OverviewAdopting prefabrication in housing field offers significant opportunities for reducing global energy consumption andgreenhouse gas emissions (Zhang et al., 2011). Prefabricated housing (PH) achieves a reduction of 65% ofconstruction waste, 16% of labour requirement on-site and 15% of construction time when compared withconventional housing construction (Jaillon and Poon, 2008). During its implementation, there are barriers, such ascost, lead-in time, and shortage of knowledge on prefabrication, etc, affect the progress of PH (Goodier and Gibb,2005, Mao et al., 2013). Among them, cost is identified as the most critical obstacle (Pan and Sidwell, 2011).The costs of PH are 7-10% higher than the conventional mode (POST, 2013). Previous studies only focus on thecontruction costs. However, transaction costs (TCs) such as the costs of searching for projects, estimating, projectpartners, negotiation, monitoring, regulatory approval and dealing with any deviations from contract conditions, areoften ignored (Li et al., 2015). There has been successful attempts to apply the TCs theory into the manufacture andconstruction management (Winch, 2001, Chang and Ive, 2000, Li et al., 2015, Sambasivan et al., 2017). MitigatingTCs can also be an alternative approach to improve the economic efficiency of PH. This paper aims to explore howTCs occure in the PH supply chain in order to reduce the frictions to PH. It helps understand key stakeholders’concern onTCs and will eventually contribute to the economic efficiency improvement of the PH supply chain.MethodsThis paper first, develops a TCs framework of PH supply chain based on TCs theory and the management of PHthrough literature study. A case study in China is followed to empirically understand how transaction costs occure inPH project in practice from key stakeholders’ perspectives. There are 25 semi-structured interviews conducted withkey stakeholoders (developer, general contractor, architecture designer, prefab components supplier and government)in two PH projects to understand the content and nature of TCs based on the provisional TCs list.ResultsThe identification of TCs in the PH supply chain is based on five phases: concept, plan and design, manufacturing,construction, sale and operation phases. The result of semi-structured interview showed that the conceptual phaseand the construction phase are identified as the stages where majority of TCs occurred. The developer and thegeneral contractor are the roles that have more contractual relationships with others, and most of the TCs aretherefore born by them (Qian, 2012, Kiss, 2016). In addition, it is also noticed that the transaction cost of permit andapproval is throughout the whole supply chain of PH project because dealing with permits is a time-consuming andbureaucratic process in China. Results generated from the theoretical study and case study will be further extractedas strategic suggestion to the stakeholders to improve the economic efficiency of PH supply chain.ConclusionsTo improve the governance of the supply chain of PH and to make the implementation of PH project morefinancially attractive, TCs during the whole development process of PH must be better understood and ultimatelyreduced. This paper develops a framework to investigate the transactions costs throughout the PH supply chain. Anempirical study verified and supplemented the TCs framework, which also provides an understanding of theoccurrence of TCs along the PH supply chain from different stakeholders’ perspective. Different stakeholders havetheir own understanding of TCs and they are bearing different TCs in different phases along the PH suppsly chain.Understanding TCs with different stakeholders’ concern builds a basis to improve the economic efficiency of PH project, and thereby it is hoped that more strategies for different stakeholders can be developed and executedcorrespondingly.
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