Construction Procurement In Sweden Construction Essay

Sweden is one of Norse states located between Norway and Finland in North portion of Europe. It has a population of 9.2 million people. Swedish clime in summer but winters bring some heavy snow and low temperatures particularly in north parts. It is known as one of the best democratic authorities illustrations but even more as a successful and modern economic benchmark. Construction sector plays a really of import function in Sweden ‘s domestic economic system. It is described as a major market or even backbone in footings of importance. Harmonizing to the Swedish Construction Institute study ( 1997 ) and the Swedish Construction Federation informations ( 2008 ) the building sector is one of Sweden ‘s largest industries and contributes significantly to national prosperity. Bing a member of EU, Sweden ‘s building legal model and procurement statute laws ( Swedish Public Procurement Act, 2008 ) tend to concentrate on: non favoritism, equal chances, transparence, cost efficiency and value for money etc. Due to conservative cultural attack, Sweden has established a typical procurance theoretical account based on common strategic consideration and trust among building histrions. Nevertheless, OECD ( Organisation for Economic Co – Operation and Development ) in one-year studies about Swedish building industry ( 2007 ) and ( 2009 ) found that trusts and deficiency of competition are the chief negative characteristics impacting procurement efficiency in Sweden.

In 1990 Swedish building industry was at its extremum followed by authorities financess chiefly for roads, Bridgess etc. Renovation, fixs and care history for 50 % of the entire building end product ( The Swedish Construction Institute, 1997 ) . In 1991 there was a downswing in the industry and entire building volume fell by about 25 % until 1994. In 1995 together with rank in EU Sweden building sector has joined ISO 9001 quality and duty criterions, which led industry to much bigger end product. As a member of EFTA ( European Free Trading Association ) , Sweden has been take parting actively in European criterions – devising in CEN ( European Committee for Standardization ) ( Atkinson, 1995 ) . Constructing ordinances and control was the chief authorities part to turning building sector. It produced a quality standard – high plenty to absorb internal market petition. The most noticeable Swedish accomplishments sing building quality by Atkinson ( 1995, p. 149 ) are: the deputation of ministerial policies on societal and proficient affairs to professionally staffed executive bureaus which carry out undertakings assigned under statute laws within a fiscal programme, the deputation of cardinal duties for edifice ordinance and associated agreements for enfranchisement and quality confidence to Boverket ( The National Board of Housing, Building and Physical Planning ) , disposal of constructing ordinances by local territory governments, helped by a well – presented system of sanctioned certification, ordinances – the Swedish Building Code – in which demands, expressed in functional or public presentation footings, are supported by illustrations of solutions, recommendations and consultative information.

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Unlike many other states Sweden has no peculiar statute law refering contract relationships for edifice undertakings by private clients. Even though private procurance can be performed with less complicated ordinances, this must be done non piquing public rules for contracts, purchase Torahs and Torahs sing competition. Public procurement ordinances are governed by Public Procurement Act directives followed by EU procurement statute law. The Swedish Competition Authority is responsible for supervising of Public Procurement Acts from 2008 ( Swedish Competition Authority, Public procurance, 2008 ) . Procurement types available in Sweden are: unfastened, restricted and negotiated ( Swedish Competition Authority, Swedish Public Procurement Act, 2007 ) . PPP/PFI has been late applied in Sweden and this sort of procurance options should derive more attending from private investors. However, harmonizing to Osipova ( 2008 ) Swedish building industry has been criticized for high costs which led to miss of competition between contractors every bit good as low productiveness and undertaking holds.

The UK has a benefit of broad scope of institutional signifiers of building contracts. However, a figure of authorities sponsored studies have besides highlighted that this has major disadvantages, indentifying duplicate of attempt and a uneconomical usage of resources at about every degree of activity ( Ashworth, 2006 ) .

In the 19th century a first standard signifier of building contract was introduced in the UK. The signifier was described as the RIBA until 1977, when the term JCT ( The Joint Contracts Tribunal ) contract was adopted. The present organic structure responsible for outlining the current signifier includes public and private sector employers, designers, measure surveyors, contractors and subcontractors. With different contract signifiers looking in the U.K. after 1964, JCT signifiers reflected different involvements of building parties involved into building concern. The choice of peculiar signifier of contract depends on assorted considerations such as: type of work to be conducted, size of the undertaking, public or private sector, position of interior decorator and procurance types. Harmonizing to Contracts in usage studies, JCT 98 is the most popular signifier of contract for edifice contracts in the UK. It is the Standard Form of Building Contract ( SFBC ) . Table 1 shows all JCT contract signifiers available in the UK. The Institution of Civil Engineers ( ICE ) signifier remains the most popular among civil applied scientist contracts. The UK building industry has attracted a great trade of unfavorable judgment in recent old ages for its inability to run into the demands of its clients ( Wood et al. , 2005 ) . There was a great demand of collaborative procurance type such as partnering. Radically different attack to the procurance offered specific aims through supply concatenation maximising the effectivity and public presentation of building activities.

