Comparison of cultures in consultant and contractor organizations in construction industry

Large number of stakeholders in construction projects makes the construction industry prone to disputes. The historical separation between design and construction add to this phenomenon by having a consultant for design and a contractor for construction. Communication breakdown, frequently, is the first sign of problems, notably in the relationship between the Contractor and the Consultant. It appears that the split between design and construction has given rise to two separate cultures in the construction industry. This paper attempts to identify whether there is a difference in organizational culture between Consultants and Contractors taken as two groups and determine whether a specific attribute was related to the cultural differences between the two entities. Based on case studies it was found that consultants are biased towards Clan culture while contractors are biased towards Market culture. However, both groups show similar affinity to Adhocracy and Hierarchy cultures.


Introduction
The common practice used in procuring construction in Sri Lanka as well as many other countries could be explained using a model termed "tripartite system".. Three parties are the Employer, the Consultant and the Contractor whose mutual responsibilities are defined by contractual and professional obligations. The formal nature of this relationship dates back to the colonial rule in Sri Lanka, and is regarded by its practitioners as the key to prudent project implementation in a market economy. It is designed to secure value for money through commercial competition, while protecting the legitimate interests of public finance and all concerned.
The term Employer covers the initiating agency, which is responsible for providing funds for the execution of a project. The Employer inexperienced in the design and implementation of construction works seeks the advice of the Consultant. The Consultant is normally given two tasks by the Employer, the recommendation and justification of a preferred technical proposal together with an estimate of its cost, and further refinement of the design to the stage where tenders can be called for construction and the framework for site supervision can be established. Based on the competitive tendering system, a Contractor is selected for the physical execution of the project. Responsibilities of the Contractor relate to the implementation of works specified in a formal contract, based on the Consultant's designs. The relationships between the Employer -Consultant and the Employer -Contractor are governed by a formal contract. However, the relationship between the Consultant -Contractor is just a functional one, which does not have contractual implications. However, during the implementation stage of a project, Consultant -Contractor relationship is very crucial. This historical separation between design and construction is well documented and considered as a main reason for the problems encountered in the construction industry (Egan, 1998;Bennett et.al., 1996;Seymour and Rooke, 1995;Latham, 1994).
A preliminary investigation of disputes in the Sri Lankan construction industry was conducted to determine the root causes. This indicated that communication gap between the Consultant and Contractor as the main reason for most of the disputes (Fernando, 2002). Therefore, it appears that the split between design and construction activities has given rise to two separate cultures in the construction industry on which these two entities operate. They work in watertight compartments and very few things can be seen in common. The desire to bring design and construction activities together, is well established and has been generally welcomed by the industry (Root and Hancock, 1996). However this is seen primarily as a redesign of the construction process through new contractual relationships, procurement routes and management tools (Seymour and Rooke, 1995). Rameezdeen and De Silva (2002) have shown that adoption of these new procurement methods is diffiult in countries like Sri Lanka where traditional method is well established. They estimated that 85% of construction projects are still procured through the traditional method. It is increasingly accepted that "Culture "as a major factor that hinders the integration of design and construction (Latham (1994), Egan (1998 Root and Hancock (1996)). The objective of this paper is to investigate whether there is a difference in organizational culture between Consultants and Contractors taken as two groups and to determine whether a specific attribute was related to the cultural differences between the two entities. The research hypothesis to be tested is that: "There is a difference in organizational culture between Consultants and Contractors taken as two groups and this difference is due to some identifiable attributes".
It is important to note that the focus of this paper is limited to the organizational culture, which is narrow in scope compared to the culture taken as a whole.

Organizational culture
Organizational culture is identified as "a collective programming of the mind which distinguishes the members of one organization from another" (Hofstede, 1984  Quinn (1988) describes the four organizational culture types that can exist in any organization with different compositions as follows.

The Clan
The Adhocracy

Clan Culture
Clan culture is in the upper-left quadrant of the figure. It values emphasizing openness, participation and discussion. The objective is to get everyone involved in activities and decisions of the organizations. Members of the organization have a concern for other members and the organization has a commitment to its members and their morale. Rewards are based upon group and organizational performance rather than individual performance. The organization come before the individual, who is a member of a team committed.to the advancement of the organization. The clan emphasizes flexibility and individual deferences. It is characterized by teamwork and information sharing.

