The Future of Engineering Project Houses within the …gsblibrary.uct.ac.za/ResearchReports/EMBA...

The Future of Engineering Project Houses

within the Mining Industry

Henry M. R. Jonker

(JNKHEN001)

Dissertation submitted in partial fulfilment of the requirements for the degree

Master of Business Administration in the Executive Programme

Graduate School of Business

University of Cape Town

Supervisor: Prof Tom Ryan 2 March 2015

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MINI – DISSERTATION 15.6 02 MARCH 2015

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UNIVERSITY OF CAPE TOWN

GRADUATE SCHOOL OF BUSINESS

DECLARATION

1. I know that plagiarism is wrong. Plagiarism is to use another’s work and

pretend that it is your own.

2. I have used the APA referencing convention for citation and referencing.

Each significant contribution and quotation from the works of other

people has been attributed, cited and referenced.

3. I certify that this submission is all my own work.

4. I have not allowed and will not allow anyone to copy this essay with the

intention of passing it off as his or her own work.

5. I have run my assignment through a Plagiarism check (Yes / No).

Signature:……………………… Date: 2 March 2015

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ABSTRACT

Paul Thomson, CEO of DRA Mineral Projects stated on 14 December 2014 that the

“slow growth in the South African mining industry is threatening to erode the

availability of critical skills in the local industry, as experienced engineers turn to

other emerging and faster growing industries for work opportunities.”

The boom cycle experienced within the mining industry over the last decade has

enabled project-engineering houses that service the mining industry to build capacity

and capability. However, the pace of the development within the mining industry

during the last year has declined, resulting in fewer projects. Subsequently, the

majority of Engineering, Procurement, and Construction Management (EPCM)

contractors have experienced natural attrition, and have also been required to reduce

staff levels through retrenchment processes.

For the EPCM industry to survive, it needs to maintain and increase its capacity to

adapt its value offering to meet the needs of the mining clients in the current

changing market. By employing a Grounded Theory methodology that utilised

conversational interviews and literature investigation, the research study sought to

determine how project-engineering houses can adapt their value offering to

clients in order to maintain a positive business case whilst sustaining a mutually

beneficial relationship with contractors and clients.

The research study discussed the need to ensure responsible and honest relationships

between internal stakeholders, thereby enabling the development of similar

relationships with external stakeholders. The findings of the research study revealed

four core variables that enable the capability of the EPCM industry to increase the

capacity to adapt its value offering: (1) Efficiency and effectiveness of corporate

governance that focuses on smooth performance, (2) Availability of current and

future skills to create competitive advantage, (3) Responsible trust between internal

and external stakeholders to achieve long-term partnering and (4) Satisfying targeted

client needs, to ensure engaged clients. Responsible trust between stakeholders was

identified as the strongest determiner of the EPCM capacity-increasing process.

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The transformation of metaphorical insights into scientific models, as proposed in

previous research, was used in the development of the theory. The Dakar Rally was

selected as the metaphor for this particular research topic.

The usefulness of the theory is limited, as a conceptual model was attained as

opposed to a scientific model. However, this conceptual model is valid as the

research was underpinned by the application of Grounded Theory and critical

realism.

The researcher focused on the creation of responsible and trusting relationships as

the main determiner within the theory, maximising the benefit to all and not

impeding on the rights of any stakeholder, whilst treating all interviewees as equals

and acting within the common good of both internal and external stakeholders.

Furthermore, the character of the researcher has strengthened, based on an improved

understanding of the subject matter.

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ACKNOWLEDGEMENT

To my wife Aneli, thank-you for supporting and for motivating me to start my

EMBA journey. Without your loving support, I would not have been able to

complete this journey.

To my two wonderful daughters, Anerique and Jomariet. Thank-you for

understanding when our weekends were absorbed with my EMBA homework; and

thank-you for all your kisses and for saying that you are proud of me.

To my personal assistant, Avril du Plessis. Thanks for holding the fort when I was

not around, and a special thank-you is due to Avril for all the proof reading.

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TABLE OF CONTENTS

ABSTRACT II

ACKNOWLEDGEMENT IV

LIST OF FIGURES IX

DISSERTATION LAYOUT XI

CHAPTER 1: INTRODUCTION AND OVERVIEW 1

1.1 Introduction 1

1.2 The development of the concern variable 3

1.3 Current position within industry 7

1.4 Idealised design 11

1.4.1 Formulating the mess 11

1.5 The research design 13

1.6 Development of the conceptual framework 16

1.7 Development of the research question 25

1.8 Argument for relevance 27

1.9 Concluding 28

CHAPTER 2: RESEARCH METHODOLOGY 30

2.1 Research Framework 30

2.2 Theoretical and conceptual foundation of the research methodology 34

2.2.1 Soft Systems Methodology (SSM) 35

2.2.2 Critical System Heuristic (CSH) 36

2.2.3 Critical Realism 38

2.2.4 Grounded Theory 40

2.2.5 Relationship between Critical Realism and Grounded Theory 42

2.2.6 Theory development 43

2.3 The phases of the integrated research framework 43

2.4 Possible threats to validity 44

2.5 Ethical considerations 44

2.6 Conclusion 45

CHAPTER 3: RESEARCH RESULTS 47

3.1 Introduction 47

3.2 Application of research framework: outcomes of each phase 47

3.2.1 Action research 47

3.2.2 Grounded Theory 48

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3.3 Discussion of the research results 57

3.4 Evaluations to threats to validity 59

3.5 Conclusion 60

CHAPTER 4: LITERATURE REVIEW 62

4.1 Overview of the literature review process 62

4.2 The project engineering house industry 64

4.3 Capacity to change to meet client needs 67

4.4 Drivers of change 70

4.4.1 Responsible trust between stakeholders 71

4.4.2 Availability of skills and knowledge 73

4.4.3 Effectiveness of market intelligence 74

4.4.4 Efficiency and effectiveness of corporate governance 76

4.4.5 Appetite for risk 78

4.4.6 Understanding client needs 80

4.5 Conclusion 81

CHAPTER 5: THEORY BUILDING 83

5.1 Introduction 83

5.2 Theoretical and conceptual foundation for the theory building process 83

5.3 The phases of the theory building process 85

5.3.1 Managerial portion of the theory building process 85

5.3.2 The scientific portion of the theory building process 87

5.4 The application of the theory building process 94

5.5 Causal loop Diagram (CLD) of core variables 97

5.6 Context – Mechanism – Outcome 101

5.7 Idealised design 102

5.7.1 Ends Planning 102

5.8 Practical adequacy of the theory 104

5.9 Conclusion 105

CHAPTER 6: CONCLUSIONS AND EVALUATIONS 107

6.1 Introduction 107

6.2 Implications and consequences of the research results for the researcher107

6.3 Relevance, Utility, Validity and Ethics 109

6.3.1 Relevance 109

6.3.2 Utility 110

6.3.3 Validity 111

6.3.4 Ethics 113

6.4 Limitations of the research and the need for further work 116

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6.5 Conclusion 116

BIBLIOGRAPHY 117

APPENDIX 1. INTERVIEW LOG – AUDIO 122

APPENDIX 2. EXAMPLE OF FEEDBACK FROM INTERVIEWEE 123

APPENDIX 3. CONCEPT ANALYSIS OF CORE VARIABLES 124

APPENDIX 4. CATWOE’S 128

APPENDIX 5. BOUNDARY QUESTIONS (CSH) 130

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LIST OF TABLES

Table 1: Research Goals 24

Table 2: Fundamental Concepts related to research goals 25

Table 3: Stakeholder Worldviews 48

Table 4: Proposition log extraction 50

Table 5: Initial labels identified: 51

Table 6: Labels following reduction sampling 55

Table 7: Draft of Core Variables 57

Table 8: Patent discipline concept analysis 65

Table 9: Focused discipline concept analysis 68

Table 10: Trust concept analysis 71

Table 11: Skills and knowledge concept analysis 73

Table 12: Market intelligence concept analysis 74

Table 13: Corporate governance concept analysis 76

Table 14: Risk concept analysis 78

Table 15: Client needs concept analysis 80

Table 16: Final core variables following literature review 81

Table 17: Torque concept analysis 89

Table 18: Driver awareness concept analysis 90

Table 19: Skill concept analysis 90

Table 20: Level to trust concept analysis 91

Table 21: Understanding what will be raced concept analysis 92

Table 22: Governance Concept analysis 92

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LIST OF FIGURES

Figure 1: Project failures 2

Figure 2: Fraser institute survey of mining companies’ investment attractiveness index Source: Fraser Institute 5

Figure 3: The concern is the behaviour of the variable over time 7

Figure 4: Rich Picture - Phase A 8

Figure 5: Rich Picture - Phase B 9

Figure 6: The complete rich picture 10

Figure 7: Engineering Project Houses 12

Figure 8:The Mess 13

Figure 9: Maxwell's research design (Maxwell, 2008) 14

Figure 10: The Activity Theory 16

Figure 11: Activity Theory Focus Area 17

Figure 12: Adaptive Cycle 18

Figure 13: Beer's viable systems model 19

Figure 14: Domains of Management 20

Figure 15: The Conceptual Framework 23

Figure 16: First three phases of the research design 26

Figure 17: Action research cycle (Dick, 1993) 31

Figure 18: Research Methodology Phase 1 31



Figure 21: Final Research Design Framework 34

Figure 22: Learning Cycle of Soft Systems Methodology (Rodriguez-ulloa & Paucar-caceres, 2005) 36

Figure 23: The ‘eternal triangle’ of boundary judgments, facts, and values 37

Figure 24: Critical Realism Domains 39

Figure 25: Grounded Theory 41

Figure 26: Critical Realism and Grounded Theory 42

Figure 27: Data Collection Cycle 1 49

Figure 28: Data Collections Cycle 2 52

Figure 29: Cycle 3 - Reduction Sampling 53

Figure 30: Reduction Sampling - Interrelationship Diagram 54

Figure 31: Cycle 3 - Saturation Coding 56

Figure 32: The three level literature review framework 62

Figure 33: Company A share price for the past 6 months – Source URL, dated 21/1/2015 63

Figure 34: Company B share price for the past 6 months – Source URL, dated 21/1/2015 64

Figure 35: Framework for Capacity to Change (Baser & Morgan, 2008) 70

Figure 36: The Transformation of Metaphorical insights into Scientific Models (Tsoukas, 2008) 84

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Figure 37: Inter relationship diagram of core variables 86

Figure 38: The Dakar rally metaphor 88

Figure 39: Metaphor inter relationship diagram 94

Figure 40: Causal Loop Diagram of the Metaphor 95

Figure 41: Isomorphic mapping of core variables 96

Figure 42: Causal loop diagram - phase 1 98

Figure 43: Causal loop diagram - phase 2 99

Figure 44: Complete Causal loop diagram 100

Figure 45: Context – Mechanism - Outcome 101

Figure 46: Theory Building Framework 102

Figure 47: Idealised Design 103

Figure 48: Context-Mechanism-Outcome for the project house industry 108

Figure 49: Illustration of argument for relevance 110

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DISSERTATION LAYOUT

The report follows a structured approach as developed by Prof Tom Ryan (2014) and

is divided into six chapters.

The structure of the dissertation is as follows:

Chapter 1 – Introduction and overview

Chapter 2 – Research methodology

Chapter 3 – Research results

Chapter 4 – Literature review

Chapter 5 – Theory building

Chapter 6 – Conclusion and evaluations

A diagrammatic representation of the dissertation structure is represented in the

illustration that follows and for ease of reference, this diagram will precede each

chapter.

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CHAPTER 1: INTRODUCTION AND OVERVIEW

1.1 Introduction

An Engineering, Procurement, and Construction Management (EPCM) contractor is

typically an engineering project house that services the mining and mineral industry.

(Burcham, 2004) stated that “mining is a global industry and companies stand to

benefit by partnering with an EPCM with a global reach. Consider future projects

and whether a global scale will enable success down the road.” The EPCM

contracting model is a popular choice when selecting a process that manages large

and complex mining projects in a time where skilled resources are a scarcity. Clients

need to consider the associated risks that are experienced when executing mining

projects.

The EPCM model and its derivatives have been extremely kind to the engineering

project house industry. The model has allowed the industry to build both capacity

and experience on long-term projects where the client has traditionally carried all the

related project risk. The most favourable option for the EPCM is a rate-reimbursable

contract for which the service provider is paid by the hour for every hour worked.

Skilled engineering and project-related resources are scarce. The past commodity

boom cycle resulted in an increase in the salaries that were paid to obtain and secure

the services of skilled resources. As such, these inflated salaries have created the

impression that the EPCM industry is expensive.

Currently the resource industry is experiencing a substantial decline, as projects have

either been curtailed or deferred. Unfortunate project failures have also resulted in

large-scale management change, with new organisational leaders taking a more

conservative view on project developments, as depicted in Figure 1.

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Figure 1: Project failures

The subsequent result for the EPCMs within the mining industry is that there exists

pressure to support natural attrition of skilled resources, as well as embark on a

process to reduce overheads through retrenchments.

(Thompson, 2014) posited that “slow growth in the South African Mining industry is

threatening to erode the availability of critical skills in the local industry, as

experienced engineers turn to other emerging and faster-growing industries for work

opportunities.”

The poor economic outlook is attributed to the notion that skills will drain from the

industry as mining projects continue to reduce. Creamer (2015) explained that “lower

oil and commodity prices also explain the weaker growth forecast for sub-Saharan

Africa, including a more subdued outlook for Nigeria and South Africa.” A further

decline in the already depressed price of metals that includes iron-ore, gold and

copper would have dire consequences for most sub-Saharan countries ( Furthermore,

energy and commodity price volatility and uncertainty continue to be the priority

challenge that confronts both international and African energy leaders (“WEC,”

2015).

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Work for EPCMs is less readily available, therefore competition to secure the work

is more severe. Additionally, clients have the ability to transfer more risk to the

service provider. The research conducted towards formulating this particular research

study aimed to garner a more profound understanding of the underlining contributors

that have enabled or disenabled the EPCM industry to adapt its value offering to

meet the changing needs of clients within the current depressed market. It was hoped

that the outcome of the research would attempt to generate a theory/mechanism that

provides structure to the underling components that enable the industry to

continuously adapt its value offering to meet the needs of the changing market.

1.2 The development of the concern variable

According to Maxwell (Maxwell, 2008), the research problem in combination with

the research goals form the foundation that justify the need to conduct the research.

The problem identified by the researcher was not initially fully understood, which

subsequently required additional research and investigation.

Maxwell (Maxwell, 2008) stated that not all studies have an explicit statement of the

research problem but that every worthwhile research design has concrete problems or

issues identified that require additional information. The research goals assist to

justify the need to gain more information to address the research concern. (Maxwell,

2008) further referred to goals within three aspects, namely intellectual goals,

personal goals and practical goals.

The researcher currently holds the position of general manager for mining and

mineral processing within Johannesburg office, South Africa for the WorleyParsons

group. The WorleyParsons group is the fourth largest consulting engineering house

on a global scale, and most of the organisation’s revenue is obtained from the oil and

gas industry. The Johannesburg office is the global hub for the mining industry

within the WorleyParsons group.

As previously stated, the purpose of the research study was to investigate the EPCM

industry, of which WorleyParsons Johannesburg forms an integral part.

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During the last decade, the EPCM industry that services the mining industry in South

Africa and sub-Sahara Africa has been lucrative. Inasmuch as the world economic

crises in 2008 held global reach, it had limited impact within the resource industry,

so far as a strong growth period was experienced directly thereafter. However, the

past year has seen a significant reduction in new mining projects, both in South

Africa as well as on a global scale.

In addition to the depression experienced within the resource industry, South Africa

is no longer perceived as an attractive mining investment destination due to the

uncertainty concerning existing mining regulations, power shortages and labour

unrests, to name but a few challenges the developing country currently experiences.

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Figure 2: Fraser institute survey of mining companies’ investment attractiveness index

Source: Fraser Institute

From the data illustrated in Figure 2, South Africa has a poor attractiveness index

when compared to 54 other countries (“Fraser Institute,” 2013)

During the boom cycle, the EPCM industry within South Africa has developed the

experience and capability to service the industry on both a local and global level. If

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the current downturn cycle continues for much longer, the EPCM industry may lose

the capability and capacity that it has solidified.