Positive partnering attack in the UK has led Sweden to follow partnering construct. Hence, partnering procurement type does non hold contractual signifier position. In Sweden, the bulk of contracts are based on the general conditions of contracts. New signifiers of undertaking happening are the public presentation based contract and partnering. Performance based contracts are improved signifiers of the design and physique contracts. Such contracts tend to supply stimulation for the contractor for development of higher degree merchandises. Partnering contracts proved to be successful in the UK are acquiring more popular in Sweden. Cost decrease and better public presentation are the chief benefits of such contracts. As in Sweden the UK building industry is strongly fragmented. To better this many of the ‘best ‘ clients use partnering or similar understandings to maintain undertaking squad together ( Sterner, 2002 ) .

Lack of competition in Swedish building sector has been pointed out by OECD ( 2007 ) in 1999 and 2004. Survey held by OECD find out that trusts are common within Swedish building industry. Besides barriers are rather high for new building companies which can non vie on the bigger undertakings. The four largest developers, which account for a big portion of the market, do non usually buy building services in the market as 75 % of flats are built in – house ( OECD, 2007 ) . This consequences in higher edifice costs than for smaller developers, who procure undertakings to a much higher extent. Swedish building sector is non competitory in footings of supply concatenation as big companies are ruling this section. Sweden has one of the highest degrees of building costs among EU.

Swedish building ordinances sing input stuffs every bit good as a deficiency of EU certified building codifications are forestalling new entries into the industry. Some procurance contracts ( beginning does non bespeak which ) have demands that disadvantage foreign companies from investing and acts merely similar protectionism. Other specific indexs making high costs in buildings are: high building service monetary values ( over 8 % higher, excepting VAT, than the EU norm in 2004 ) , labour costs ( affair of high revenue enhancements ) , powerful and really influential building workers ‘ brotherhood Byggnads activity in roll uping excess charges for non – member companies.

The civil technology industry is in custodies of large societies which besides manufacture cardinal stuffs such as asphalt and ballast. As the import is limited, other companies have to buy from the market leaders, and the monetary value of edifice stuffs is high compared to many other EU states ( OECD, Sweden: achieving consequences for sustained growing, 2007 )

Possible solutions

From the informations provided by OECD, we can province that Sweden should emphasize building sector against civilization of trusts. By cut downing figure of trusts the industry will derive more histrions involved into building procurance processs and cost efficiency should increase consequently. Stronger competition within sector could be achieved if smaller companies would move together in order to vie against large houses, but authorities should promote such competition through procurance Acts of the Apostless. It is obvious that high revenue enhancement policy has made building costs far excessively expensive in Sweden. It might be the barrier which of course protects industry from foreign investing and keeps Swedish companies busy, but besides acts against just competition. On the 7th of October 2009, Swedish Competition Authority ‘s ( Konkurrensverket ) official study stated ”the building sector is one illustration where we observe limited foreign presence in this state ” ( Konkurrensverket, 2009, p. 1 ) .

In order to fulfill the demands placed on the building sector in the hereafter, a figure of alterations must be made to procurement processs, all of which point to the demand of new signifiers of co-operation among all the histrions. The empirical information shows that the presently used procurance processs involve: specification by the client, unfastened command invitations, command ratings based on lowest stamp monetary value, high contract formalization through standard contracts, fixed monetary value compensation, low use of collaborative tools and public presentation rating by the client ( Eriksson, 2007 ) . Swedish procurance types are focused on monetary value and authorization due to miss of societal control. Harmonizing to conceptual theoretical account, trust between building histrions should have bigger attending. Such processs as: inducement – based compensation, limited command invitation, command rating based on soft parametric quantities, joint choice of bomber contractors and contractor self – control have reduced the traditional focal point on monetary value and authorization. Therefore, trust and cooperation appeared to play a cardinal function between spouses. The benefit of early subcontractor engagement into procurance processs proved to be of import manner of partnering construct.


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