Constructing archetypes: mapping business models in the construction value chain

Research output: Working paperResearchpeer-review

Abstract

Construction value chains are characterised by institutionalised roles, such as architects, engineering consultancies, contractors, and material suppliers. These roles constitute an important reference point in an industry like construction, where few processes are standardised and few projects are repeated. However, as these roles rely on different business models, and as most construction projects are organised in a cross-organisational way, the construction of buildings tend to be a matter of coordinating and aligning different business models. Recent research shows a rising interest in business models of construction. However, the differences between construction business models are underexplored. The purpose of this paper is to investigate the archetypical business models in construction. The aim is to create a foundation from which further business model research can be conducted. It presents findings from a series of workshops and interviews with companies representing the whole construction value chain. Building on an analytical framework, we explore archetypical characteristics of different business models found in the construction industry. This includes identifying the priorities (value proposition and profit formula) and capabilities (resources and processes) of companies representing different institutional roles. We identify four business model archetypes, which utilise three distinct profit formulas. The findings show that professional service providers, like architects and engineering businesses, build on a profit formula concentrating on selling hours to cover high variable costs; general contractors build on a sustained cash-flow model to cover high variable costs and contractual risks; and material suppliers sell products and optimise the capacity of their production facilities to cover high fixed costs. Each business model is sustained through unique capabilities in the form of resources and processes, which support a specific value proposition. The identification of business model archetypes represents a platform for further research and discussions on how new technologies and changes in boundary conditions influence different types of construction businesses.
Original languageEnglish
Number of pages10
Publication statusAccepted/In press - 2020

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