The researcher considered three scenarios. The first scenario entailed the EPCM

industry failing in flexibility to meet the needs of clients within the current changing

market. If this scenario becomes a reality, it would result in project houses that fail to

secure work in the current market and, in doing so, be forced to reduce overhead

costs and staff to survive until the next upturn within the market. The researcher does

not give this scenario a high probability, as the pressure to become more flexible will

force the industry to meet the needs of clients in order to survive.

The second scenario considers the uncertainty within the market that prevents mining

houses from attempting new projects. This scenario may very well materialise within

the South African context where uncertainty with regard to mining regulations,

power costs and shortages as well as labour associated costs and risk exists. Should

this scenario become a reality, it would force the project house industry to find work

elsewhere.

The third scenario considers that mining houses adopt a policy of completing

projects in-house with limited support from the EPCM industry. In the current

downturned market, the mining industry has commenced analyses of alternative

strategies to execute projects. It is highly unlikely that the mining industry will return

to the position where mining houses have large project-engineering capability.

However, the possibility is prevalent that mining houses would strongly consider

attracting skills and resources from specific EPCM teams to function within the

control and systems of their objectives.

The change in client needs, reinforced by the depressed resource market requires the

EPCM industry servicing the mining industry to either maintain or improve their

capacity to adapt their value offering to meet the needs of clients and the market.

The concern variable for this research study was therefore identified as “Adaptation

to the market environment in meeting client needs”.

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Figure 3: The concern is the behaviour of the variable over time

The concern variable as indicated in figure 3 represents the behaviour of the concern

variable. The intent of the research was to gain sufficient information to enable the

researcher to develop a mechanism that will explain the behaviour of the concern

variable, thus gain an understanding of correcting the variable to an optimal position.

1.3 Current position within industry

Figure 4 depicts that the resource industry has experienced some spectacular project

failures that have resulted in the restructuring of mining houses, including the

appointment of fresh, new management teams. Added to the challenges already

evident within the mining sector, is the decline in global resources prices. Therefore,

clients are placing more pressure on ensuring return on project investments.

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Figure 4: Rich Picture - Phase A

Labour force unrest has also contributed to more pressure being placed on project

selections. The 2014 South African mining industry strikes were the worst ever

experienced within the South African mining industry. Legislation changes have also

resulted in South Africa becoming a less attractive investment destination, while

South Africa has to simultaneously compete with projects outside its borders that

have become more attractive.

Investors desire certainty to secure their investments. Investors are not deterred by

difficult conditions, but they do require consistency and certainty of tenure.

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Figure 5: Rich Picture - Phase B

The changes within the market has challenged the EPCM industry to adapt their

service offering to meet the needs of clients. The EPCM contracting model that has

traditionally been utilised has recently found opposition, as clients have expressed a

need to have contracting models with less risk to the client, coupled with a certainty

of return on investment.

Clients are also experimenting with integrated teams, pressurising service providers

to place their team in the control of clients. The risk of clients going back to doing

projects themselves exists, even if it seems rather unlikely in the current market. The

availability of skilled resources is also a challenge to the industry with the risk of

skilled resources leaving the industry during the downturn cycle to move to other

sectors within the market.

During the downturn cycle, clients have more of the power to dictate their terms of

service. This action has the potential to be considered arrogant and may lead to

irreparable damage to the EPCM industry. Execution of projects in the mining

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environment is prone to risk. Risk could be in the form of project scope, uncertainty

of geological structure as well as socio-economic influences.

Figure 6: The complete rich picture

The EPCM industry currently faces a difficult challenge to survive the current

downturn market. Survival is determined by innovative client offerings, with the risk

of potentially being stuck in a poverty trap. Failing to adapt to the current market

condition may result in further downscaling within the industry.

The interview process with all research participants evidenced that there are varying

perspectives regarding the current challenges facing the EPCM industry. Particularly,

certain respondents were stalwarts in their belief that the industry is sufficiently

robust to withstand the current market turmoil that is being experienced.

The research was conducted to further understand the concern variable in context to

the rich picture.

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1.4 Idealised design

The researcher utilised Ackoff’s idealised design or interactive planning process. The

approach has two parts, idealisation and realisation. Idealisation considers

formulating the mess and concludes in ends planning, whereas realisation considers

means planning, resource planning, design of implementation and design of controls

as cited in (Magidson & Addison, 2006).

A set of interacting threats and opportunities exist within all organisations. These

threats and opportunities formulate the mess. The purpose of formulating the mess is

to understand the factors that have the potential to eventually destroy the

organisation if the current path is not adapted to the changing internal and external

environment. Formulating the mess requires four steps:

1. A system analysis of the organisation’s current operations;

2. An obstruction analysis of the characteristics preventing the organisation

from adapting;

3. The preparation of reference projections of how the organisation would

destroy itself in future if current parameters did not change, thus revealing the

impact of the obstructions identified in the obstruction analysis; and

4. The preparation of a presentation of the mess that provides insight regarding

the future of the organisation if nothing changes.

The second phase of idealisation is ends planning. The focus of ends planning is to

design the future of the organisation from an unbounded perspective. It is important

for the idealised design to demonstrate how the obstructions identified in formulating

the mess are addressed (Magidson & Addison, 2006).

1.4.1 Formulating the mess

Due to the current shrinking market, the EPCM industry has reduced staff through

natural attrition and retrenchments to maintain profitably.

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Figure 7: Engineering Project Houses

Figure 7 demonstrates the process of reducing staff levels through a retrenchment

process, resulting in damaging the trusting relationship within the industry.

De Meuse explained that a “Psychological Contract” exists between the employer

and employee, and is regarded as a mutual relationship based on trust and

predictability. According to this informal code, employees are expected to perform

an honest day's work and in return they receive an agreed upon day's pay.

Downsizing is a violation of this trust and perpetuates the organisation's failure to

provide a positive work environment and secure employment. Consequently,

retrenchment can lead to various adverse effects when employees react to such a

unilateral breach of trust (Meuse, 2013).

The reduction of staff results in the EPCM industry not having sufficient skilled

resources or leaders available to access new opportunities without returning to the

market place to secure the services of the required skill set. In these instances,

clients’ needs are not necessarily understood and these needs are subsequently

unmet. The EPCM’s willingness or aversion to risk also prohibits the ability to meet

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the changing needs of clients. By expanding the trusting relationship between

stakeholders, as represented in Figure , the EPCM industry is often referred to as a

relationship business.

Figure 8:The Mess

Contractors and equipment suppliers are forming stronger relationships with clients,

thereby weakening the relationship between the EPCM industry and the client. This

weakened relationship has the ability to undermine the current EPCM business case.

The second component to idealised design will be discussed on completion of the

theory building in Chapter 5.

1.5 The research design

The preceding section of the report explained the empirical perspective of the current

EPCM situation by providing insight into the background related to the research

topic. The following section explains the theoretical perspective of the research that

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is considered inclusive of the research goal, research question as well as the

conceptual framework.

The research design was based on Maxwell’s (2008) research design. The intent of

Maxwell’s research design was to provide a model of, as well as for the research

(Maxwell, 2008). Maxwell’s research design considers the research design as a real

entity and does not view it as merely an abstract concept (Maxwell, 2008).

Maxwell’s Model consists of five components, illustrated in Figure 9.

Figure 9: Maxwell's research design (Maxwell, 2008)

“What is innovative is the way the relationships among the components are

conceptualized. In this model, the different parts of a design form an integrated and

interacting whole, with each component closely tied to several others, rather than

being linked in a linear or cyclic sequence” (Maxwell, 2008) The interconnectedness

of the model, for example, allows for the goal being considered to impact the

research methodology being employed. Conversely the research methods being used

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may constrain the goals of the research. Furthermore, the research methodology may

impact the validity of the results whereas the impacts on validity may guide the

methodology being employed.

The goals that are stated affirm the importance and relevance of the research. For the

goals to be effective, the researcher must consider the potential influence of the

research on the existing body of knowledge as well as in the EPCM industry. The

goals also need to demonstrate the intention of the researcher as well as the

contribution of the results to the EPCM industry (Maxwell, 2008).

The conceptual framework considers the researcher’s current understanding of the

research topic. It also considers the theories, beliefs and prior research that has been

performed, to guide the researcher through the research. The research conceptual

framework provides the lens through which this researcher views the research,

thereby assisting the researcher to maintain focus (Maxwell, 2008).

The research question addresses the specific desired results that will be garnered

through the completion of the research. The researcher focusses on gaining more

information about the topic (Maxwell, 2008). In order for the research to be

successful, the accurate answering of the research questions will deal with the

concern variable developed.

The research method formulates the process for conducting the research. These

processes are discussed in detail in Chapter 2.

The validity of the research study considers the potential pitfalls of the design that

might result in the research being discredited. Validity also considers the plausible

alternative interpretations and threats to the validity of the research and how the

researcher attempts to deal with these threats. Validity also questions the

believability of the results of the research (Maxwell, 2008).

Maxwell’s research design is an interactive design model, as each component is

dependent on the other with the common intent to solve the research question that

has been identified.

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1.6 Development of the conceptual framework

As stated in the previous section, the conceptual framework of the research study that

was conducted is a system of concepts, assumptions, expectations, beliefs and

theories that support and inform the research (Maxwell, 2008).

The first theory considered for the conceptual framework is that of the Activity

Theory, as proposed in Figure 10.

Figure 10: The Activity Theory

An agent structure model (Rose & Scheepers, 2001) was adopted to view the

research, with the agent having the capacity to make the required difference. This is

also referred to as “transformative capacity” (Rose & Scheepers, 2001).

Referring to Figure 11, the focus area of tension experienced within the activity

triangle exists between the EPCM, the rules and policies implemented by industry

role players, and the tension that exists between the community who have to work

within the rules and policies.

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Figure 11: Activity Theory Focus Area

The community within the EPCM industry considers all levels of management as

well as the clients they serve. The rules and policies established by the industry

ensure corporate governance and limit liability, often create tension within the

community. To meet the needs of clients, project managers may want to accept more

risk, while executive managers do not support the increased risk exposure. Equally

so, the rules and policies that are implemented limit the ability of the community to

meet the required needs. Contracting conditions imposed by clients also increase the

ownership of projects that are placed on the community, thereby creating more

tension.

The second theory considered is that of the adaptive cycle cited in (Robinson, 2010),

as depicted in Figure 12.

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Figure 12: Adaptive Cycle

The area of focus as a function of the adaptive cycle questions whether the industry

is trapped within the rigidity trap and whether the condition within the existing

market downturn exists to trigger an opportunity to change. The resilience of the

industry is also questioned, especially whether it has the ability to adapt within the

changing market to meet the needs of clients.

The third theory considered as part of the conceptual framework is that of Beer’s

Viable Systems Model (VSM) as cited in (Walker, 1998) with specific focus on the

EPCM industry’s ability to collect the required market intelligence in order to guide

the need for change to meet market requirements.

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Figure 13: Beer's viable systems model

Figure 13 depicts the system components within Beer’s VSM. S1 represents the

primary activity within the system. S2 provides a coordination function within the

VSM inclusive of IT and human resources. S3 focuses on the control of the various

S1 functions with the S3* providing an audit function. S4 focuses on gathering

intelligence from the environment. S5 provides policy and direction to the VSM and

responds to the signals from S1 to S4.

The Viable Systems Model (VSM) is a very helpful tool to understand, diagnose and

design organisational structures. The VSM model allows for the decomposition of

complex systems into smaller, self-contained units. Organisational structures are

generally formal, functional-based reporting structures. However, within the VSM,

structures emerge from stable forms of communication allowing parts of the

organisation to function as a whole (Espejo, 1990)

Requisite variety is fundamental to the VSM model. An organisation cannot manage

all the variety to which it is exposed. Therefore the organisation must create stable

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units from where the controller has the requisite variety to maintain the outcomes of

the unit within a desirable state (Espejo, 1990).

Complex systems are managed through a process of recursion, as each system has

the same fundamental capability to sustain itself. “This process produces viable

systems within viable systems, at increasing levels of complexity” (Espejo, 1990).

Within the research being conducted, the VSM model with specific reference to the

S4 level is used to provide the researcher with insight regarding the organisations’

needs need to ensure and apply market intelligence.

The fourth and final theory considered as part of the conceptual framework is

(Hoebeke, 2000) domains of management, as described in Figure 14.

Figure 14: Domains of Management

(Hoebeke, 2000) described “appreciative systems”, also known as Normative

Management, as part of his third level of recursion, the value-systems domain. The

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value-systems domain is part of creating permanent and new elements to an

organisation by developing new languages, and building a permanent debate between

varying parties with different worldviews.

Hoebeke observed management domains through three levels of recursion:

1. Added value domain (Operations management);

2. Innovation domain (Strategic management); and

3. The value-systems domain (Normative management).

The lower level of recursion is reinforced by the condition created by the higher level

of recursion. Normative management creates the environment for continuous debate

to take place with varying worldviews, cultures and beliefs. The presence of

successful normative management allows for strategic management within the

innovation domain, therefore having strategic episodes that are desirable, feasible,

transferable, and has systemicity.

Parties must share a common willingness to participate in debate with the intent to

create a new organisational language.

Hoebeke (2000) referred to the value-systems domain as “the major process is the

creation of a new value language through an ongoing debate” (Hoebeke, 2000).

“Although the process and its outcome may appear abstract, its reality resides in the

persons participating in the construction of the new values” (Hoebeke, 2000). According

to Hoebeke (2000), appreciative system conversation occurs due to the following

underlying qualities:

The comparing of “generative” theories enables the participants debating to develop

new behaviours that permit them to improve their impact on their natural and cultural

environment. “A greater diversity of worldviews makes more synergistic connections

possible leading to genuinely generative debate” (Hoebeke, 2000).

(D.L.Cooperrider & Srivastva, 1987) suggested that there is a need to re-awaken the

imaginative sprit of action research. For this to take place, a complete new

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“generative” perspective is required that acknowledges and accepts uncertainties,

ambiguities and mysteries. “With practice the appreciative eye can be developed to

see the ordinary magic, beauty and real possibility in organisational life, however it

is unsure whether we can transform our central convictions easily”. (D.L.Cooperrider

& Srivastva, 1987)

“The quality of debating and its outcome are directly related to the tolerance of its

members of different cultures, languages and worldviews” (Hoebeke, 2000).

Tolerance allows a willingness to give empathy, respect and acceptance with

diminished response. Tolerance results in reconciliation and understanding with a

broadened perspective. “A good debate is held by tolerant adversaries who increase

the quality of debating by testing their own worldview by means of the other view”

(Hoebeke, 2000).

Dialectical capability is concerned with trust. The quality allows adversaries to trust

each other as valuable human beings despite cultural differences, alternative ethical

viewpoints and varying worldviews. An analogy of adversaries is best explained by

considering professional sportsman: The game is only successful when both parties

believe in their unfailing competence to succeed (Hoebeke, 2000). Dialectical

capability is increased by adopting a “we” approach as opposed to an “I” approach

(Basseches, 2005).

However, within an enemy relationship, trust does not exist. Negative capability is

born from the capability to function with a situation while not having full knowledge

of what is about to happen and not being in control of the situation. Therefore, it is

important to allow for “space” within the confines of having a lack of knowledge for

innovation to take place (French & Simpson, 2009).

From the theories mentioned above and in previous sections, the conceptual

framework used in this research study is represented in Figure 20.

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Figure 15: The Conceptual Framework

The framework focusses on the situation currently experienced within the EPCM

industry servicing the mining industry. The framework’s lens guides the researcher

through the perspectives of the community, the theories consulted and the

researcher’s personal perspective.

The research design identified three goals, as explained in Table 1.

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Table 1: Research Goals

Research Goals

Intellectual Goals

To determine an alternative buisness model to enable the EPCM industry to maintain market presense considering the current depressed market.

Personal Goals Through normative management, achieving sufficient level of strategicenss to effect awareness and change.

Practical Goals

Increase clarity and understanding of the requirements enabling the EPCM industry to adapt and improve its offering to cliets, thus meeting their needs.

