LEVERAGING THE SUPPLIER’S EXPERTISE THROUGH AN INNOVATIVE ORGANIZATIONAL STRUCTURE

Abstract

Effective procurement practices drive innovation, improve collaboration, and achieve timely, cost-efficient outcomes in construction projects. However, the industry faces persistent inefficiencies, including cost overruns, delays, limited technology adoption, and adversarial relationships rooted in traditional procurement methods. While collaborative approaches promote early stakeholder engagement, they often overlook explicit mechanisms to integrate external suppliers' expertise early enough to meaningfully influence design decisions. Specifically, current procurement models either emphasize price competition, requiring nearly complete designs before supplier selection, or rely on unclear compensation structures, failing to incentivize early-stage supplier contributions. To address these critical gaps, this study introduces an Integrated Coordination Framework (ICF) that strategically embeds early supplier involvement through adaptive contractual incentives and structured compensation mechanisms. Leveraging agent-based modeling, the research evaluates and observes trends in the proposed framework. Results demonstrate significant improvements under the ICF, including a 38% increase in design productivity, a 3% reduction in rework, and a 37% rise in technology adoption. By expanding on successful elements of P21+, such as Guaranteed Maximum Price (GMP) agreements and structured gainshare arrangements, the ICF ensures compensation clarity, timely GMP finalization, and strategic alignment of supplier incentives with value-driven outcomes. Ultimately, this study advances lean construction procurement by providing empirical evidence that structured, early supplier involvement, supported by clearly defined compensation structures, drives innovation, enhances efficiency, and reduces waste in the design phase.