Goal Congruence & Alignment
This research effort overarches the other three topics. Its goal is to create a “neighborhood-like” structure that fosters long-term relationships among all stakeholders in a project or portfolio of capital projects. Unlike traditional contracting where the goal often is to reallocate risk, the “neighborhood” model should incentivize collaborative behavior and streamline the project process. Faculty involved in this research have backgrounds in cognitive psychology, anthropology, dispute resolution, organizational trust, innovation and entrepreneurship. Also involved are staff in the UT IC2 Institute and the Bureau of Business Research with backgrounds in econometrics and quantitative studies.
Existing capital project supply chain engagement (that is, bidding) methods usually do not fully engage the expertise, knowledge, and innovation of engineers, contractors, and suppliers. Oftentimes suppliers are engaged late since they are in the lower tiers of the supply chain. The industry’s traditional bidding process burdens the supply chain with a high cost of capture and subjects it to dysfunctional buying practices that often focus solely on initial cost while ignoring the suppliers’ more compelling overall value propositions. Other industries utilize more successful approaches. This research topic will search for and apply leading practices that can improve the effectiveness of buyer-supplier relationships in capital projects. Faculty involved in this research come from the UT McCombs School of Business and its Supply Chain Management Center.
Dynamic Risk Modeling
The capital project industry lacks a common approach for defining, assessing and allocating risks. This lack of consistency contributes to negative financial, reputational and performance outcomes, impacting all stakeholders. An example includes characterizing risk dynamically over the life cycle of a capital project to enable implementation of steps that reduce, mitigate or assign risk to the most capable party for management. The objective of this research is to develop novel and dynamic methods to identify and price risks using a common, easy to understand basis to improve transparency and solution alignment. Faculty involved in this research work in UT’s Information, Risk, and Operations Management (IROM) Department in the McCombs School of Business and in the Operations Research and Industrial Engineering (ORIE) Department housed in Mechanical Engineering.
Contracting via Smart Contracts and Blockchain
Blockchain technology allows smart contracts to improve access to information, is immutable and readily auditable, can automate functions such as “micro” payments, and can be connected to enterprise resource planning (ERP)and project management information systems (PMIS) for real-time visibility of transparent data to all project participants. These capabilities support multiple project parties in developing, demonstrating, and verifying reliability so that predictability is enhanced. Smart contracts also can eliminate cumbersome administrative processes and greatly reduce back-office overhead costs. This research team will apply state-of-the-art thinking and technology to explore how this technology can facilitate trust, enhance security, speed up the velocity of cash flow, and improve performance of capital projects. Faculty involved in this project come from the UT Blockchain Initiative and include researchers from UT’s Department of Electrical and Computer Engineering as well as the McCombs School of Business.