The intellectual goal aims to determine an alternative viable business model to

enable the EPCM industry to maintain market presence considering its current

depressed state. To achieve the intellectual goal, the researcher needs to understand

the impact of the adaptive cycle, Viable Systems Model (VSM) and Cultural

Historical Activity Theory, as related to the research.

The personal goal of the researcher is to achieve sufficient levels of strategic ability

to effect awareness and change through normative management. All discussions,

meetings and interactions require normative management to be mastered to ensure

sufficient levels of desirability, feasibility, transferability and systemicity achieved

through a process of appreciative enquiry (Hoebeke, 2000).

The practical goal considers increasing clarity and understanding of the

requirements, enabling the EPCM industry to adapt and improve its offering to

clients, thus meeting their needs.

The researcher is most interested in the factors that enable the industry to showcase

ability to adapt value offerings on a continuous basis to meet the needs of clients and

the market it serves.

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The researcher identified the following fundamental concepts as a function of the

research goals established, as listed in Table 2: Fundamental Concepts related to

research goals.

Table 2: Fundamental Concepts related to research goals

Key Concepts

Willingness to adapt to the changing market condition

Understanding the changing market conditions

Understanding the risk associated with adapting to meet the changing market conditions

Change is not initiated without the existence of a willingness to change. For change

to be effective, the market in which the organisation operates need to be understood

while understanding the level of risk to which it is being exposed.

1.7 Development of the research question

The context of the research study has been described. The EPCM industry servicing

the mining industry has been lucrative for the past ten years, even when the 2008

Global Economic Crisis is considered. However, the past year’s market has been

very slow due to the poor commodity pricing as well as an increase in socio-

economic challenges with regard to investing within the South African mining

market.

Large project-engineering houses in South Africa have built capacity and capability

during the resource boom cycle. However, the current downturn and pressure from

clients have resulted in restructuring and retrenchment processes to reduce overhead

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costs, as well as accept more project risk. The demand placed on the EPCM industry

to adapt its value offering while maintaining responsible trusting relationships with

internal stakeholders as well as with clients, contractors and equipment suppliers is in

question.

The research question that was posed is “With the current change and focus on

markets, how can project-engineering houses adapt their value offering to

clients in order to maintain a positive business case whilst sustaining a mutually

beneficial relationship with contractors and clients?”

According to Maxwell’s (2008) research design, the goals, conceptual framework

and research question are related, as illustrated in Figure 16.

Figure 16: First three phases of the research design

The fundamental concepts identified from the goals are risk, market conditions and

willingness to change. The research question considered how the EPCM industry can

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change within the current market. To answer the question, the current market must be

understood. Secondly, for the industry to adapt, it has to be willing to adapt whilst

considering the risk implications of adapting.

The conceptual framework provides insight in to the need for the VSM to exist on

level S4 to ensure market understanding whilst the adaptive cycle provide insight

regarding the process associated with adapting. Activity theory allows the researcher

to focus on the tension that exists between the community, subject and rules and

policy.

As such, the research question, goals and conceptual framework are related, as these

coexist.

1.8 Argument for relevance

The EPCM industry serving the mining industry has been successful during the

resource boom cycle of the past ten years. In doing so, the various EPCM’s have

built large capacity and capability which attracts large overhead costs. However, the

past years has seen commodity prices tumbling with associated labour unrest and

disruption at an all-time high in South Africa.

In addition to the above, EPCM industry is a resourced-based industry, i.e.: The

people are the foundation of the industry, not the systems, procedures and policies.

According to (Connor, 2002), the survival and success of the industry is dependent

on the resources available within the organisation.

For the EPCM industry to maintain and build the capacity to adapt to meet client and

market needs, it must ensure responsible trusting relationships exist between the

resources within the industry as well as all external stakeholders. If the industry fails

to maintain and build the capacity to adapt to the current changing market, the

industry will be forced to further downsize and then it stands the risk of failing.

The relevance of the research was further examined by using powerful questions

(Insight, n.d.) during an interview process. Each interviewee was asked if he/she

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believed that the EPCM industry is sufficiently nimble to adapt in meeting the needs

of clients during this changing market.

1.9 Concluding

This chapter provided context to the current research study whilst explaining the

structure and design of the research process, according to (Maxwell, 2008) model.

The chapter considered the empirical perspective of the situation and provided

insight regarding the background related to the research topic. Chapter 1 provided a

theoretical perspective of the research that was inclusive of the research goal,

research question as well as the conceptual framework.

The following chapter comprehensively discusses the research methodology that was

followed through the research.

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CHAPTER 2: RESEARCH METHODOLOGY

Within the previous chapter the first three components of Maxwell’s research design

were discussed. The components were research goals, research questions and the

conceptual framework. The current chapter delineates the research methodology that

was employed and discusses the validity of the research.

The methodology employed to conduct the research consists of a combination of

tools and techniques to collect data and conduct a rigorous analysis thereof, thereby

developing a theory to explain the behaviour of the concern variable.

Throughout the next section, the research framework is revealed in segments to

provide the reader with on overall understanding of the methodology employed.

2.1 Research Framework

According to (Dick, 1993), action research is a methodology that incorporates dual

aims of research and action. The action component aims to effect change within an

organisation, whereas the research aims to increase the understanding on the part of

the researcher.

Action research is cyclic in nature and at a minimum, needs to include intent or

planning before action followed by review, before the next planning and activity

takes place.

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Figure 17: Action research cycle (Dick, 1993)

The research was based on an action research methodology. The action part of the

research was conducted within three cycles of actions, as presented in Figure 18:

Research Methodology Phase 1 The mess was explained in Chapter 1, while the ends

planning is discussed in Chapter 5. Through action research, the move from the mess

to the ends planning emerged.

Figure 18: Research Methodology Phase 1

Each cycle was underpinned by interviews that were conducted based on an

appreciative enquiry approach with the intent to create new “generative” theories that

enabled the participants debating to develop new behaviours that would permit them

to improve their impact on their natural and cultural environment.

From each cycle, the worldview of the audience group is formulated to provide a

more profound understanding of the multiple perspectives that were considered.

According to appreciative enquiry, each cycle is formulated to determine the critical

system heuristics by asking twelve respondents open-ended questions. The events

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and ideas were based on the experiences of the researcher throughout the research

cycles. The outcome of the action research intends to lead to an improved situation or

awareness.

Data was based on Grounded Theory, as explained in Figure 19: Research

Methodology Phase 2.


Grounded Theory is a qualitative research process based on a process of emergence.

Data collection within the grounded theory process is consistent to the action

research discussed. The Grounded Theory outcomes form the basis of the action

research outcome.

The generative theory aims to explain the behaviour of the concern variable based on

the data collected throughout the action research conducted, as emphasised in to


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Generative theory building only takes place once the action research is completed;

this is exhaustively discussed in Chapter 5. The final phase of the research

framework was the incorporation of critical realism within the action research, as

described by Figure 21: Final Research Design

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Figure 21: Final Research Design Framework

“Critical realism is a philosophy of and for social science” (“Critical Realism and

Causal mechanisms,” n.d.). It is mainly concerned with the researcher’s ontology

whilst having a relative open stance towards epistemology.

The next section develops the theoretical and conceptual foundation of the research

methodology.

2.2 Theoretical and conceptual foundation of the research

methodology

The philosophy of ontology explains how the researcher experiences his reality. The

researcher’s ontology therefore influences all the components of the research

framework inclusive of the research goals, concern variable and the research

question prepared. Epistemology provides insight to the knowledge and processes

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that the researcher uses to collect data, interpret the data, and to create an

understanding of the data within the context of the research.

2.2.1 Soft Systems Methodology (SSM)

Checkland (2005) was dismayed to find ‘hard systems thinking’ focussed on solving

problems based on a goal-seeking approach. Checkland (2005) regarded the ‘hard

systems thinking’ approach as inadequate in terms of real world management

practice. From this perspective, the author focused on a problem-solving

methodology that encapsulated the view of maintaining relationships as cited in

(Williams, 2005)

SSM focuses on building multiple system models based on explicit worldviews of a

perceived real world problem, rather than building only a singular system model, as

is commonly used in hard methodologies. Comparing models with a real word

situation enables the acquisition of information through structured debate about

desirable and feasible changes.

SSM represents a seven stage cyclic learning process. The process facilitates the

sense making about a real world problem by viewing it from multiple worldviews.

The underlying process within SSM guides the process of establishing a rich picture

of the situation without being too prescriptive. An illustration of the process is

provided in Figure 22.

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Figure 22: Learning Cycle of Soft Systems Methodology (Rodriguez-ulloa & Paucar-

caceres, 2005)

For the research that was conducted, the CATWOE process was identified in Step 3

of SSM and was used to gain a more profound understanding of the various

stakeholders’ worldviews. Step 3 of SSM is described in the following paragraph:

Step 3: The root definition of the relevant systems potentially offer insight into the

problem situation brought forward by the development of a CATWOE for each

stakeholder’s worldview. Each root definition reflects a different way of viewing the

problem situation, i.e. a university could be seen as a place of learning, a place to

gain worldly wisdom, a place to be equipped for future life or a place to build lasting

networks.

CATWOE refers to Customers, Actors, Transformation process, World view, Owner

and Environment

2.2.2 Critical System Heuristic (CSH)

Critical System Heuristic (CSH) as developed by (Ulrich, 1983) is a methodology

that focusses on the normative “What ought to be” impact within system designs.

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Critical System Heuristics is built on three pillars. Heuristics refers to the art or

practice of discovery through a critical reflective process based on boundary

judgements that define the boundaries of the system. Ulrich (1983) revealed that the

reflections are not just limited to professionals and decision-makers, but to ordinary

people as well.

As boundary judgements are changed, the facts and values of the system change to

keep the system balanced, as reflected in Figure 23.

Figure 23: The ‘eternal triangle’ of boundary judgments, facts, and values

Thinking through the ‘eternal triangle’ as referred to by Ulrich is a process of

“Systematic Triangulation”. Therefore as new facts become available, researchers are

required to expand their boundaries of the reference system to make provision for the

new facts, resulting in a requirement to alter their values accordingly (Ulrich, 1983).

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Ulrich utilised twelve questions to identify the boundaries of the system. The twelve

questions focus on two aspects of the system boundaries, “what is” and “what ought

to be”. The twelve questions address four boundaries’ issues, namely sources of

motivation, sources of power, sources of knowledge and sources of legitimation.

Ulrich further assigned three categories to each basic boundary issue:

1. The social role of each stakeholder that may include people who are involved

or ought to be involved.

2. The concern specifically associated with the stakeholder being considered in

the questions.

3. The pertinent problems associated with the concern.

CSH was selected as a practical process of guiding questions to reveal the vision,

assess the situation, consider other contexts that might be relevant and examine

whether the research does not claim too much. For the process to be effective, “those

in control of the situation need to lay their boundary judgements open”, thus

“supporting those parties whose concerns are ignored or suppressed” (Ulrich, 1983).

2.2.3 Critical Realism

“For critical realism the world is real and exists independent of the idea the

researcher may have of it”(“Critical Realism and Causal mechanisms,” n.d.). Critical

Realism operates within tree domains of stratified ontology, as illustrated in Figure

24: Critical Realism Domains

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Figure 24: Critical Realism Domains

Critical realism consists of the processes, namely structures, powers and causal

mechanisms that generate events relating to the research. The real domain reflects

the mechanisms that give structure to the process of understanding the viability of the

EPCM industry within the current market.

The actual domain includes events, whether observed or not. Relative to the research,

the research question asked whether EPCMs meet client requirements within the

current market. The market is continuously changing, together with clients’ needs.

Even though the researcher may not have witnessed these events, he is aware that it

has an impact on the EPCM industry.

The empirical domain reflects that which the researcher experiences through his

observation. Relating to the research, this could be the researcher’s observations of

the small wins, the impacts within industry and surrounding activities.

Through the empirical domain, the researcher gathers large quantities of data,

allowing the researcher to have an enhanced understanding of the actual domain.

Through a process of hypotheses, it enables the researcher to build a causal

mechanism, which potentially operates within the real world.

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For this research study, it has to be considered that “the physical and social world

exists independent” of the researcher’s knowledge (“Critical Realism and Causal

mechanisms,” n.d.). The research is based on the ontology of the researcher and the

result will exist independently from the EPCM industry.

The researcher’s knowledge of the EPCM industry is fallible as it has its own

independence. The researcher may also have been surprised by new discoveries

made during the research project whilst the researcher may possibly have made

mistakes (“Critical Realism and Causal mechanisms,” n.d.). The researcher was

required to consider the topic critically in order to explain and understand the

behaviour of the concern variable.

The researcher considered Grounded Theory as the foundation for collecting

empirical data.

2.2.4 Grounded Theory

Grounded Theory was developed by Glaser and Strauss in 1960. Since then Glaser

and Strauss have developed differences regarding the implementation of Grounded

Theory. Glaser emphasised the necessity for the researcher to be more creative and

less process driven. Strauss conveyed a linear approach (Douglas, 1997). For the

purposes of the research that was conducted, Glaser’s model of Grounded Theory

was selected to allow for the emergence of insight during the course of the research

process.

The Grounded Theory study process enables a complex and rich viewpoint to be

gained of the topic being research. An important attribute of grounded theory is that

it allays a serious criticism of qualitative studies that being accused of being

unscientific and lacks the rigidity of a scientific research. It is viewed that there is

not sufficient qualitative studies which provide a detailed structure relating to the

data analysis beyond providing a vague framework of headings. (Kempster & Parry,

2011).

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(Kempster & Parry, 2011) argues that Grounded Theory provides a structured

process form categorising data of the topic being considered towards building a link

between the categories identified. Through the process of linking categories, a

picture emerges providing context of the topic being researched.

“Data collection, analysis and resultant theory generation has a reciprocal

relationship, in that the researcher, rather than commencing with a theory that he or

she attempts to verify, commences with an area of study and allows relevant

theoretical conceptual constructs to emerge from the process. Grounded theory

research requires a constant interplay between the researcher and the data. Grounded

theory studies use rigorous data coding procedures designed to increase the validity

of data interpretation.” (Douglas, 1997)

Figure 25: Grounded Theory

In reference to Figure 25, Grounded Theory provides a process of collecting large

amounts of data based on observation, field notes and existing literature. A rigorous

coding process follows to ensure validity to the research that has been conducted.

Grounded Theory is conducted in a four-phased approach. The first phase referred to

as open coding, where large amounts of propositions were collected through the lens

of the conceptual framework.

During the second phase, the initial proposition was categorised. Additional

propositions were collected, to provide an option to add additional categories if

required, based on new insight gained.

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During the third cycle, the categories were reduced to seven categories, followed by

a literature review thereof. The fourth and final stage was the saturation coding of the

final set of categories. The final set of categories were developed into core variables

by means of a concept analysis.

Conceptually, Grounded Theory provides a systemic process for collecting data by

the researcher, thereby allowing an explanation of the behaviour of the topic being

researched to emerge.

2.2.5 Relationship between Critical Realism and Grounded Theory

Figure 26: Critical Realism and Grounded Theory provides insight into the

relationship between Critical Realism and Grounded Theory.

Figure 26: Critical Realism and Grounded Theory

Grounded Theory is the process of surfacing all the empirical data through a precise

process to ensure validity of the research data. The empirical data is based on the

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observation of the researcher. Through Grounded Theory’s coding process, the core

variables were identified as well as the interrelationships thereof. The mechanism

developed sought to provide insight into the real domain.

2.2.6 Theory development

The theoretical and conceptual foundation relative to theory building pertaining

specifically to this research study is discussed extensively in Chapter 5.

2.3 The phases of the integrated research framework

The research was concluded based on the research methodology, as depicted in

Figure 21: Final Research Design.

The first phase of the research focused on events and ideas directly experienced. This

phase formed the action research part of the process. This phase also represented the

empirical component of the research from a critical realism perspective.

The researcher collected data through an interview process aimed at three levels

within the EPCM industry over a 12-week period. Face-to-face interviews were

conducted in an informal setting. For each interview, the context of the research was

explained and the discussions opened with a powerful question, i.e. “is the EPCM

industry nimble enough to meet client needs in the current changing market?” All

interviews were conducted from the perspective of appreciative enquiry to allow a

new language to emerge.

