American Society of Civil Engineers

Internal Governance of Design and Engineering: The Case of the Multinational Firm

by Vedran Zerjav, (corresponding author), (Doctoral Candidate, Dept. of Industrial Building and Interdisciplinary Planning, Vienna Univ. of Technology, Karlsplatz 13/234-2, A-1040 Vienna, Austria. E-mail:, Timo Hartmann, A.M.ASCE, (Assistant Professor, Dept. of Construction Management and Engineering, Univ. of Twente, P. O. Box 217, 7500 AE Enschede, The Netherlands. E-mail:, and Amy Javernick-Will, (Assistant Professor, Dept. of Civil, Environmental and Architectural Engineering, Univ. of Colorado at Boulder, ECOT 441, 428 UCB, Boulder, CO 80309-0428. E-mail:

Journal of Construction Engineering and Management, Vol. 138, No. 1, January 2012, pp. 135-143, (doi:

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Document type: Journal Paper
Section Heading: Organizational Issues
Abstract: This paper examines the process of design and engineering in large-scale construction projects delivered by multinational organizations. The analysis is on the basis of using transaction cost economics to represent design and engineering as a stream of intra-firm transactions between the local contracting office and the network of subsidiary offices. The paper then applies the concept of asset specificity to process-level design and engineering knowledge and induces a theoretical framework on the basis of local and expertise specificity of assets. The framework posits that different levels of local and expertise specificity lead to different modes for intra-firm governance of work packages in design and engineering. The paper validates the theoretical framework with interview data from six major international design and engineering organizations and derives a set of management recommendations for practitioners. The framework takes the transaction cost theory into the realm of intra-firm governance represented as a stream of asset-specific transactions. The framework extends construction engineering and management literature with a transaction-based elaboration of the design and engineering process.

ASCE Subject Headings:
Engineering firms
Construction industry
Case studies
Business management

Author Keywords:
Interdisciplinary design and engineering
Internal governance
Transaction costs
Asset specificity
Case reports