Project-based firms have to capture value from the projects in which they engage. This can be challenging as firms need to reconcile project goals and organizational goals while attempting to avoid the slippage of value to other actors. Drawing on interviews with architects and clients, this research reveals how architectural firms used the strategies of postponing financial revenues in a project, compensating for loss of financial revenues across projects and rejecting a project to accept or mitigate the slippage of financial value, and to avoid the potential slippage of professional value in projects. With these strategies firms attempt to enhance their overall benefits. The study contributes to the literature on project business by showing how a more nuanced conceptualization of value slippage is particularly helpful to theoretically explain and practically manage the value capture of project-based firms through both single project and project portfolio decisions.

Introduction

Project-based firms often encounter difficulties when attempting to capture value from the products and services that they deliver. Not only may their opportunities to capture value in a project be highly unpredictable and uncertain (Nightingale et al., 2011); value may also be captured by project-partners or other stakeholders over time and can easily slip away from the firm (Chang et al., 2013). Value capture, which is commonly defined as the difference between the revenues and the costs retained by a firm (Bowman and Ambrosini, 2000), is fundamental for businesses to survive (Teece 2010; Zott et al., 2011). It has been argued that value slippage needs to be limited or avoided in order to enhance value capture and protect the profitability and viability of a firm in the long term (Lepak et al., 2007; Chang et al., 2013). This makes managing potential value slippage in projects a key business challenge for all project-based firms.