The first level of interviews aimed at project managers within the industry. Project

managers represent the contact point between client and contractor and are ultimately

responsible for ensuring the delivery of projects according to the mandate given,

while also being responsible for maintaining trusting relationships with clients,

contractors and the project team.

The second level of interviews was aimed at senior executives from the industry. The

researcher was fortunate to gain access to senior executives from a variety of leading

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industry service providers. The third and final level of interviews aimed at senior

clients within industry, exposed to a variety of EPCMs within the industry.

As part of the data collection, a limited documentary search was conducted of

literature pertaining to the research.

2.4 Possible threats to validity

If the research being conducted is not deemed credible by the reader, then the

research will have no value. As such, plausible alternative interpretations need to be

considered, as well as whether the results and conclusion of the research might be

wrong. To ensure that the research was valid, the following concerns were addressed

during the design and execution of the research (Maxwell, 2008):

The research was conducted over a relatively short period of 12 weeks. A more long-

term participation observation would have provided more complete data regarding

the research topic.

Rich data was collected through short-term involvement and intensive interviews. To

ensure quality of data was collected from interviews, verbatim audio recordings

should have been used. Notes recorded from the interview would not be deemed

sufficient.

Misinterpretation of the data collected can only be countered by ensuring

interviewees are afforded the opportunity to validate the data recorded. Validation by

interviewees helps to counter any bias evident from the researcher. Furthermore,

collecting data by various means and from a wide range of individual would ensure

that sufficient triangulation was achieved.

2.5 Ethical considerations

Ethical considerations are addressed to ensure the objectivity and accuracy of the

research conducted. By following well-recognised research methodologies such as

Grounded Theory, provides a process to ensure auditability and transparency of the

research concluded.

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The researcher must be sensitive to the needs and privacy of the participants being

observed as a function of the research. In this regard, the researcher disclosed to all

interview participants that he is was completing his EMBA. Most interviewees were

more than willing to have their names referenced in the research. Furthermore, the

researcher descriptively disclosed the purpose of the research to all parties concerned

(Mack, N., Woodsong, C., M.Macqueen, K., Guest, G., & Namey, 2005).

The successfulness of achieving the requirements of an ethical research is more

comprehensively discussed in Chapter 6.

2.6 Conclusion

The methodology employed provided the researcher with a structure and insight

regarding the nature of conducting research, thus enabling the researcher to maintain

a constructive and focused process of addressing the concern variable and; in doing

so, ultimately providing a theory underpinning the behaviour of the concern variable

and answering the research question.

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CHAPTER 3: RESEARCH RESULTS

3.1 Introduction

This chapter provides insight regarding the results of the research methodology as

described in the preceding chapter. The chapter discusses the data collection process,

up to the point of identifying the initial core variables related to the research.

The chapter focuses mainly on the Grounded Theory process whilst providing

insights of the path followed by the researcher to gather the required data whilst

ensuring that the validity of the research was maintained.

3.2 Application of research framework: outcomes of each phase

3.2.1 Action research

The action research conducted throughout the research process provided the means to

collect data as reflected within the Grounded Theory results, as discussed in the

following section. It also provided the insight to progress Ackoff’s idealised design

from the mess, as described in Chapter 1 to the ends planning, as formulated in

Chapter 5 of the research paper.

Through each cycle of data collection, the worldview of each grouping of

stakeholders was formulated as prescribed within the SSM process, Step 3, as

delineated in Table 3. For detailed CATWOE’s, refer to Appendix 4.

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Table 3: Stakeholder Worldviews

Stakeholder Worldview

Project Managers The industry is slow to react, limited by corporate

governance and large overhead cost structures.

Project Executives The industry is stressed but the service being provided is

nimble, as corporate governance not seen as a stumbling

block.

Clients The industry is slow to react, large overhead cost

structures and less willing to take on risk.

The “is and ought to be” questions as identified within the CSH process were used to

identify the boundaries associated with the sources of motivation, sources of power,

sources of knowledge and sources of legitimation. Refer to Appendix 5 for CSH

boundary questions and answers.

The CSH boundary questions have confirmed the notion of collaborating. Sources of

motivation, power, knowledge as well as legitimation are and come from both

service provider as well as clients. The notion of partnering therefore confirms that

the one cannot exist without the other.

3.2.2 Grounded Theory

The data was collected in accordance with the developed framework. The research

focused on understanding effectiveness and relevance of the EPCM industry within

the mining and mineral processing industry. Interviews were approached in an

appreciative enquiry nature, creating opportunity for new ideas and concepts to

emerge whilst been open to the uncertainties and ambiguities presented by the

situation (D.L.Cooperrider & Srivastva, 1987).

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3.2.2.1 Data collection

The first cycle of data collection focused on interviewing various project managers

within the industry. During the first cycle, an outspoken and critical international

client was available to be interviewed. The data from this interview was included as

part of the first cycle of data collection. The client interviewed within the first cycle

gave an additional perspective on the situation.

Figure 27: Data Collection Cycle 1

The interviews were conducted by placing emphasis on ensuring that the

interviewees were comfortable to share their thoughts and opinions. This was

achieved through a process of nudging, by asking a few probing questions. The topic

was attention grabbing and most participants were eager to share their views.

To ensure that all the data related to each interview was comprehensively collected,

the researcher selected to make an audio recording of each interview. During the

interview the researcher made no notes to ensure that the interviewee was not

distracted. The researcher focused on ensuring that the interviewee was attentively

listened to, whist maintaining eye contact with the interviewee. The process followed

ensured that the interviewees were relaxed and able to talk comfortably.

Following the interview, the researcher listened to the audio recordings of each

interview to prepare the transcripts and collect the required proposition. Table 4

provides an extract of how data was collected.

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Table 4: Proposition log extraction

Proposition Initial

Labels

Place/

Source

Relevance

on concern

R/I/

J

Vali-

dity

Memo /

Comment

1

Our offering

needs to be

focused on

client needs

and not what

we want to

force on

them

Understand

ing client

needs

Interview

of Donovan

Munro

The

capacity to

adapt is only

relevant if

we know

what we

need to

adapt too.

J High

It has been

commented in the

past that EPCM

contractors have

become arrogant

and want to force

their ways and

opinions on to

client. It is

therefore

important to

understand the

client needs,

thereby being

sensitive thereto.

For each proposition collected, consideration was given to the source of the data, the

relevance on the concern, if the proposition was a report, inference or judgement, the

validity of the proposition as well as a memorandum to provide context relating to

the proposition.

According to Glaser’s approach, the researcher considered the data collected and the

patterns that emerged. It became evident from the data that the need to adapt to meet

market requirements was very profound. Similarly, various other concepts and

patterns emerged were assembled into categories with an assigned overarching

classification assigned to each category.

Fourteen classifications were identified with some 190 propositions collected during

the first cycle of the data collection, as evident from Table 5.

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Table 5: Initial labels identified:

No Labels No Labels

1 Level of agility to meet market

needs

8 Level of Market Understanding

2 Level of Arrogance 9 Extent of Multi-Tasking

3 Quality Competent Skill set 10 Cost of Overhead

4 Applicability of Contracting

Models

11 Quality of Relationships

5 Level of Corporate Governance 12 Understanding Client Needs

6 Level of Credibility 13 Level of Value Offering

7 Diversified Services 14 Willingness to risk

Data collected for the second cycle focused on interviewing industry executives.

Interviews were concluded with three large international EPCMs represented in

South Africa. The researcher found it more challenging to gain access to the various

EPCM executives as many of these executives appeared to believe that consenting to

the interview would expose the respective EPCM’s competitive advantage. The CEO

of an unnamed group refused to afford the researcher an interview. This was very

disappointing; as the company in question forms a large part of the local industry and

this particular CEO’s perspective would have greatly added to the richness of the

data collected.

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During the second data collection cycle, no further classifications were identified.

However, the executives’ perspectives were exceedingly more positive as opposed to

the opinions shared in the first data collection cycle.

Figure 28: Data Collections Cycle 2

At this point during the research, the researcher formed the potential hypotheses that

corresponded with the data collected from the project managers during the first cycle

and with the data collected for clients during the last cycle of the data collection,

while the EPCM executives held an opposing view.

The hypotheses formed because project managers interfaced with their clients on a

daily basis, whereas EPCM executives had a much more positive view, believing in

the capability of the industry to meet client needs. EPCM executives meet clients on

a much less frequent basis, where project specifics are not necessarily discussed. It is

emphasised that the hypotheses are based on the ontology of the researcher.

The researcher found it challenging to maintain a neutral viewpoint without his

personal viewpoints affecting the data that was collected. Interviewing multiple

stakeholders with a variety of views assisted in ensuring the consideration of

multiple perspectives.

The second cycle of data collected did not add additional classifications, but

provided rich data and further insight regarding the needs of the industry, to ensure

the ability of the industry to adapt, thereby meeting market needs. The data also

provided alternative perspectives to the somewhat negative perspectives recorded

within the first cycle of data collection.

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On the completion of the second cycle, the classifications were reduced by reduction

sampling, which was the result of gaining information from the literature that was

reviewed.

Figure 29: Cycle 3 - Reduction Sampling

The researcher initially considered increasing the level of abstraction to decrease the

initial classifications identified. However, this attempt was unsuccessful.

Reduction sampling was therefore achieved through a process of constructing an

interrelationship diagram. The intention of the reduction sampling was to decrease

the number of classifications to an acceptable number between six and eight, as

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Figure 30: Reduction Sampling - Interrelationship Diagram

The interrelationship diagram identified the interactions of each classification with

all the other classifications. For example, willingness to risk is a determiner for the

level of agility to meet market needs.

The seven strongest determiners were selected as the core classifications, as reflected

in Table 2.

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Table 6: Labels following reduction sampling

No Label

1 Level of agility to meet market needs

3 Quality Competent Skill set

5 Level of Corporate Governance

8 Level of Market Understanding

11 Quality of Relationships

12 Understanding Client Needs

14 Willingness to risk

A limited literature review revealed the following insights. (Thaler & Sunstein, 2009)

stated that people are susceptible to make choices based on poor information

following some rule of thumb.

According to Robert (2001), “It is important to distinguish trust from reliance

(reliability, dependability, confidence).We often use such terms as trust and reliance

interchangeably. We talk about trusting the car to start, and we talk about relying on

our friends. Our intention here is not to force a pointless consistency on ordinary

language but rather to map out a conceptual distinction that is of considerable

importance in understanding trust. To equate trust with predictability is a mistake

because we are dealing with people in dynamic, reciprocal relationships rather than

with recurrent phenomena governed by (more or less) clear, law like regularities.” It

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is therefore important to consider that responsible trusting relationships should not be

confused with the reliability of service provided.

(Burnard & Bhamra, 2011) explained that within organisations, resilience exists in

both the individual and the organisational domains. This involves the ability to

withstand systematic discontinuities as well as the capability to adapt to new risk

environments.

“The resources of the firm will provide the basis for its survival and success through

time as external conditions in the environment change” (Connor, 2002). According to

Connor (2002), the survival and success of the industry is dependent on the resources

available within the organisation. Furthermore, (Connor, 2002) stated the source of

sustainable competitive advantage proceeds from the availability of strategic

resources that demonstrate particular properties and characteristics.

The final cycle of data collection focused on saturation coding of the classifications

post reduction sampling.

Figure 31: Cycle 3 - Saturation Coding

During the saturation process, coding data was collected by interviewing clients

within the mining industry. The hypothesis that clients would view the agility of the

industry similar to the view of the project managers interviewed in the first cycle was

confirmed. Both parties affirmed that international EPCMs were not agile enough to

meet client needs within the current changing market. Throughout all the cycles of

the data collection a total of 405 propositions were collected. On completion of the

saturation cycle a draft concept analysis of the final classifications were developed to

identify the draft core variables, as presented in Table 7. Refer to Appendix 3 for a

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detailed description of the concept analysis. The final core variables are delineated in

Chapter 4.

Table 7: Draft of Core Variables

Label Core Variable

Level of Corporate

Governance

Efficiency and effectiveness of corporate governance

Quality of skill set Availability of skills and knowledge

Level of agility to meet

market needs

Adaptation to the market environment in meeting client

needs (Note that this is the same as the research concern

variable)

Quality of relationships Responsible trust between stakeholders

Willingness to risk Appetite for risk

Level of Market

understanding

Effectiveness of market intelligence

Understanding client

needs

Understanding of client needs

3.3 Discussion of the research results

The data collected from the Grounded Theory process returned seven core variables

including the concern variable. Responsible trust between stakeholders was

identified as the strongest determiner within the core variables interrelationship

diagram, followed by availability of skills and knowledge.

During the research, profound insight was gained regarding critical realism. After

critically considering the research topic, a much deeper understanding and

appreciation had been achieved. Effectually, the EPCM industry exists independently

from the research being conducted. As much as the researcher has gained more

understanding, it does not affect how the industry exists. It had also been liberating

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for the researcher to understand that his ontology may not be accepted by all parties,

since it represents the ontology of the researcher and not that of the industry.

Responsible trust between stakeholders

Trust between internal and external stakeholders is paramount, as reflected within the

idealised design. This is termed responsible trust or alternatively called authentic

trust (Solomon, Robert, 2001). The project-engineering industry has been built on

relationships founded on responsible, authentic trust. Trust forms the foundation on

which relationships are built, enabling transparent communication between all

stakeholders.

Availability of skills and knowledge

Work in the EPCM environment was often obtained due to the availability of the

required skill set. Relationships are also built with skilled team members as opposed

to the organisation, therefore clients provide work with organisations that have the

strategic resources available.


Based on Beer’s VSM model (Espejo, 1990), the S4 level is responsible for market

intelligence and understanding the future. Responsible trusting relationships need to

be built timeously with future clients and existing clients that hold future

opportunities. Market intelligence is also paramount for the adaption of market

offering to meet future clients’ needs.


In today’s environment of complex and large project-engineering houses, efficient

and effective corporate governance is required. It is, however, important to ensure

that corporate governance does not become a burden to meet clients’ needs

efficiently and cost effectively.

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Appetite for risk

Large EPCMs must protect themselves by ensuring risk is maintained within

acceptable levels. The larger the organisation, the less willing it becomes to take on

risk. As such, it could position itself to miss opportunities due to the perceived risk

exposure. In the current market, clients push more risk onto the service provider,

testing the willingness of the service provider to accept the risk.

Understanding client needs

During the data collection process, it emerged that clients do not believe service

providers take the time to understand their needs. As service providers fail to meet

clients’ needs, clients look elsewhere for better service. This creates the potential for

clients to deal directly with contractors and equipment suppliers and/or consider

doing the work themselves.

Level of capacity to adapt value offering (Concern Variable related to the

research)

During the interview process, the most frequently asked question was: “Are service

providers nimble enough to meet client needs within the current market change?” To

this question, the answer was mostly “no”. For the EPCM industry to survive in the

current changing market, it must improve its capacity to adapt its value offering

continuously to meet clients’ needs.

It is vital to understand the value offering. The value offering may vary from having

the required responsible trusting relationship, to having the required strategic skill set

available or willing to contract whilst accepting a more risky position. Effective

market intelligence is critical in guiding the industry to proactively adapt its value

offering to meet the future market needs.

3.4 Evaluations to threats to validity

Due to the limitations of the researcher, the data was collected over a 12-week

period. During the 12-week period data was collected from interviews of three

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selected groupings within industry to ensure effective usage of the time available.

The validity of the research would have been improved if the data had been collected

over a longer period, especially for the data collected through the last cycle as clients

are not as readily available to be interviewed as industry peers.

To ensure that the richness of the data collected was not lost during the interview

process, audio recordings were made of all interviews. Audio recordings allowed the

researcher to make detailed transcriptions of the research to ensure the accuracy and

comprehensiveness of propositions recorded. Appendix 1 provides details of the

audio recordings made.

To further ensure the validity of propositions recorded, a copy thereof was sent to the

interviewee by email for confirmation. Refer to Appendix 2 for an example of this

email communication.

To ensure triangulation of the data recorded, a wide audience was selected from

which to record propositions. The wide audience from different levels of

management as well as clients and services providers allowed for a rich base of

multiple perspectives.

