into the development process has moved forward slowly  no evidence of resistance to change, rather an inertia grounded in the traditional values of society and the structure of government departments  Hofstede’s dimensions of culture  Confucian values of harmony and conflict avoidance are often an opposing force to the drive for stakeholder empowerment.  evidence from the case studies that a culture change is taking place

18. Conclusion Impediments to relationship management progress in Hong Kong:  Relationship management should be a consideration in choosing project delivery process and cannot be implemented effectively on existing projects  Resistance to alliance contracting exists throughout the industry “it isn’t the way we do things”, lack of trust  Not a one-off process Continuously facilitated and maintained, implemented at all levels in the project. Facilitation is essential to break down barriers and to enable blame- free and open communication.  Individuals need to be educated and trained  Not everyone is suited for relationship management, HR issue