Adhocracy Culture
The upper-right quadrant of the figure is labeled as the Adhocracy culture. It prizes external support, resource acquisition, and growth that it obtains through insight, innovation, and adaptation. The emphasis is on innovation, looseness, and flexibility of structure in conjunction with a focus on external constituencies and resource providers and the achievements of legitimacy with outside stakeholders. Distinguishing features of the Adhocracy includes the prominence of entrepreneurial activity, creativity, and acquiring resources from external providers. There is a commitment to risk, innovation, and development.

Market Culture
Market is the term employed for the culture of a rational goal model organization. This can be identified in lowerright quadrant of the figure. With its emphasis on the maximization of output, Market culture value goal clarification, providing direction, and being decisive about what is to be done. It prides itself on accomplishment and productivity and in making a profit or having an impact. It emphasizes order, rational production, and goal accomplishment in combination with external interactions with suppliers, customers, subcontractors and competitors. The competitive orientation towards rivals and emphasis on achievements on the market place distinguish the Market from other cultures.
Members of the organization are clearly instructed by a decisive, authoritarian leader and are rewarded financially, if they perform well. Rewards are based on individual performance rather than organizational performance.

Hierarchy Culture
The hierarchy or bureaucratic culture is characteristic of the internal process and is based on consolidation and equilibrium. It is the antithesis of the Adhocracy culture. Hierarchy culture values stability, control, and continuity, which are obtained through measurement, documentation, and information management. Maintenance of internal system is of paramount importance. People are given well-defined roles and are expected to follow the rules and procedure that are developed to govern their actions. Situations are structured to fit the rules and procedures of the organization. The major reward for the performance within the Hierarchy culture is job security. Financial rewards are primarily seniority based.

Cultural elements of an organization
Organizational culture can be considered as a cumulative representation of an assortment of elements.
Quinn & Cameron identified six elements within the organization to represent culture. These elements are briefly as follows.

Nature of organizational climate
This explains existing working environment of the organization. Climate of Clan culture is participative and comfortable while Market culture has a competitive and confrontational climate. Adhocracy culture has characteristic of readiness and Hierarchy culture emphasizes the state of performance and stability.

Success criteria of the organization
This indicates the relationship between organizational success and the core values of it as perceived by the employees of the organization. Clan culture believe that their success lies on the development of human resources while Market culture believes market penetration and existing market share as key reasons for their success. Adhocracy culture depends on project leaders to achieve success by implementing their innovative ideas. Hierarchy culture gives high weightage to smooth scheduling of organizational activities and strict time targets.

Management style towards the employees For the effective development of a culture within an organization, there is a necessity to have closer relationship between style of management and culture types. Management competencies possessed by the leaders should be consistent with the culture of their organization. In Clan culture managers value teamwork, consensus and participation. Management style in
Market culture is production oriented with incentives for achievement. In Adhocracy employees taste freedom, innovation and uniqueness. Employees of the Hierarchy culture show security of the job and predictability as their main concern.

Data collection and analysis
As described in section 2, "Competing Value Framework", developed by Quinn and Cameron was used as a model for measurement of organizational culture. The focus of the research was on entire organization rather than on units of the same. Nine contractor organizations and nine consultant organizations in Sri Lanka participated in the study. Sample was selected with the aim of representing all types of consultant and contractor organizations who are engaged in construction work. Hence, selection ranged from small scale to multi deciplinary construction organizations.
Data were collected from executive and non-executive employees of the organization from various divisions. Three executive employees and five non-executive employees were randomly chosen from an organization for personal interviews and questionnaire survey and this ratio was maintained throughout the study. The executives of these organizations have titles such as Divisional Head, Project Manager, and Company Director. In total 144 questionnaires and personal interviews were conducted equally for contractors and consultants.
The survey was carried out by obtaining prior appointments from the respondents and conducting the personal interview followed by the questionnaire survey.The objective of the personal interview is to solicit information related to the organization, which would be useful in explaining the results of the questionnaire survey. In the questionnaire, four statements were utilized for each element, with one statement representing each of the four culture types based on Competing Value Framework. Respondents were asked to distribute 100 points between the four statements for each element depending on how similar the description was~to the organization in question.
The points distributed to each of the statements for the cultural elements were averaged to determine an overall culture score.
The responses were presented in a tabulated form for each organization and summarized to obtain an overall score in view of comparing the overall culture of contractor and consultant organizations. Further, each element of organization culture was analyzed to determine the dominance and distribution of cultural types.