3.5 Conclusion

The chapter demonstrated the results of the methodology, up to the finalisation of the

core variables. The subsequent theory building is discussed as part of Chapter 5. The

next chapter rigourously analyses literature concerning the research topic.

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CHAPTER 4: LITERATURE REVIEW

The literature review focuses on providing additional insight into the theories

surrounding the research that was conducted. This section concentrates on providing

a connection along the ladder of abstraction from the core variables to the parent

discipline.

4.1 Overview of the literature review process

The literature framework provides an overview of the process followed (Ryan,

2014). It also provides insights into the process followed to identify the parent

discipline and its associated concepts for the level one review and similarly for the

level two and three review, as explained in Figure 32: The three level literature

review framework

Figure 32: The three level literature review framework

The level one review considers the reason for the research study. The researcher is

passionate about the viability of the industry in which he operates. The EPCM

industry is currently affected by the downturn within the resource market. Projects

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are postponed or deferred by resource companies; alternatively, resource companies

are executing projects themselves.

Three companies were interviewed as part of the data collection process, two of

which are listed. The listed companies share price graphs for the past six months

provide an indication of the effect that the downturn market has on the industry, as

revealed by Figure 33 and Figure 34.

Figure 33: Company A share price for the past 6 months – Source URL, dated 21/1/2015

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Figure 34: Company B share price for the past 6 months – Source URL, dated 21/1/2015

From these graphs, it is evident that both companies have been devalued by the

market, based on the market’s perception of the companies’ ability to create value for

its shareholders within the current market.

The level two review answers the “what” question and considers the research goals,

research question and concern variable. The level two literature review focuses on

the capacity of the industry to change to meet clients’ needs within the changing

market.

The level three review considers how to move from the current state to the desired

state, i.e. how can the industry move from a positon of being unable to meet client

needs to a positon of meeting client needs whilst maintaining acceptable levels of

risk, and without compromising on industry corporate governance?

4.2 The project engineering house industry

It is posited that South Africa will experience a drain in skills from the mining

industry, as mining project continue to decline. Creamer (2015) noted that the

continued reduction in oil and commodity prices give credence to the weaker growth

forecast for sub-Saharan Africa, including an increasingly subdued outlook for

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Nigeria and South Africa. A further decline in the already depressed price of metals,

most notably iron-ore, gold and copper will severely affect most countries in sub-

Saharan Africa (GEP, 2014).

The sustainability and viability of the mining industry, and by extension the EPCM

industry remains challenged by the decline in the current market and subsequent

changes in clients’ needs. The literature reviewed, attempted to garner a more

profound understanding of contracting sustainably and ensuring a viable business

case.

Table 8 provides a concept analysis of the ensuing literature review. The concept

analysis considers the antecedents, attributes and consequences relating to the

concept being considered as part of the literature review.

Table 8: Patent discipline concept analysis

Over overarching concept - Viability

Antecedents Attributes Consequences

Affective

contracting models

Reputational risk

Rate of progress

does not meet the

need

Need for change

Meeting client needs

Skilled consultants

Sustainable

approach

Meeting needs today

without

compromising

future ability

Adaptiveness

Return on

investment

Improved balancing

of risks and

liabilities

Long-term success

Improved

relationships

Organisational

stability

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When considering the UK Civil Engineering industry, the effectiveness of existing

contracting methodologies are questioned as projects become more complex

(Madigan, 1997). Historically the UK civil engineering industry has proposed pricing

cuts to ensure a sustainable pipeline of work, after which the work was completed in

substandard fashion, by cutting corners and attempting to increase revenue by

managing claims. However, the UK civic industry’s clients have adopted

procurement strategies that prevent these unsavoury practices (Madigan, 1997). It

has been noted that the civil engineering companies who were able at adopt new

methodologies to meet clients’ needs where able to remain profitable (Madigan,

1997).

Consulting engineering houses believe that their expertise and professional skills add

value to the development and design of projects by leading the way to an improved

balance between risks and liabilities. This balance includes the identification of

benchmarks for long-term success for all stakeholders, and the creation of solutions

that are sustainable for the environment, society and the resources used.

(“Sustainable solutions for project financing,” 2001)

The UK civil engineering industry has considered a sustainable approach when the

need for an organisation to prosper is not at the expense of the environment of the

society in which it functions (Simms, 2004). It is further stated that reputational risk

can be limited by ensuring the use of a sustainable approach, whilst fostering

improved relationships with clients, suppliers and contractors. Project efficiency can

also improve by ensuring improved relationships with communities affected by

projects (Simms, 2004).

(Hoverstadt & Bowling, 2005) stated that “viability requires an organisation and

industry to act in such a way that it meets the needs of the present without

compromising the ability of future generations of organisations and industries to

meet their own needs. Therefore, sustainable and viable organisations need to

consider for organisations beyond their own existence. The nuclear industry in

particular needs to grasp this concept as its action greatly influences the future of the

industry” (Hoverstadt & Bowling, 2005).

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“Durability, also referred to as resilience is the ability and capacity to withstand

systemic discontinuities and to adapt a new risk environment, based on actions such

as diagnosing enterprise risks, implementing risk mitigation strategies and enduring

increased risk and complexity” (Chan, 2011).

(Chan, 2011) further argues that organisational resilience is the ability to continually

adapt strategies and business models within a changing environment.

“In the behavioural approach, a resilient organisation has the collective behaviour

and robust response capability to perceive environmental changes quickly and to

implement adaptive responses early.” (Chan, 2011) Chan further states that it is

important for an organisation to locate early warning systems which could enable an

organisation to recognise signals which will disenable an organisation to initiate is

self-renewal process timeously

According to (Sussman, 2004) adaptive capacity is required within an organisation to

effect change. Adaptive capacity has the ability to draw the organisation into a

chaotic direction, thus allowing for change to occur. Organisational capacity within

an organisation pulls it towards stability. Both adaptive and organisation capacity is

required to ensure balance within an organisation. However, in times where change

is required, an organisation may decide to shift all the balance to distort the status

quo in order to effect change.

4.3 Capacity to change to meet client needs

Following from the literature review of the South African mining and EPCM

industries, it remains to be determined whether the industry has the required capacity

to change in order to meet the needs of the changing market.

The literature review conducted within this section aims to provide a comprehensive

understanding of the requirements for capacity to change to meet clients’ needs.

Table 9 provides a concept analysis relating to the focused discipline based on the

ensuing literature review.

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Table 9: Focused discipline concept analysis

Capacity to change to meet client needs


Change is inevitable

Dynamic process

Interconnected

dynamics

Levels of

uncertainty

Strategic Flexibility

Change is complex

Threats viability

Adaptiveness

Prediction of change

According to (Grewal & Tansuhaj, 2001), “Organisations must frequently cope with

anomalous events, referred to as crises, that create high levels of uncertainty and are

potential threats to the viability of an organisation”. Change is therefore inevitable.

These authors questioned the capabilities that a firm must have to build capacity to

manage crises and associated change. “Managers should stress building a skilled

market orientation and strategic flexibility while recognising their usefulness in

managing different facets of the environment” (Grewal & Tansuhaj, 2001).

Organisational change is captured within the adaptive cycle. The adaptive cycles, as

witnessed in all organisations, are much more evident in new and rapidly growing

organisations, as well as within organisations that have recently experienced major

crises (Miles, Snow, Meyer, & Coleman, 2014).

“For most organisations, the dynamic process of adjusting to environmental change

and uncertainty of maintaining an effective alignment with the environment while

managing internal interdependencies is enormously complex, encompassing myriad

decisions and behaviours at several organisation levels. However, the complexity of

the adjustment process penetrated by searching for patterns in the behaviour of

organisations, one can describe and even predict the process of organisational

adaptation” (Miles et al., 2014). Miles further states that most organisations

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continuously evaluate their purpose whilst authenticating the way in which they react

to their environment.

Organisations that are not familiar with change management struggle to implement

and manage change when it is required. Essentially, the ability to manage change can

be related to personal fitness. Without exercise, there would be no fitness.

Organisational fitness creates stamina, agility and strength; all attributes enabling an

organisation to deal with change effectively. “Practitioners have begun to recognize

that an organization’s ability to challenge its own established ways of thinking and

doing things and to successively craft and adopt more effective means is a distinct

form of performance-enhancing organizational capacity” (Sussman, 2004).

(Baser & Morgan, 2008) provided a framework for the capacity to change, as evident

from the relationship with the socio-political dynamics of the context within which

they take place. Figure 35 illustrates the framework as “The heart of the framework

has to do with interconnected dynamics of capacity, endogenous change and

performance, but this dynamic is shaped by four other factors: namely, the external

context, stakeholders, internal features and resources and external intervention”

(Baser & Morgan, 2008).

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Figure 35: Framework for Capacity to Change (Baser & Morgan, 2008)

“The concept of complex adaptive systems thinking can be helpful in understanding

and crafting capacity development interventions involving many actors. It can see the

deeper patterns of behaviour and relationships that lie beneath individual events and

actions, but because it puts less faith in planning and intentionality, it implies looking

differently at causation, attribution and result chains. It encourages people to think

more creatively about disorder, uncertainty and unpredictability” (Baser & Morgan,

2008).

4.4 Drivers of change

The drivers of change are the core variables developed by the Grounded Theory

process. The literature review aims to gain a deeper understanding of the determiners

that may lead to further development of the core variables.

For each core variable, a concept analysis is developed based on the related literature

review.

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4.4.1 Responsible trust between stakeholders

Table 10: Trust concept analysis

Responsible trust between stakeholders


Success factor

Primary goal

Business are created

within a

community of trust

Value proposition

Reliance is not trust

Can only exist

between people

Sophisticated

Authentic

Partnering

Worthwhile journey

Diversity acceptance

Blind trust is

irresponsible

(Solomon, Robert, 2001) stated that “trust and distrust have become the major

concern of successful businesses (whether they know it or not), whether these

businesses are large corporations or small entrepreneurial enterprises. Creating trust

has become the primary goal of business practices.” (Hordes, n.d.) argued that trust is

essential in today’s business: “What would happen if your clients trusted you more?

All kinds of great things such as:

allowing you to enter into their world.

asking your advice,

sharing news that will occur before they actually do;

seeking you to assist other parts of their organization without the constant

focus on price only; and

treating you like a partner who has terrific ideas, acceptable and highly

valued throughout their organization.”

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Trust can only exist between people. Too often the terms trust and reliance are used

interchangeably. It is important to comprehend that a car may be predictable and that

the driver can be confident that it will start every time; however, a trusting

relationship may exist between a mechanic who maintains the car and the

driver/owner of the car. Trust can only be exuded in a reciprocal relationship: “It is

therefore important to note that responsible trusting relationships should not be

confused with reliability of service provision” (Solomon, Robert, 2001). Robert

(2001) concluded that “we are capable of, and what has become necessary, authentic

trust, sophisticated trust, responsible trust, trust with its eyes wide open.”

Building responsible trusting relationships with clients and specialist service

providers is a worthwhile process. The skills obtained during the process have

longevity and create legacy. Providing a skilled service is concerned with building a

trusting relationship that results in successful partnering (Hordes, n.d.).

“Business organisations are typically conceived and born in communities of trust.

Certainly there must be individual ambition and passion, but the myth of the lone

inventor or entrepreneur operating in a vacuum has been firmly laid to rest”

(“Communities of Trust,” n.d.). Therefore, trust is essential in creating the

environment for business evolvement.

(Espejo, 1998) argued that “responsible trust is necessary in order to accept diversity

and increase the organisation’s performance in a demanding environment. This, in

turn, suggests the necessity to move from hierarchical organisations to recursive

organisations.” He further stated that “accepting unpredictability without

corroborating the competencies and sincerity of the others would be to blindly accept

their actions, and therefore would be a case of irresponsible trust.” Hence, supporting

the notion for responsible trust.

(Solomon, Robert, 2001) concluded that “we are now too sophisticated to bemoan

the loss of simple and blind trust, which may have served humanity well in isolated

tribes but became a problem when these tribes came into contact and conflict. What

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we are now capable of, and what has now become necessary, is authentic trust,

sophisticated trust, responsible trust, trust with its eyes wide open”.

4.4.2 Availability of skills and knowledge

Table 11: Skills and knowledge concept analysis

Availability of skills and knowledge


Source of strategy

Future value of

resources

Survival

Success

Skilled resources are

scares, valuable

and not replaceable

Long-term

performance

Barriers to entry by

others

Competitive

advantage

Connor (2002) explained that the resource capability of an organisation is the

primary source for strategy development. The resources within an organisation will

be the source of survival as conditions and external environments change.

Connor further stated that “firms that are able to choose strategic initiatives which

effectively exploit their existing human and social capital while, at the same time,

facilitating the development of new, variable human and social capital, will perform

better in the long run than those that are not able to achieve this synergy between

exploitation and creation” (Connor, 2002).

In supporting the view above (Bryson, Ackermann, & Eden, 2014) argued that

"scarce, valuable, and imperfectly imitable resources are the only factors capable of

creating sustained performance differences among competing firms, and that these

resources should figure prominently in strategy making".

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(Colbert, 2004) supported the resources based view that “a firm develops competitive

advantage by not only acquiring but also developing, combining, and effectively

deploying its physical, human, and organizational resources in ways that add unique

value and are difficult for competitors to imitate”.

“The increased attention to firms’ resources by researchers seemed to be beneficial in

helping to clarify the potential contributions of resources to competitive advantage,

as well as introduce strategy scholars to a number of useful descriptive theories from

industrial organization economics” (Akio, 2005). Akio further argued that “the most

important entrepreneurial abilities for gaining the competitive advantage is the firm’s

skill or accuracy to perceiving the future value of resources” (Akio, 2005).

4.4.3 Effectiveness of market intelligence

Table 12: Market intelligence concept analysis



Future focused

knowledge

Competitive

advantage

World is affected by

global changes and

turbulence

Valuable knowledge

Commitment of

resources and

finances

Trust and market

intelligence is

directly linked

Foreign markets

result in increased

commitment

Enables the

identification of

change

“Consulting statistics and reports are not enough to gain a thorough overview of

future developments in the market. Valuable, practical, qualitative and future-

focused knowledge about the market is to be found in the minds of people who are

active in the market on a daily basis” (de Man, 2012).

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When entering new markets, regions and countries, it results in serious commitment

of financial and people resources, which is particularly true when entering new and

unknown countries (Mitra & Golder, 1997). The timing for entering foreign markets

is increasingly more dependent on economic factors as opposed to cultural factors

(Mitra & Golder, 1997).

Market intelligence is freely available. There are service providers who specialise in

selling market intelligence relating to specific projects’ commencement dates,

locations and required skills. However competitive advantage lies how in the

organisation uses the market intelligence and not merely the access thereto (Maltz &

Kohli, 1996). Maltz and Kohli (1996) concluded that responsible trust and market

intelligence is directly related, since market intelligence obtained directly from the

client that is based on trust is infinitely more valuable.

“The modern business world is affected by global change and turbulence. Companies

need to identify and understand new trends, regulatory change, political change,

competitor moves and customer perceptions. A well-functioning Market Intelligence

system is an important capability that will enable companies to identify and

understand this change.” (“Market Intelligence for the Strategy & Planning Process,”

2007). It is further reasoned that a “balance is needed between models that are

focused on historical and on present time horizons, as well as those that are more

future orientated” (“Market Intelligence for the Strategy & Planning Process,” 2007)

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4.4.4 Efficiency and effectiveness of corporate governance

Table 13: Corporate governance concept analysis



Driven by financial

scandals and

questionable

business practices

Many discipline

impact on the

development of

corporate

governance

System which

directs and

controls

Stronger corporate

governance does

not ensure

increased

performance

Smooth business

performance

Fair investor returns

Too much

monitoring can

lead to lower

returns

(Dharmadasa, Gamage, & Herath, 1997) argued that “corporate governance has

attracted increased attention in the recent past, partly due to financial scandals and

questionable business practices reported in the corporate sector around the world.” It

is widely understood that corporate governance provides the system by which

organisations are directed and controlled (Dharmadasa et al., 1997).

“Theories underlying the development of corporate governance stem from a number

of disciplines, including finance, economics, accounting, law, management, political

science, sociology, and organizational behaviour. Given that many disciplines have

influenced the development of corporate governance, the theories are quite varied.

