Int. J. Production Economics 104 (2006) 164–178 Specifications and supplier development in the UK electrical transmission and distribution equipment industry Tom McGovern a , Christian Hicks b,Ã a Business School, University of Newcastle Upon Tyne, Newcastle Upon Tyne, NE1 7RU, UK b School of Mechanical and Systems Engineering, Faculty of Engineering, Stephenson Building, University of Newcastle Upon Tyne, NE1 7RU, UK Received 27 April 2004; accepted 20 August 2004 Available online 26 October 2004 Abstract Specifications have a large impact upon capital and operating costs because they are formulated early in the design process. Models of the specification process have been developed for the automotive industry. These models have many shortcomings and have limited application in other sectors. This paper examines the development and use of specifications relating to customised plant for the electricity supply industry. Two case studies are presented that examine the specification process at the National Grid Company (NGC) and SupplierCo, one of its strategic suppliers. Functional models are developed to explore the application and use of specifications. Previous research suggests that there is a choice between functional or technical specifications. This research found that functional specifications were used for each contract, but these were applied within a detailed framework of technical specifications. NGC has developed a supplier development programme that aims to improve the capability of its supply chains within its framework of specifications. NGC’s use of specifications enables it to effectively meet the requirements of The Office of Gas and Electricity Markets (OFGEM) and its shareholders. r 2004 Elsevier B.V. All rights reserved. Keywords: Specifications; Electricity supply; Capital goods; Supplier development 1. Introduction In the management of major projects one of the principal objectives of the contract strategy is to minimise technical and commercial risk. The customer needs to be confident that the supplier has the necessary capabilities to satisfy the terms and conditions of the contract. The cost to the client of failure by the contractor may be many times greater than any compensation that could be recovered through legal action. A contract requires safeguards and incentives that protect the interests ARTICLE IN PRESS www.elsevier.com/locate/ijpe 0925-5273/$ - see front matter r 2004 Elsevier B.V. All rights reserved. doi:10.1016/j.ijpe.2004.08.005 Ã Corresponding author. Tel.: +44-191-222-6238; fax: +44- 191-222-8600. E-mail address: chris.hicks@newcastle.ac.uk (C. Hicks).