PROCUREMENT STRATEGIES AND THE FORMATION OF CONSORTIA

Thus in May 87 when COWIconsult commenced developing a strategy for the conceptual design work and the subsequent procurement phase it was considered appropriate to freeze the subdivision of the entire fixed-link project as structured by the Act. Consequently separate conceptual designs were prepared for the three main sub-projects: the Railway Tunnel, the West Bridge and the East Bridge. From a technology management point of view it seems evident that strategies laid down at that time concerning the technical and organisational properties of the sub-projects and their interfaces would have a determining impact on other parties' performance throughout the project. Of particular importance in lengthy and complex projects are the conditions for, and readiness to, absorb successive alternatives to already taken decisions. It is remarkable that these comprehensive considerations were taken under great time pressure and sanctioned by a not yet operational client organisation - in the light of 20 years run-up to the political resolution some would even say absurd)! Besides the above mentioned point of no return strategy of Gotfredsen, the position of COWIconsult appears to have been decisive. For more than 20 years COWI had acquired useful experience from bridge design and consultancy jobs all over the world - most recently on the Pont de Normandie. Obviously, the company had been able to maintain continuity and to develop routines within several modern bridge technologies (COWI, 1994). Even more important for COWI's capacity for the "fast track" approach was probably the company's extensive involvement in production and evaluation of design proposals for earlier versions of the fixed link. Literally spoking, COWI had on the shelves comprehensive files containing all sorts of information from preliminary surveys to ready-for-use designs. It therefore certainly makes sense to characterise this principal - agent relationship by massive asymmetric knowledge in favour of the agent, a situation which inevitably gave rise to the self-esteem of the client’s main consultant: COWI's staff ... is probably the most superb in this field in the Kingdom of Denmark. The job we defined was to establish a broad view of what the Storebælt organisation should get going with... In this perspective the principal's agent costs could be considered high - to some extent locking up the implementation of general and contractor oriented technology strategies to the culturally and commercially defined premises of the consulting engineer. It might on the other hand be argued that the client in this period achieved what he thought necessary and felt comfortable with: a quick move towards materialising a vast number of open ended project variables - a fixing of multiplicity. Ostenfeld from COWI describes this as a rather iterative and apparently unruly process: The work methodology alternates between broad view considerations and technical details; we took several rounds and aimed at including as many project dimensions as possible. ... One predominant issue in the discussions was the procurement strategy: it is important to have an idea of who is going to build which part of the project and to urge an interest among tendering firms. Thus integrated in this initial work of technical and organisational planning was also a focus on the tendering procedures and contractual conditions. Throughout the project's long past of political existence the issue of national industrial and labour market benefits had developed into an imperative, and almost become personified by the client company’s board of directors. However, the Danish State being sole share holder in the company, such interests could not be pursued in the direct sense that contracts and work could be awarded to specific (Danish) contracting enterprises. According to article 7 of the Treaty of Rome construction works such as the fixed link are subject to a prohibition regarding the differential treatment of tenderers within the EEC, (all companies with more than 50%. government involvement are subject to this stipulation). The EEC rules, however, did provide an opportunity for A/S Storebæltsforbindelsen to employ a procedure of pre-qualification which obviously complied well with the company's need for establishing commercial contacts with a restricted number of qualified and financially solid contractors. As the Danish companies in international terms are relatively small they were encouraged by the A/S Storebæltsforbindelsen to acquire international co-operation partners in connection with the pre-qualification. In the first round of pre-qualification, for the Railway Tunnel, which was announced in June 1987, this strategy proved practicable, and in November 87 the Board of Directors pre-qualified "four strong international consortia, all with Danish participation" (Storebælt Annual Report 1988, p.27). During the same autumn also the second round of pre-qualification, this time for the Western Bridge, came out with internationally broad-based consortia, all with participation of Danish contractors. As some consortia were identical in these two, technologically unlike prequalification rounds it could be argued that the client's (as well as the participating contractors') criteria for evaluating the efficiency of a given consortium are more based in financial requirements and commercial strategies than oriented towards questions of technological and managerial competencies and capacities. Several incidents during project execution confirm this general hypothesis.