The main theories that have affected the development of corporate governance are

agency theory, resource dependence theory, transaction cost theory, stakeholder

theory, stewardship theory, classes hegemony theory, managerial hegemony theory”

(Dharmadasa et al., 1997).

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According to Swamy (2011), “corporate governance broadly refers to the rules,

processes, or laws by which businesses are operated, regulated and controlled”.

“Corporate Governance means different things to different people. The process of

ensuring that business performs smoothly and investors receive a fair profit is

described as corporate governance” (Onakoya, Fasanya, & Ofoegbu, 2014). “There

is a difference between strong corporate governance and optimal corporate

governance, as stronger corporate governance does not necessary mean better

performance and higher valuation because costs may offset the benefits” (Onakoya et

al., 2014).

The findings of the study conducted by (Onakoya et al., 2014) revealed that

corporate governance has a negative relationship with banks’ performance in terms

of return on assets, but not in terms of return on equity. This implies that banks’

management are more cautious to improve the prosperity of their owners in

preference to safeguarding the banks’ assets. The researcher concludes from this

statement that corporate governance influences the behaviour of managers to act

conservatively at the cost revenue.

(Bruno & Stijn, 2007) argued that “that too much monitoring and legal protection

may hurt managerial initiative and consequently lower returns and worsen company

valuation”.

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4.4.5 Appetite for risk

Table 14: Risk concept analysis

Appetite for risk


Calculated risk with

foresight

Understanding risk

appetite and

tolerance

Political risks need

to be considered

Balance between

risk and reward

Judgement

Risk requires review

and reporting

Risk is required to

generate profit

Alignment of risk to

broader strategy

(Lysanne, Nash, & Rowe, 2012) argues that a healthy balance between risk and

reward is essential to ensure the existence of an organisation. For an organisation to

make profit, it has to take some risk. There is however, a massive difference

between taking calculated risks as opposed to careless risk taking.

“The starting point for boards is to oversee risk in relation to their organisation’s risk

‘appetite’ and ‘tolerance’ and to align their approach to risk with its broader strategic

aims” (Lysanne et al., 2012).

Globalisation of businesses over recent years have resulted in organisations being

exposed to a wide range of potential dangers. This is not only applicable to global

giants but to any organisations moving into other regions and countries. As the

organisation spreads its wings, so does the exposure to risk (Lysanne et al., 2012).

In more unstable territories, political risks should be considered. Aspects that are

pertinent before expansion into perilous countries include the exit strategy if a

government unilaterally cancels a contract, or even nationalises a company.

Argentina has recently experienced these actions, as the state gained control of the

Spanish oil company YPF Repsol (Lysanne et al., 2012).

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“Organisations will inevitably have to deal with the implications of discontinuities

and disruptions caused by turbulence within their operating environments. This

turbulence can threaten both the operation and survival of an organisation. The

demands and requirements of the business environment are also continually

changing. Turbulence within these environments is therefore defined as the

‘unpredictable change’ in the complexity of an organisation’s environment”

(Lysanne et al., 2012).

Risk management may be the responsibility of line management. However,

processes need to be established to help identify and analyse new risks. The board is

responsible to appoint a suitable risk process owner such as a risk officer to facilitate

the risk process. The risk officer is responsible to engage with all relative parties

who are best suited to understand the potential business risk. It is up to these parties

to analyse all information available and identify the risk which could potentially

impact the organisation whilst developing actions to respond to the risk identified.

The process of risk management can result in guiding strategy and organisational

objective setting(“A practical guide to risk assessment *,” 2008).

“Effective risk management requires a reporting and review structure to ensure that

risks are effectively identified and assessed and that appropriate controls and

responses are in place. Changes in the business and the environment in which it

operates must be identified and appropriate modifications made to systems” (“Risk

Management,” 2011).

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4.4.6 Understanding client needs

Table 15: Client needs concept analysis

Satisfying targeted client needs


Personal

relationships

Precise

establishment of

client needs

Good relationships

Satisfying identified

needs

Targeted customers

Engaged clients

Loyalty

“By studying client’s attitudes, is was found that the most engaged clients rated the

personal relationship with their adviser as "very important" or "critically

important,'"* In other words, we assume the path to engaged clients is paved with

new and better products or services, but clients themselves report that products and

services are basic expectations. The path to engagement is paved with personal

relationships. Clients, especially younger clients who do not feel tied by loyalty, go

where their personal needs are met” (Florain, 2011).

In a project environment, where clients’ needs are not adequately evaluated and

identified, it results in a failure of the initiation of the project. To meet the specific

needs of clients, evaluation criteria needs to be developed that focusses on achieving

the required outcome (Chinyio & Olomolaiye, 1998).

“The concept of customer satisfaction is largely developed in the production sector

and consumer services markets, and is regarded as the raison d’eˆtre for companies’

existence and operations. The provision of service or production of a product offered

for sale should be aimed at satisfying identified needs of the targeted customers”

(Mbachu & Nkado, 2006).

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4.5 Conclusion

The literature review conducted with the associated concept analysis created a

distinct connection, both horizontally and vertically, between the parent discipline,

focused discipline and drivers of change. The literature review provided new insight

regarding the core variables identified within the data collection cycle. Because of

the literature review, the core variables have been adapted as follows:

Table 16: Final core variables following literature review

Initial Core Variable Final Core Variables following literature

review

Responsible trust between stakeholders Responsible trust between internal and

external stakeholders to the point of

achieving partnering

Availability of skills and knowledge Availability of current and future skills,

creating competitive advantage

Effectiveness of market intelligence Effective partnering, ensuring current and

future focused market intelligence

Efficiency and effectiveness of

corporate governance

Efficiency and effectiveness of corporate

governance, achieving smooth

performance

Appetite for risk Appetite for risk, aligned with strategic

objectives

Understanding client needs Satisfying targeted client needs, achieving

engaged clients through partnering

Adaptation to the market environment in meeting client needs (research concern

variable)

Chapter 5 expounds on theory building, thus creating the mechanism that deals with

the concern variable.

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CHAPTER 5: THEORY BUILDING

5.1 Introduction

Metaphors used in the development of theoretical insights have been a controversial

issue within organisational science (Tsoukas, 2008).

It is argued that organisational discourse does not explain an independent reality, but

draws on symbolic concepts in helping bringing reality. As such, metaphors

encourage different thinking, allowing scientists and ordinary people to explain and

influence different aspects of complex organisations (Tsoukas, 2008). Conversely, as

much as the use of metaphors is inevitable, at more mature phases of scientific

enquiry, the researcher should dispense with metaphorical language in preference for

literal language (Tsoukas, 2008). (Tsoukas, 2008) argued that both concepts are to

merge the metaphorical language with the organisational science to form literal

language, thereby complementing each other.

This chapter demonstrates the process of using a metaphor to provide scientific

meaning to the research that was conducted through a process of isomorphic

mapping.

5.2 Theoretical and conceptual foundation for the theory building

process

In Chapter 2, the theoretical and conceptual foundations of the research methodology

were discussed, except for the theory building process. For the purpose of clarity, the

theoretical and conceptual foundation for the theory building process is included in

Chapter 5.

The theoretical and conceptual foundation of the theory building process is presented

in Figure 36, as initially provided by Tsoukas (2008).

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Figure 36: The Transformation of Metaphorical insights into Scientific Models (Tsoukas,

2008)

Metaphorical insight makes use of metaphors to provide insight into the research

study that has been conducted. According to the Oxford English Dictionary, as cited

by Tsoukas (2008), a metaphor is “the figure of speech in which a name of

descriptive term is transferred to some object different from, but analogous to, that

which is properly applicable”.

According to (Tsoukas, 2008), three types of metaphors can be distinguished, namely

live metaphors, dead metaphors and dormant metaphors. Live metaphors are most

useful as they particularly lend themselves to further conceptual development.

Mapping considers the elements of Set A that can be corresponded in various ways

to elements of Set B (Tsoukas, 2008). Homomorphism involves a many-to-one

transformation while preserving operational relationships (Tsoukas, 2008), e.g. when

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a map is drawn of an area, the higher order relationships are maintained at the

expense of lower order relations. The river drawn on the map as a blue line whilst the

detailed colour of the river is not indicated as it constitutes a lower order relationship.

When mapping takes place, it requires a set of rules that must be followed. For

example, if the alphabet is mapped to a corresponding letter, it must be ensured that

there is only one number for every letter of the alphabet; then one-to-one

transformation has been achieved. Mapping that involves one-to-one transformation

while simultaneously preserving the operational relations is an isomorphism

(Tsoukas, 2008). The easiest way to explain would be to consider a town and the

map representing the town. The map would therefore represent an isomorphic

relationship of the town.

However, achieving an isomorphic scientific model is not always possible.

5.3 The phases of the theory building process

5.3.1 Managerial portion of the theory building process

Chapter 1 of the research study provided insight about the empirical perspective of

the research by providing background to the situation and developing a rich picture

of the situation. The rich picture was a graphical representation of the empirical

perspective. Chapter 1 also provided a theoretical perspective that considered the

research goal, research question and the conceptual framework for the research

study.

From chapter 1, it was evident that the mining industry is currently experiencing a

downturn in the market as less projects are available. EPCMs servicing the industry

need to ensure that they can adapt their value offerings to meet the needs of clients

within the current changing market.

Chapter 2 provided the methodology that was employed by the research study. The

methodology provided a framework of Grounded Theory by utilising critical realism

and action research that are inclusive of idealised design.

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Chapter 3 provided the results of the research conducted, up to the point of

identifying the core variables associated with the research data. The literature review

conducted in Chapter 4 provided additional information and insight regarding the

core variables.

To determine the interplay between the core variables, an inter-relationship diagram

was developed by delineating the core variables, as illustrated in Figure 37.

Figure 37: Inter relationship diagram of core variables

From the inter-relationship diagram, it can be concluded that responsible trust

between stakeholders within the industry community, achieving partnering was the

strongest determiner. The appetite for risk, aligned with strategy objectives was the

strongest outcome of the inter-relationship diagram.

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5.3.2 The scientific portion of the theory building process

The metaphor selected to provide metaphorical insight was the Dakar Rally. The

similarity between the Dakar Rally and the research is based on the Dakar Rally’s

position and function within the greater motor racing industry. The Dakar Rally is

structured to test the durability, viability, adaptive ability and relevance of the race

within the motor racing industry. The purpose of the Dakar Rally is to test the skill of

the driver and support crew through the most challenging off-road endurance race in

the world. To complete the Dakar Rally is a victory in itself.

The Dakar Rally is an annual rally raid organised by the Amuary Sports

Organisation. The first Dakar rally took place in 1978 with a race from Paris, France

to Dakar, Senegal. Due to security threats in Mauritania, the 2008 rally was

unexpectedly cancelled. From 2009 onwards the Dakar Rally was moved to

Argentina and Chile within South America. The race is open to professional and

amateur entries. Surprisingly almost eighty present of participants are amateurs.

Despite its "rally" name, it is an off-road endurance race, hence being referred to as a

rally raid as opposed to a conventional rally. The Dakar Rally negotiates much more

rugged and tougher terrain, resulting in the use of true off-road vehicles. The route

includes crossing dunes, mud, camel grass and rocks amongst others. The distances

of each stage covered vary from short distances up to 800 and 900 kilometres each

day.

The topic of the research considered the future of the EPCM industry and aimed to

answer the research question: “With the current change and focus on markets, how

can project-engineering houses adapt their value offering to clients in order to

maintain a positive business case whilst sustaining a mutually beneficial relationship

with contractors and clients?” For the EPCM industry to survive, it needs to be

profitable and must create value for its stakeholders on a sustainable basis. To be

profitable and create value, it needs to ensure that it has sufficient capability to adapt

its value offering to meet client needs within a changing downturned market.

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One of the main elements of competing within the Dakar rally is the ability of the

competitor with his support crew to adapt to the constantly changing situation of

climate and road conditions with the intent to complete the race in the best time

possible. The EPCM industry is a complex environment with a high focus on its

resources to create the required value proposition. Equally so the Dakar rally is

complex in its nature and is reliant on the resources within the race to ensure its

successful operation.

The metaphor was extended to identify other concepts that relate the EPCM industry

to the Dakar Rally. As a result, seven concepts where identified as depicted in Figure

38.

Figure 38: The Dakar rally metaphor

Each of the concepts identified are further developed within the ensuing section.

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5.3.2.1 The level of torque required to cover the difficult terrain

Table 17: Torque concept analysis

The level of torque required to cover the difficult terrain


Need to drive fast

Need to drive

through sand and

rough terrain

Flexibility

Adaptive

Increased torque

Increased speed

The Dakar rally requires torque to drive the racing vehicles through thick sand and

rough terrain. The transmission reduces the higher engine speed to the slower wheel

speed, increasing torque in the process. The torque required may differ from vehicle

to vehicle. The heavy truck requires substantially more torque as opposed to

motorcycles. Furthermore, on flat and fast surfaces, less torque is required in

exchange for speed. This function is achieved through the various gear ratios

produced by the gearbox.

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5.3.2.2 Driver awareness of route and danger ahead

Table 18: Driver awareness concept analysis

Driver awareness


Planning Awareness Knowledge of

dangers ahead

Correct set up

Adapting driver

style

To navigate the treacherous Dakar Rally requires planning and awareness of the

dangers ahead, therefore route intelligence is paramount. With knowledge of the

route ahead, the vehicle is set-up to best manage the terrain, allowing the driver to

adapt his driving style and speed to best match the terrain.

5.3.2.3 Skill of the driver to manage the dangerous race

Table 19: Skill concept analysis

Skill of the driver to manage the dangerous race


Management of

dangerous race

Skilled driver

Experience

Quick driving

Safe driving

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To manage the Dakar Rally requires a skilled driver with sufficient off-road

endurance experience. A skilled driver can make best use of the vehicle’s capabilities

and armed with the knowledge of the road ahead, the driver is able to navigate the

dangerous route as quickly and safely as possible.

5.3.2.4 Level of trust that exist between driver, co-driver, support crew and race

organisers

Table 20: Level to trust concept analysis

Level of trust


Need to perform Responsible trust Best performance

Team work

Success

Responsible trust plays an important role within the Dakar Rally. The driver can best

perform when a responsible trusting relationship exists between him and his crew.

The reliability of the vehicle is established in the trust the driver has with his

maintenance crew. Equally so, the driver and co-driver of a vehicle can only preform

optimally when the responsible trusting relationship between the driver and co-driver

is such that the driver will act on instruction of the co-driver while unaware of what

lies ahead.

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5.3.2.5 Understanding of the required vehicle (Truck, car or bike)

Table 21: Understanding what will be raced concept analysis

Understanding what will be raced


Ensuring that the

correct driver is

driving the

required vehicle

Understanding the

need

Correct skill for

what is to be raced

Meeting the

objective

The skill set required to ride a bike through the Dakar Rally is vastly different from

the skill set required to race a truck. A clear understanding of what is required for

each vehicle that is being raced is required, and to ensure that the correct driver and

support crew is selected with the required skills.

5.3.2.6 Level of governance maintained through ensuring skill of participant

Table 22: Governance Concept analysis

Level of governance maintained through ensuring skill of participant


Potential of death Governance Signed indemnity

Licenced drivers

Limited liability

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The Dakar Rally is dangerous, with the potential to take lives. Therefore the required

governance is necessary to ensure all drivers are licenced race drivers. An indemnity

must also be signed to free the race organisers from any liability in the event of an

accident or death.

5.3.2.7 Level of risk due to increased speed

Level of risk due to increased speed


Need to drive fast Risk Driving within

acceptable risk

Safety

Continuous smooth

performance

The Dakar Rally is a race where speed is essential to win the rally. However, it is not

speed at all cost. Since it is an endurance race, the vehicle must complete the entire

route. The increased speed at which the vehicle is driven increases the driver’s and

by extension, the vehicle’s risk. Risk, therefore must be maintained at acceptable

levels. However, without risk being taken, there would be no chance of winning the

rally.

