Business models and project selection in construction companies

Abstract

Purpose – The purpose of this study is to investigate project selection in the context of business management with the specific aim of understanding the role of business models in project selection. The logic followed for making decisions and selecting projects significantly influences construction companies’ success. Design/methodology/approach – The research objective is pursued by conducting a multiple-case study. Managers acting in key decision-making roles from eight construction companies are interviewed. A conceptual framework is developed for analysing the interview data and the prevailing project selection practices in construction. Findings – The findings suggest that project selection is not guided by any specific business model, but that the decision-making process is dominated more by short-term factors such as need of work and profitability. Thus, estimation know-how largely determines the kind of projects companies are willing to consider, regardless of their competence to deliver them. Research limitations/implications – The study produces a hypothesis that ignorance of business models in project selection and their general underutilisation in management have negative effects on performance of the construction industry. More consistent management practice would enable the development of business models and processes, contributing to performance and help companies to distinguish themselves from each other. Originality/value – As opposed to previous studies that have produced bidding models that emulate the current industry practices, this research analyses the prevailing logic of project selection from a more critical perspective. In addition, the project selection practices of Finnish construction companies have not been investigated previously.