Date of this Version
When building and construction markets are analysed it is often at the project level, with markets defined by sector or structure type, procurement method or contract, size, complexity or other characteristic. Projects within a defined market are then grouped together to establish its importance, detached housing for example, or high-rise commercial. A distinction can be made, however, between a market made up of similar types of projects and the market for a single project. Such a market is created by a client as they go through the procurement process. This paper introduces the idea that procurement of a project creates a identifiable, though temporary, market for goods and services, and that such a market has distinctive characteristics that make it both interesting, as a source of testable hypotheses and further research, and important in developing our understanding of the industry and its dynamics. The research the paper reports on shows that the idea of project procurement as a mechanism for creating a market can utilise the elements of industry structure and competitive analysis that have traditionally been applied at the firm level. The paper concludes that this allows a new perspective on issues such as collusion, ruinous competition and cost uncertainty associated with the typical single price, sealed bid auction used for procurement in the building and construction industry.
This document has been peer reviewed.