Building International Construction Alliances: Successful partnering for construction firms

149 Pages·1996·1.85 MB·English

by  Rob Pietroforte

Building International
Construction Alliances
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Building
International
Construction
Alliances

SUCCESSFUL PARTNERING FOR CONSTRUCTION FIRMS

Roberto Pietroforte
Department of Civil and Environmental Engineering
Worcester Polytechnic Institute, USA

E & FN SPON
An Imprint of Chapman & Hall
London · Weinheim · New York · Tokyo · Melbourne · Madras
Published by E & FN Spon, an imprint of
Chapman & Hall, 2–6 Boundary Row, London SE1 8HN, UK
This edition published in the Taylor & Francis e-Library, 2003.
Chapman & Hall, 2–6 Boundary Row, London SE1 8HN, UK
Chapman & Hall GmbH, Pappelallee 3, 69469 Weinheim, Germany
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Madras 600 035, India

First edition 1997

© 1997 Roberto Pietroforte

ISBN 0-203-47696-4 Master e-book ISBN

ISBN 0-203-78520-7 (Adobe eReader Format)
ISBN 0 419 21980 3 (Print Edition)
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A catalogue record for this book is available from the British Library
To my son, Alexander, with the hope that he,
too, can keep a window on more than one
world

Contents
Foreword by Alfred D.Chandler, Jr ix
Preface by Henry Irwig xv
Introduction xvii
1 Market opportunities and environments of
the firms 1
The construction market: current opportunities 1
The construction market: future opportunities 2
The environments of Dioguardi and Beacon 4
The Italian construction market 5
The US construction market 6
Conclusion 7
2 The historical evolution of Fratelli Dioguardi 9
Phase 1: The establishment of a design-driven
construction firm, 1913–1961 10
Phase 2: Reorganization and growth—setting the
basis for a nationally oriented firm, 1960–1975 13
Phase 3: Becoming an established nationally
oriented and integrated firm, 1976–1990 20
Phase 4: Becoming a European-oriented firm,
1990 to date 30
3 The historical evolution of Beacon Construction 36
Phase 1: Building for outside clients, 1945–1965 37
Phase 2: Building for its own account, 1965–1978 40
Phase 3: Evolving as a service-oriented
construction company, 1978–1988 46
Phase 4: Building for outside clients, 1988 to date 51
4 Comparative analysis of the firms 57
Current strategic orientation of Dioguardi and
Beacon 57
Market positioning of the firms 60
Organizational and functional features of
Dioguardi and Beacon 63
vii
viii | Contents
5 The operation of the firms: analysis of six projects 68
The contexts of the projects 68
Dioguardi’s Linate Airport project, Milan
(1991–1993) 70
Dioguardi’s Margherita Theater project, Bari
(1992 to date) 73
Dioguardi’s Monte di Dio parking project,
Naples (1990–1994) 77
Beacon’s MIT Facility Assessment Study,
Cambridge (1992–1996) 79
Beacon’s Clinical Center project, Beth Israel
Hospital, Boston (1992 to date) 83
Beacon’s Thayer Hall project, Harvard
University, Cambridge (1992–1995) 85
Conclusions 89
6 Cooperative strategies in international
construction 91
Market trends and challenges 91
Entering the international construction market 93
Advantages of alliances 95
Challenges of alliances 97
Implementing an alliance 99
7 The alliance between Dioguardi and Beacon 101
The complementary capabilities of the firms 101
The opportunities for collaboration 105
The cultural challenges for the two firms 108
Chronology of the alliance 109
Learning from experience 113
The future of the alliance 116
Appendix The international bridgehead agreement 118
References 122
Index 127
Foreword
This book is a study of the making of an international
partnership between an Italian company, Fratelli Dioguardi,
and an American firm, Beacon Construction, to permit each
to compete more effectively in global markets and to do so by
enhancing each company’s existing corporate capabilities.
What gives this study particular significance is that in this age
of strategic alliances, joint ventures and other forms of
enterprise cooperation, these firms are not large international
firms operating in the capital- and knowledge-intensive
industries in which today’s multinationals have clustered.
Rather the partners are two medium-sized entrepreneurial
enterprises in the fragmented, price-competitive building
construction industry, an industry in which each phase of the
industry’s value-added chain has traditionally been carried out
by different sets of small specialized firms.
The book’s strength rests on its historical approach. It
describes how these two enterprises evolved through
developing functional capabilities in marketing, management,
finance and research in their industries during a time of rapidly
changing markets, technology and macroeconomic
environment. Both grew in size and competitive strength by
creating, enhancing and coordinating their capabilities in the
different phases of the building construction process—design,
planning and construction. Both moved backward into the
acquisition and management of real estate and forward into
the maintenance and rehabilitation of existing structures. Both,
however, became such integrated enterprises in different ways,
with different emphasis on the several functional activities
during different time periods of their growth.
The capabilities of each evolved and were reshaped in
relatively the same four chronological phases—from World
War II until the early 1960s, from the mid-1960s to the mid
and late 1970s, followed by a decade of maturity until the late
1980s. Then the declining markets and economic recession
that marked the beginning of the fourth phase created pressures
to move abroad—pressures that led the two companies to sign
their International Bridgehead Agreement in January 1992.
The purpose of that agreement was to permit the two
ix