Results of survey
The results of analysis are presented under three headings as follows.   Figure 2). This shows that the core values of the contractor organizations are oriented towards production-related strategies.

Dominating culture types
The Organization Leaders of the consultants show a bias towards Clan Culture while the contractors organization leaders tend to move towards the Market Culture as in Figure 3. This contrasting scenario explains that the leaders of consulting organizations are considered as mentors or parent figures while the leaders of contractor organizations are considered as hard drivers.

Discussion
In order to test the hypothesis given in section 1 of this paper, first, within group characteristics are considered. Table 2 presents the mean values and standard deviation of the overall culture scores of these two types of organizations.
Consultants have the highest mean value for Clan and lowest for Market cultures. However the high standard deviation for Clan indicates the relative disagreement of ideas among consultants regarding their dominant culture. It appears that there were few who did not strongly beleive that the Consultants have a Clan dominant culture.
The statistical test indicate that at 99 % level of confidence, the difference between the two entities lies somewhere between 6.4 -8.3 for Clan, 0.7 -1.7 for Adhocracy, 6.8 -8.3 for Market, and 0.1 -1.9 for Hierarchy.
It can be inferred from the above test that the difference between consultants and contractors is relatively low in Adhocracy and Hierarchy cultures. This difference is relatively high in Clan and Market cultures. This implies that there is a considerable difference between the cultures of consultant and contractor organizations and this could be explained as between Clan and Market cultures respectively. Thus the attributes that can be used to distinguish the two types of organizations can be given in Table 4. To answer the question "is there a difference between consultants and contractors with regard to their culture?" the difference between two sample means has been considered. It was assumed that the two sample means are normally distributed and hence the difference of two means are also normally distributed. Using the following formula, confidence interval for the difference between two means is calculated.

(M a .u b )±zcs.e.(M a .u b )
Where (u a . u b ) is the difference between the two sample means c is the desired level of confidence se -(Ma-Mb) is the standard error of the difference between two means, which is given by t(s a 2 /n a -1) + (s b 2 /n b -1)] 1 « Where s and n denotes the sample standard deviation and sample size respectively, (n = 144).

Conculsions
The analysis presented here confirms that there is a marked difference between organizational culture of consultants and contractors. The study revealed that consultants are oriented towards a Clan dominated culture mix, while contractors are oriented towards a Market dominated culture mix.
Consultants believe their success lies in development of human resources for achieving specific goals of the organization. They emphasize on loyalty and traditions and create participative and comfortable working environment. Further, they highlight the importance of teamwork, encourage discussions, participative decision-making and open communication. Leaders of consultant organizations successfully play the role of mentor and guide subordinates towards a common objective.
Contracting organizations on the other hand, are driven towards output maximization. They encourage competitive work environment and emphasize on goal accomplishment. Leaders of contractor organizations are considered as hard drivers.
Both types of organizations have almost equal commitment to risk innovation and development and face situations where tasks are not clearly defined despite sever deadlines. However there are instances, which totally fit with rules and procedures of the organization as well. Hence, both types of organizations agree with the importance of maintaining their internal system.
Shaping the business activities to meet the environments' needs is a prerequisite in any organization strategy. Hence, the difference between organizational culture of consultants and contractors and the attributes that lead to this difference are understandable. However, the prime concern is the prevalence of disputes and communication gap between these two groups in the industry and the question whether organizational culture aggravates this situation. Can organization culture be used to diffuse the tension between these two groups and as a result reduce disputes?