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5.4 The application of the theory building process

The application of the theory building process is to assimilate the insights gained

from the Grounded Theory process with that of the metaphor. The similarities

between the metaphor variables and that of the Grounded Theory process are

compared with the intention to gain insight regarding the behaviour of the concern

variable compared to that of the metaphor. A scientific model is achieved if

isomorphic mapping take place. If this is not achieved, then a conceptual model will

have been achieved.

The inter-relationship diagram is used to gain understanding of the interplay between

the metaphor variables.

Figure 39: Metaphor inter relationship diagram

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The inter-relationship diagram of the metaphor was used to develop the causal loop

diagram of the metaphor, as illustrated in Figure 40.

Figure 40: Causal Loop Diagram of the Metaphor

From the causal loop, two reinforcing loops exist with one balancing loop. The level

of risk due to increase in speed creates a limiting factor, resulting in the balancing

loop.

The researcher attempted to create isomorphic mapping between the metaphor and

core variables, as displayed in Figure 41.

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Figure 41: Isomorphic mapping of core variables

The researcher attempted to achieve one-to-one transformation whilst preserving the

operational relations. The skill of the driver mapped to the “availability of current

and future skill, creating competitive advantage” within the project-engineering

house industry. The level of torque required mapped to the “poor adaptation to the

market environment in meeting client needs”. During the Dakar Rally the racing

vehicle needs to adapt torque requirements to meet various situations, equally the

EPCM industry needs to adapt its value offering to meet market requirements.

The level of governance within the race needs to allow the race to be conducted as

safely as possible without limiting the race. Equally so, corporate governance needs

to be effective and efficient to ensure the organisation is suitably protected without

limiting the organisations ability to perform according to the clients’ needs and

requirements.

The level of trust between the driver and other stakeholders must be authentic with

the required accountability and understanding the possibility of distrust. Equally so,

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responsible trust needs to exist between stakeholders within the industry community,

achieving partnering with a clear understanding of accountability and consequence

in the event of trust being broken.

The driver of the Dakar Rally must be aware of the route ahead and its associated

challenges. For the EPCM industry to provide the required service timeously to the

market, it needs to have effective current and future focused market intelligence.

Additionally, the driver of the rally must be aware of the vehicle that he will be

racing, being either a car, bike or truck. Similarly, the EPCM needs to satisfy

targeted client needs, and achieve engaged clients through partnering. On the basis of

fundamental evaluation, this metaphor is a homomorphism, therefore the research

study did not achieve isomorphic mapping.

Without risk, the Dakar Rally cannot be won. However, it cannot be risk at all cost.

Equally, for an EPCM to succeed in winning the required contract, it is required to

take some risks. As with the Dakar Rally, these risks must be understood and

quantified.

5.5 Causal loop Diagram (CLD) of core variables

The CLD of the core variables are presented in a systematic approach and the context

of each core variable discussed, as proposed in Figure 42.

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Figure 42: Causal loop diagram - phase 1

For the EPCM industry to be successful there must be skills and knowledge available

to manage current projects while ensuring reserve capacity to manage and win new

project opportunities as these become available. A responsible and authentic trusting

relationship must exist between internal and external stakeholders. The EPCM

industry within the mining and mineral processing industry is regarded as a

relationship industry. Trust with acceptance of accountability therefore needs to exist

between all stakeholders. According to(Connor, 2002), the survival and success of

the industry is dependent on the resources available within the industry.

In the past, the EPCM industry has been blamed for not listening to their clients and

not providing the service requested. It is, therefore, important for the industry to

make it a priority to understand the needs of their clients and provide the service

expected.

In today’s complex world of large project-engineering houses, good corporate

governance is required. Industry however must guard against corporate governance

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becoming too restrictive, resulting in potential inflexibility and lack of nimbleness

within the industry.

The four core variables discussed form a reinforcing loop within the CLD, as

depicted below.

Figure 43: Causal loop diagram - phase 2

Building on the aforementioned, effective market intelligence is required to ensure

that the EPCM industry can ready itself for opportunities and needs within the

market. As discussed in Chapter 2, within the VSM model the S4 activity is

responsible for focussing on future activity. With the required market intelligence

that is complemented by responsible trust between all stakeholders, the industry can

adapt its value offering to meet the needs of clients and changing markets.

For industry to survive and excel, it needs to, on a continuous basis evolve its value

offering to meet the needs of the market. The resource industry is continuously in a

state of flux, with client needs changing accordingly. The ability of the industry to

adapt its value offering to complement the market intelligence that has been gathered

forms the second reinforcing loop within the CLD.

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As industry adapts its value offering, it inevitably exposes the industry to various

levels of risk, as revealed in Figure 44.

Figure 44: Complete Causal loop diagram

A pure rate reimbursable EPCM contract holds the least amount of risk to an EPCM,

whereas a lump-sum turnkey contract holds the greatest risk. In addition,

consideration must be made regarding the location of the project as well as the

reputation/identity of the client. In the past 10 years, most EPCMs have done

extremely well by completing projects for large mining houses within South Africa.

The market has however changed to opportunities north of South Africa beckoning

for investment. This new frontier holds promise, but also holds challenges, as many

of these clients are new and relatively unknown.

The appetite of industry to accept risk creates a limitation. The EPCM industry must

survive; in order to survive it must accept risk. However, risk needs to be quantified.

Winning and completing projects have to be within acceptable limits of risk to ensure

the long-term viability of the industry. The appetite for risk must be aligned to the

strategy objectives that form the balancing loop within the CLD.

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5.6 Context – Mechanism – Outcome

Context Mechanism Outcome (CMO) reveals the required outcome for the

researcher. Within the CLD section, the context of each core variable was discussed

with the CLD forming the mechanism within the CMO.

Figure 45: Context – Mechanism - Outcome

The concern variable identified as part of the research study is the “level of capacity

to adapt value offering”. From the research study, it has become apparent that for the

EPCM industry to survive, it needs to continuously adapt its value offering to meet

clients’ needs. Therefore, EPCM’s must ensure it has skilled industry leaders and

resources available that exhibit responsible trusting relationships with internal and

external stakeholders. According to the idealised design, external stakeholders

include clients, contractors as well as equipment suppliers. Industry however must

uphold a responsible view on risk taking whilst maintaining efficient market

intelligence and effective corporate governance.

In conclusion, the theory building process that was employed in this research study

(presented in Figure 46) is a graphical representation of the theory building

framework applied from concern variable to CMO.

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Figure 46: Theory Building Framework

5.7 Idealised design

5.7.1 Ends Planning

The Ends Planning or idealised design concept surfaced during an interview with

Digby Glover, the CEO of WorleyParsonsRSA. Mr Glover receives credit for this

concept, as he formulated it during the interview.

In ideal situations, EPCMs need to form the core relationship between clients,

contractors and equipment suppliers with regard to capital projects that are related to

the mining and mineral processing industry. This idealised design is best represented

by Figure 47: Idealised Design

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Figure 47: Idealised Design

At the core of the structure, project-engineering houses must ensure they have strong,

responsible trust relationships between all internal stakeholders. Responsible trust is

reciprocal and exists in the face of distrust. Trust cannot exist if distrust is not a

possibility (Solomon, Robert, 2001).

Sufficient skill levels (industry leaders) and knowledge need to be available to

capture opportunities presented whilst having sufficient knowledge of clients’ needs

and the willingness to risk sufficiently to meet client needs. In the idealised design,

the engineering project house industry is central to the relationship between client,

contractor and equipment supplier. To maintain this responsible trusting position, the

project-engineering house industry must demonstrate knowledge of the project, the

equipment and the contractor to provide the best solution to the required capital

project. The knowledge and expertise that are inherent to the EPCM is such that it

facilitates the most cost effective and efficient solution to meet client needs. The

responsible trusting relationship must extend to both contractor and equipment

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supplier, thereby establishing the required ethical relationship and transparent

structure to act in the best interest of all parties concerned.

5.8 Practical adequacy of the theory

“Glaser and Strauss (1967, p. 237) provide some guidance for evaluating the

empirical grounding of a Grounded Theory” (Douglas, 1997). For the theory to be

practically adequate, it needs to meet the following concepts: Fit, Understanding,

Generality and Control.

The criteria for “fit” determines whether the theory developed from the data

corresponds to the real world data, i.e.: Does the theory fit the fact and the context?

The theory developed matches the real world in that a viable industry requires

effective market intelligence supported by available skilled teams with responsible

trusting relationships with all stakeholders whilst maintaining good corporate

governance and meeting the needs of its clients. With the aforementioned in place,

the EPCM industry can adapt its value offering insofar as it does not exceed the risk

profile it is willing to take.

The criteria of “understanding” determines whether the theory developed makes

sense to its reader. Making use of the well-known Dakar Rally as the metaphor for

EPCM change allows the reader to draw similarities from the metaphor with the data

that was investigated. The idea that the Dakar Rally is a competition that requires

completion and hopefully winning, meets the criteria as discussed under “fit”.

The criteria of “generality” determines whether the theory developed is sufficiently

abstract to move beyond the context of the study, i.e.: Can it be applied to other

situations?

The professional service industry requires responsible trusting relationships with

both internal and internal stakeholders to build relationships to the point of achieving

partnerships. For the service industry to increase its capacity to adapt its value

offering, it requires the presence of responsible trust to the point of achieving

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partnerships. The three companies that represented the industry are very large

organisations. Further research may be required to confirm if the theory will be

applicable for small consulting firms.

The criteria of “control” determines whether the theory developed can be applied to a

real-world experience context, i.e.: Can the theory be applied practically in real-life

situations or is it simply an agreeable theory?

The theory developed considers market intelligence, risk, trust, adaptation, skills,

client needs and corporate governance. All these aspects are vitally important within

the world of the professional service industry. Developing trusting relationships to

the point of achieving partnering is paramount to the success of business.

Furthermore, the trusting relationship facilitates the development of superior market

intelligence, formed by personal relationships with the client base.

From the above, it can be confidently stated that the practical adequacy of the

theory’s development has been achieved.

5.9 Conclusion

This chapter provided an overview of Beer’s theory building (Tsoukas, 2008) and the

application thereof. The theory developed did not reach a full scientific model, as the

metaphor had been adapted during the building process to match the requirement of

the core variables.

The theory that emerged provided insight into the requirements to achieve an

applicable model. As such the EPCM industry can use the model to change its value

offering to meet the needs of clients in the current changing resource market while

maintaining responsible trusting relationships with both contractors and equipment

suppliers.

The following chapter considers the relevance, validity and utility of the research as

well as the limitations associated with the research. It also provides

recommendations for future research.

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CHAPTER 6: CONCLUSIONS AND EVALUATIONS

6.1 Introduction

The previous chapters discussed the results associated with the research study and

the development of a theoretical model. The concluding chapter emphasises the

implications and consequences of the research results whilst testing these against

relevance, utility, validity and ethics (RUVE).

The chapter also gives consideration to the limitations of the research whilst

providing consideration to further investigation that may be required in the future.

6.2 Implications and consequences of the research results for the

researcher

Currently the EPCM industry within the mining and mineral industry in South Africa

is in a threatening environment. The past year has resulted in enormous pressure

being placed on commodity prices. The current reduction in the oil price has added to

the pressure on the resource industry.

The poor commodity prices have seen numerous mining projects either curtailed or

deferred. This has added to the pressures from the cost of energy and the continuing

challenges with the labour force.

Interviews and discussions related to the topic of research created energetic debates

and discussions as all parties were equally motivated to succeed within the industry.

The research process and the ensuing results allowed an opportunity for all parties

concerned to consider the current situation. The most profound small win achieved

by the research study was that it created and stimulated awareness of the situation.

The primary initiator to enable the industry to build capacity to adapt was identified

as building responsible trusting relationships with internal and external stakeholders

to the point of achieving partnering, as demonstrated in the CMO and illustrated in

Figure 48.

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Figure 48: Context-Mechanism-Outcome for the project house industry

The implications and consequences of the research have emphasised the need of the

industry to build capacity to adapt, thus meeting client needs within the current

changing market. Failure to react to this need may result in the collapse of the

industry, as the market will find alternative models to meet the needs of the mining

industry.

The goals of the research study were achieved. The research study provided the

researcher with the insight to understand that a successful model is only possible

whilst responsible trusting relationships are built to the level of achieving partnering.

The requirements of enabling the industry to adapt are systemic with responsible

trust being the main determiner.

On a personal level, the research process provided the researcher with the

opportunity to engage with all stakeholders through normative management, thereby

achieving the required level of strategicness to effect the awareness of the need for

change.

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6.3 Relevance, Utility, Validity and Ethics

6.3.1 Relevance

The large EPCM industry in South Africa has evolved to the point where most of the

service providers to the mining and mineral industry have become large

organisations, structured to provide their services to Tier 1 clients. The industry has

developed due to resource expansion and growth experienced in the country in the

past 20 years. To meet the needs of Tier 1 clients, service providers developed ISO

compliant systems and procedures with associated corporate governance, all adding

to the overhead cost structure of the industry. For the EPCM industry to survive and

stay relevant, it needs to maintain and improve its capacity to adapt its value offering

to meet the needs of client within the current changing and market.

Ivanhoe mines recently appointed Murray & Roberts, a construction company, to

design and engineer the headgear for the new Platreef mine (“Ivanhoe Mines,”

2014). This is one example where work that has historically belonged to the EPCM

industry has been awarded to contractors.

It remains to be determined whether the EPCM industry has become overconfident

and in doing so, has failed to understand the needs of clients in the current changing

market. Furthermore, it must be ascertained whether the EPCM industry failed to

maintain responsible trusting relationships with all stakeholders. In the past year,

most of the EPCMs have undergone large-scale restructuring, and the effects of the

restructuring remains to be documented, inasmuch as the impact thereof has not yet

been fully understood.

It is generally accepted that in the current market, the client has the upper hand as

there are fewer project available, resulting in fierce competition for work. For the

industry to survive and stay relevant, it needs to continually adapt its value offering,

whist understanding the risks associated with those adaptions.

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The research and associated discussions are very relevant within the current

declining market. However, if the downturn is short-lived and is followed by another

boom period, this current research study would be less relevant.

In using the Toulmin model, the concern for the adaptation to the changing

environment in meeting client needs optimally is illustrated in Figure 49, as it is

related to the current EPCM situation.

Figure 49: Illustration of argument for relevance

6.3.2 Utility

As stated above, the mining and mineral processing industry is currently

experiencing a downturn, affecting the EPCM industry servicing capital projects.

The concern emphasised by the research study is the capability of the industry to

adapt its value offering. To achieve utility, the researcher considered whether a

sufficient answer to the research question addressed the concern.

The research study’s fundamental research question asked the following: “With the

current change and focus on markets, how can project-engineering houses adapt their

value offering to clients in order to maintain a positive business case whilst

maintaining a win–win situation for contractors and clients?”

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From the research it was apparent that for the EPCM industry to survive and

continuously adapt its value offering to meet client needs, it needs to ensure that it

has skilled industry leaders and resources available that have responsible trusting

relationships with internal and external stakeholders to the point of achieving

partnering. According to the idealised design, external stakeholders include clients,

contractors as well as equipment suppliers. Industry however must maintain a

responsible view on risk-taking whilst maintaining efficient market intelligence and

effective corporate governance. The answer to the research question is a systemic

answer, in that each element has an impact on the next. As such, the EPCM industry

needs to ensure that it considers all the elements of the developed theory to ensure

continuous evolving of the value offering to meet clients’ needs.

The answer provided adequately addresses the research question and in doing so

meets the requirement of addressing the concern stated above. It must be

remembered that the theory is applicable in the current market but may become less

relevant in a boom cycle, where skills are a scarcity and clients are willing to pay and

absorb all risk to ensure their projects are sufficiently serviced.

6.3.3 Validity

The validity of the research is ensured by making use of Grounded Theory and

critical realism to develop the mechanism providing the insight to answer the

research question posed. The data collected by interviewing multiple industry

practitioners, clients and contractors gleaned multiple perspectives of the research

topic. All participants of the interview and discussion process were very willing to

share their views and opinions.

Acknowledgement must be given to the executives of the various EPCM’s who

willingly participated in the research process. Their participation allowed an industry

perspective to be observed and collected.

