Managing the Commercial Interface: Project Owner Commercial Strategy

The commercial interface between the owner organization which develops the business case for the project and the project-based firms which provide the human and material resources required to achieve the outcomes desired by the business case receives relatively little attention in project organizing research. For instance, an otherwise comprehensive handbook on “organizational project management” with contributions from many of the leading figures in the field (Sankaran et al., 2017) does not mention the topic. While there is a growing interest in research on “inter-organizational projects” (Ahola, 2018; von Danwitz, 2018), this research stream tends to be conceptual and “existing contributions provide no empirical insights on specific governance institutions overseeing an inter-firm project” (von Danwitz, 2018: 535). Perhaps only the work of Turner (Turner, 2004; Turner and Simister, 2001; Turner, 1995) attempts to integrate commercial management into the mainstream of project organizing research, but this particular contribution has apparently had limited influence.

The contribution of this paper therefore, will be two-fold. First, it will theorise the commercial interface between the owner and the supplier domains of project organizing (Winch, 2014) as a central area in project organizing research. Second it will provide an empirical basis for the strategic management of the commercial interface by project owners with their suppliers – what we dub “owner commercial strategy”. It will do this by analysing a case study of the evolution of commercial strategy through the project life-cycle on an oil refinery upgrade project. We will first review the relevant literature on the commercial interface and evaluate its strengths and limitations. We will then present the research method and the details of the case as it evolved. A discussion of the implications of the empirical research for theory and conclusions follow.