A Business model ontology for construction contractors

Abstract

Today's hostile business environment, economic uncertainties and external shocks make construction companies vulnerable to business failures. In facing such challenges, contractors' businesses should be with informed decisions, enabling management of complicated supply chains, strategic partnerships, featured and complex project scopes, tight programmes and numerous project participants while serving clients with high expectations. A Business Model (BM) is fundamental to the success of any business, supporting high-quality business decisions. Hence, contractors must develop their business by adopting proper BMs. However, in construction industry, it is still a novel concept with relatively few ontologies to support contractors in designing their BMs. Thus, this research aimed to propose a developed and validated BM ontology for the construction context to facilitate contractors designing BMs. This research was positioned on pragmatism philosophical stance and followed abductive approach. The Research Questions (RQs) were answered through a multi-method qualitative study. Phase I data were collected through multiple case studies by interviewing two top managers from each case and analysing the websites. Case study results were used in the subsequent qualitative survey conducted among 15 construction business experts. A BM development process with five stages toward improved BM application was identified by reviewing the literature on BM evolution. The absence of stage-wise BM development in the construction industry urged following the BM development process to develop a BM ontology for contractors, enabling BM design. Construction Business Model (CBM) was defined following a systematic process under literature review, which was empirically validated for compatibility and comprehensibility, completing Stage 1 of the BM development process. During Stage 2, thirty-four elements constituting the Construction Business Model Ontology (CBMO) were identified and classified based on their relationships, roles and positions. One 'Desired Element', one 'Inherent Element', three 'Shared Elements', two 'Bridging Elements', and four' Value Pillars' with their respective 'CBM Elements' and 'CBM Sub-elements' were explored. In addition, new elements, e.g. 'Professionalism', 'Key Subcontractors', 'Construction Expertise' and 'Workmanship', were introduced concerning contractors' business. Describing parameters for each CBMO element were established at Stage 3, and CBMO was developed considering established relationships of CBMO elements at Stage 4. A step-by-step guide with guiding questions for CBMO would help contractors design their CBMs. Validation of the CBMO with two groups using a sample scenario confirmed its clarity, understanding and significance by providing a business case's big picture and common language. CBMO enables handling clients and stakeholders, using specified processes, handling risks, choosing strategies, utilising resources and promoting value-based competition in the construction industry.