During data collection, care was taken to record all interviews. Propositions collected

through the interview process were returned to the interviewee for confirmation of

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the accuracy thereof. The interviewees made some corrections. By following the

Grounded Theory process to collect data, the research study achieved credibility.

Dependability was achieved by the successful implementation of the Grounded

Theory process, and by making use of the interactive research model as developed by

(Maxwell, 2008). The audit trail of the research is well documented and open to

scrutiny to ensure confirmability was achieved.

The current downturn in the resource industry and associated projects created a

suitable environment to discuss the research topic, as all parties were exposed to the

difficult situation. The researcher doubts if the same willingness to participate in the

process would have been possible in a commodity boom cycle.

From the researcher’s perspective, the theory developed is transferable to other

professional service industries where the adaptation of value offerings are paramount

in a restrictive market. The true test of transferability of knowledge rests in the hands

of the reader of the report.

Credibility

Data was mostly collected through a process of interviews. To ensure sufficient

triangulation, the interviews focused on a variety of interviewees categorised into

three groups, namely project managers, industry executives and clients.

To increase the potential of triangulation an interview was conducted with one of the

largest construction company executives in South Africa. The company in question

has actively promoted a solution to clients that excludes the services of EPCMs.

The research process of Grounded Theory and Ackoff’s idealised design was

rigorously followed, thus ensuring that data was accurately recoded and analysed.

Transferability

The researcher could not determine the transferability of the research results.

However a hypothesis was constructed from the the findings of the report that would

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be transferable to similar industries where project houses deliver services outside of

the mining and mineral processing industry. The oil, gas and power industry could

potentially have similar conditions.

Dependability

The process of Grounded Theory was well used and adhered to throughout the

process of collecting the data. The interactive model as developed by Maxwell was

used to develop the methodology in preparation for the research been conducted.

Based on the aforementioned results, Figure 41 represents the life cycle of a

proposition from initial proposition to a core variable.

Grounded Theory was used to collect all data relevant to the methodology developed

as part of the interactive model. To ensure the validity of propositions collected, the

collected propositions were sent to the interviewees for acceptance, as evidenced

from Appendix 2.

Confirmability

The research audit trail is well documented and open to scrutiny by the reader.

Confirmability can improve by allowing more time to reach saturation and by

allowing data been collected by more than one person.

6.3.4 Ethics

According to (Velasquez, Andre, Shanks, & Meyer, n.d.), ethics consist of two

fundamental things. Firstly, ethics refers to the well-founded standards of right and

wrong that guide what humans ought to do, usually in reference to rights,

obligations, benefits to society and fairness.

Secondly, ethics refers to the study and development of an individual’s ethical

standards. There is not a set of laws or rules that define the nature of ethics.

Individuals exist in a changing society and as such there is a need to consistently

challenge and examine ethical standards to ensure that these are well founded.

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Valesquez et al (n.d.) proposed five sources of ethical behaviour to be used in

defining ethical behaviour: the utilitarian, rights, fairness or just, common good and

virtue approach (Velasquez et al., n.d.). The utilitarian approach considers

consequences and aims to increase good whilst reducing harm. For example, ethical

warfare balances the good in ending terrorism with the harm done to all parties. The

rights approach considers viewing that all humans are individual and having the right

to choose. Therefore the right approach has a duty to respect the rights of all.

The fairness or just approach considers that individuals should treat all human as

equals and if it is considered to treat humans unequally, then actions are required to

be defensible, i.e. paying company executives more than normal workers or by

paying someone who work harder a better salary.

The common good approach considers that life in the community is good and that all

actions within the community should add to the good life within the community.

Laws that govern actions and laws that govern service providers can be developed

for the basis of the common good approach. Lastly, the virtue approach considers the

kind of person an individual would become if the individual committed to this action

and willed it to develop his/her character to the highest potential.

Have the implications of the research maximised the benefit to the mining

industry whilst minimising the negative impact on the industry and its

stakeholders?

The research had the ability of creating harm by challenging the beliefs of others that

the industry is not as nimble or as able to adapt its value offering as could be

believed. However, the outcomes of the research study confirmed that focusing on

creating responsible trusting relationships with internal and external stakeholders

maximises the benefit for all.

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Have the implications of the research affected the rights of any of the

stakeholders?

The rights of every person interviewed as part of the research were respected. The

researcher challenged certain comments made during the interview process in order

to stimulate debate, but at no time were the comments made by an interviewee

ignored or discarded. The focus on increasing responsible trusting relationships does

not affect the rights of any of the stakeholders, as each stakeholder may opt not to

agree with the view and cannot be forced to agree with the views of this research

study.

Have the implications of the research affected the fairness or justness of any of

the stakeholders?

The question could similarly be asked: “Why did the researcher not interview an

equal amount of project managers, project house executive and clients?” Access to

project managers and project house executives were more readily available as

opposed to clients during the process of the research. However, the information

provided by each interview was equally weighted, i.e. the opinions of a project

executive did not have more impact when compared to a project manager’s

responses. The outcome of the research is open to scrutiny of all and as it represents

the ontology of the researcher; it is not forcible on any stakeholder.

Has the implication of the research acted within the common good of all

stakeholders?

The purpose of the research was to act within the common good of the engineering

project house industry without negatively affecting any other industry. The

development of responsible trusting relationships with internal and external

stakeholders is within the common good of all.

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What implication has the research had on the virtues of the researcher?

In this regard the research has allowed the researcher to develop his own

understanding of the subject and has strengthened his character to manage the

process of increasing the level of capacity to adapt within the sphere of his influence.

6.4 Limitations of the research and the need for further work

Through the research, the rich data collected guided the researcher in gaining a more

profound understanding in the mechanisms that enable the industry to build the

capacity that is required to adapt the level of its service offering to meet client and

market needs.

The research however only built a theory of what is required based on the workings

of the researcher. To prove the applicability of the research, it has to be tested within

practice by multiple parties to gain multiple perspectives whilst emerging new

insights are to be added to the research that has already been completed.

6.5 Conclusion

Should the current downturn in the mining sector continue, the EPCM industry

servicing the mining industry will be forced into a position of change to meet the

opportunities available. This will require a high level of capacity to adapt to the

industry’s value offering to meet the needs of clients and the market.

Should the industry return to a boom cycle, EPCMs will have to be mindful of the

factors that enable the industry to adapt, thus ensuring that the value offering being

presented is built on a responsible trusting relationship with all internal and external

stakeholders to the point of achieving partnering.

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APPENDIX 1. INTERVIEW LOG – AUDIO

An audio log has been kept of all interviews that were conducted during the research

process, for referencing and ensuring accurate recording of propositions.

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APPENDIX 2. EXAMPLE OF FEEDBACK FROM INTERVIEWEE

Interviewees were asked by email to confirm the accuracy of the propositions

recorded. Below is an example of feedback received.

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APPENDIX 3. CONCEPT ANALYSIS OF CORE VARIABLES

Concept Antecedent Attribute Consequenc

es

Broader

Context

Core

Variable

Level of

Corporate

Governance

Need for

sufficient

levels of

corporate

governance

to ensure

effective

management

The need to

ensure that

corporate

governance

does not

become a

hindrance

for the

organisation

to perform

its intended

purpose

The ability

to ensure the

effective

level of

corporate

governance

is

maintained

Should the

level of

corporate

governanc

e be

maintained

to ensure

an efficient

business

without

corporate

governanc

e

becoming

a

stumbling

block or

the lack

thereof

putting the

business at

risk

In today’s

complex

business

environme

nt,

corporate

governance

is required

to protect

the

business

from itself.

Corporate

governance

does

however

have the

ability to

stifle

operations

if

incorrectly

applied

Efficiency

and

effectivenes

s of

corporate

governance

Quality of

skill set

To ensure

the required

level of

service is

provided

based on

having the

required

skilled and

motivated

work force

Service

provision

and agility

thereof is

only

possible

when the

organisation

has the

required

skilled

Work in

the project

house

environme

nt often

obtained,

based on

having the

required

skill set

available.

An

engineerin

g project

house is

only as

good as the

people

they

employ

and their

ability to

Availability

of skills and

knowledge

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es

Broader

Context

Core

Variable

and industry

experts

personnel

available

Relationshi

ps are also

built with

skilled

team

member as

opposed to

the

organisatio

n

motivate

the skilled

employees

to perform

Level of

agility to

meet market

needs

An

organisation

can only

meet the

requirements

of a

changing

market if it

has the

ability to

adapt to the

needs of the

changing

market

Agility is the

ability of an

organisation

to adapt its

service

offering to

meet the

needs of a

changing

market

Agility at

all cost

would put

the

organisatio

n at risk.

However

sufficient

agility

within the

bounds of

the

organisatio

n structure

will ensure

an

sustainable

organisatio

n

Agility

needs to be

achieved

within the

bounds of

the

organisatio

n to ensure

a stable

platform to

operate

from.

Level of

capacity to

adapt value

offering

(Note that

this is the

same as the

research

concern

variable)

Quality of

relationship

s

Relationship

s build based

on tangible

experience

with

individuals

and not

organisation

Trusting

relationships

are built on

the back of

professional

competence,

open

communicati

Open

exchange

between

client and

service

provider.

Efficient

and agile

Relationshi

ps cannot

exist in the

absence of

trust.

Relationshi

ps allow

for market

Responsible

trust

between

stakeholder

s

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es

Broader

Context

Core

Variable

s

Relationship

build on

reciprocal

gestures

Effective

and open

communicati

on (McCabe

&

Sambrook,

2014)

on and

confidentiali

ty

service by

service

provider

Trust

based on

good

performan

ce from

service

provider

insight,

thus

allowing

the service

provider to

position

himself

such to

provide the

best and

most

efficient

service

Willingness

to risk

Within the

changing

market,

service

providers

need to be

willing to

risk in order

to meet

client-

changing

needs.

Skilled

resources

and

confidence

in their

ability to

perform

Confidence

in systems to

be able to

limit the risk

being taken

Increase

agility

Potential

increase in

profitabilit

y

Increased

market

The

service

industry

been built

on a

recognised

model of

EPCM rate

reimbursab

le.

Moving

away from

this model

increases

business

risk to the

service

provider.

Appetite for

risk

Level of

Market

understandi

ng

In order to

position the

industry to

meet market

High level

of accurate

market

intelligence

Timeous

market

intelligenc

e, allowing

In the

current

volatility ,

market

Effectivene

ss of market

intelligence

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es

Broader

Context

Core

Variable

needs, it

needs to

have an

understandin

g and

intelligence

of the

market

(VSM S4)

for the

industry to

position

itself to

meet

market

requiremen

ts

intelligenc

e is

paramount

to ensure

industry is

correctly

poised to

meet the

demands

of the

market

Understandi

ng client

needs

Clear

communicati

on with

clients

Trusting

relationship

with clients

Alignment

of service

offering to

client needs

Business

model

developed to

meet client

needs

Allowing

sufficient

opportunity

to meet with

clients and

gain insight

in to needs

through

listening

Alignment

of service

offering to

client

needs

Client

needs are

continuous

ly

changing.

Industry

needs to

keep

abreast

with client

needs to

ensure

service

offering

meets the

requiremen

t.

Understandi

ng of client

needs

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APPENDIX 4. CATWOE ’S

Root Definition – Service provision by

engineering project houses to the

mining and mineral industry

Within the current market, work is

scares and clients demand a value

proposition meeting their needs. The

project managers within the project

houses see the industry as slow to react,

limited by corporate governance as well

as burdened by high overhead costs.

C Customers Mining industry

A Actors The project managers

T Transformation Providing an

agile service to the mining and mineral

industry within the current downturned

market

W World view The industry is slow

to react, limited by corporate governance

and large overhead cost structure

O Owner Management of various

engineering project houses

E Environment The current

resource market is constrained with not

much project work available






proposition meeting their needs.

Clients within the industry believe

service providers are slow to react, with

high overhead cost and not too willing

to take on more risk..


A Actors Clients




market

W World view The industry is slow

to react, large overhead cost structures and

less willing to take on risk




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proposition meeting their needs. The

project house executives see the

industry as sufficiently nibble, with

corporate governance not seen as an

obstacle.


A Actors The project house

executives




market

W World view The industry is

stressed but the service being provided is

nimble with corporate governance not

seen as a stumbling block






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APPENDIX 5. BOUNDARY QUESTIONS (CSH)

SOURCES OF MOTIVATION

(1) Who is (ought to be) the client or beneficiary? That is, whose interests are

(should be) served?

Engineering project houses are focuses on cutting costs and ensuring

corporate governance is met. They however ought to be focused on meeting

the needs of client and thereby ensuring customer satisfaction.

(2) What is (ought to be) the purpose? That is, what are (should be) the

consequences?

Engineering project houses are focused on ensuring profit by reducing staff

levels and in doing so destroying the trust relationship between internal

stakeholders. They however ought to be focused on increasing responsible

trusting relationships with internal and external stakeholders. Focusing on

adapting the value offering the meet the needs of clients and the market.

(3) What is (ought to be) the measure of improvement or measure of success? That

is, how can (should) we determine that the consequences, taken together, constitute

an improvement?

The measure of success is profitability. The measure of success ought to be

the level of trusting relationships between internal and external stakeholders,

resulting in increased capacity, ability and opportunities.

SOURCES OF POWER

(4) Who is (ought to be) the decision-maker? That is, who is (should be) in a position

to change the measure of improvement?

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Currently clients believe they are the ultimate decision makers whereas

project house executives believe they are the decision makers for their own

destiny. However, it ought to be a combination of clients and project house

executive to create the responsible trusting relationship enabling a combined

effort to change the measure of improvement.

(5) What resources and other conditions of success are (ought to be) controlled by

the decision-maker? That is, what conditions of success can (should) those involved

control?

Clients control who gets the work and project house executives’ control what

work perused. However the decision makes ought to consider the viability of

industry for now and generations to follow and ensure sustainability and

relevance thereof.

(6) What conditions of success are (ought to be) part of the decision environment?

That is, what conditions can (should) the decision-maker not control (e.g. from the

viewpoint of those not involved)?

The decision makers cannot control the market but ought to be focuses on

creating the responsible trusting relationship where opportunities can be

identified and skills set developed to best execute the opportunities which are

available within the current and future market.

SOURCES OF KNOWLEDGE

(7) Who is (ought to be) considered a professional or further expert? That is, who is

(should be) involved as competent provider of experience and expertise?

Professional experts exist within the mining houses as well as the project-

engineering houses. They should be focusing on working within a trusting

relationship to best utilise the combined expertise.

(8) What kind expertise is (ought to be) consulted? That is, what counts (should

count) as relevant knowledge?

Within the industry, knowledge and expertise exist within all levels of the

industry. It should be the combined effort of all internal stakeholders through

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responsible trusting relationship allowing the combined knowledge to best

give insight to the situation.

(9) What or who is (ought to be) assumed to be the guarantor of success? That is,

where do (should) those involved seek some guarantee that improvement will be

achieved – for example, consensus among experts, the involvement of stakeholders,

the experience and intuition of those involved, political support?

Internal, and external stakeholders within the project house industry, however

it will be the responsibility of the project house executives to build and

maintain the responsible trusting relationships with internal stakeholders, thus

enabling responsible trusting relationships externally.

SOURCES OF LEGITIMATION

(10) Who is (ought to be) witness to the interests of those affected but not involved?

That is, who is (should be) treated as a legitimate stakeholder, and who argues

(should argue) the case of those stakeholders who cannot speak for themselves,

including future generations and non-human nature?

Decision makers should act in the best interest of industry. Internal and

external stakeholders do however have a responsibility to build and maintain

responsible trusting relationships.

(11) What secures (ought to secure) the emancipation of those affected from the

premises and promises of those involved? That is, where does (should) legitimacy

lie?

Industry leaders as a whole needs to ensure legitimacy.

(12) What worldview is (ought to be) determining? That is, what different visions of

‘improvement’ are (should be) considered, and how are they (should they be)

reconciled?

The worldview is distorted since mining houses believe service providers are not

acting in their best interest. Service providers believe clients are arrogant and

expecting too much, for what they are willing to pay, whereas internal stakeholders

no long have a responsible trusting relationship within the engineering project house

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industry. Improvement should be considered through a process of establishing

responsible trusting relationships with internal and external industry stakeholders.

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