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The purpose of this paper is to provide insights into how a project alliance contract is conducive to the development of cooperative relationships between client and…
The purpose of this paper is to provide insights into how a project alliance contract is conducive to the development of cooperative relationships between client and contractor organizations involved in a complex project.
A longitudinal case study of a complex construction project was conducted in which the contract was changed at the end of the negotiation period from a design‐build into a project alliance form.
Data show that opportunistic behaviour is reduced when there is an incentive structure, as is to be found in project alliances, for client and contractor organizations to cooperatively realize the project. However, it is not sufficient for project partners to agree upon an appropriate incentive structure. For cooperative relationships to develop, they also have to put substantial efforts into reducing their remaining inclinations to make use of opportunities that arise to deviate from the alliance contract.
It is shown that both principals and contractors not only need to carefully select staff for such projects; they also have to work with the people employed such that appropriate attitudes are reinforced and rewarded. Developing cooperative relationships in project alliances needs the surrounding working methods to offer support.
The longitudinal character of the case study offers exceptional opportunities for studying the dynamics in preventing and overcoming the deteriorating patterns of opportunistic behaviour that organizations regularly face in many traditional and design‐build projects.
This paper aims to investigate how construction clients currently deal with procurement and to analyse how the choices made during the buying process stages affect the…
This paper aims to investigate how construction clients currently deal with procurement and to analyse how the choices made during the buying process stages affect the combination of governance mechanisms and control types in client‐contractor relationships.
Empirical data were collected through a survey of 87 Swedish construction clients.
Current procurement procedures establish governance forms facilitating a focus on price, through output control, and authority, through process control. Since construction transactions are mostly characterized by high complexity and customisation and long duration, the theoretical framework prescribes a focus on trust and a somewhat lower focus on price and authority. Hence, from a transaction cost perspective, construction clients focus too much on price and authority and too little on trust. Since current procedures may cause problems in all stages of the buying process, the result suggests that partnering arrangements, entailing completely different choices during the buying process, may be a suitable way to facilitate trust and cooperation through informal social control.
Since the empirical results are based on data collected from only Swedish clients, international generalizations should be made cautiously.
Clients wishing to implement trust‐based collaborative relationships need to reconsider their procurement procedures entirely; joint objectives, teambuilding and other “fuzzy” techniques are not enough to transform adversarial relationships into cooperative ones.
Earlier research has focused on one or a few aspects of procurement and governance, while this paper adopts an overall process perspective, taking into account clients' procurement procedures in their entirety.