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Adversarial contracting methods are used for most public infrastructure procurement and timely delivery on budget remains a problem. In the past 20 years, OECD countries have adopted a number of alternative procurement methods that are based on collaborative principles including public private partnerships, long-term outsourcing arrangements and relationship/alliance contracts. We review the theoretical principles that operate for both adversarial and collaborative contracting methods. We identify the characteristics of non-adversarial contracting methods such as the output specification, qualitative selection criteria, the alignment of incentives, discrete allocation of residual control rights, life cycle costing, and risk-weighted value for money measurement that are delivering better procurement outcomes for government.

There has been a significant increase in the use of relationship contracting in the global construction industry, with strategies such as Partnering, Alliancing and Public-Private Partnerships all used. These approaches were introduced to the Australian construction industry in the 1990s in an attempt to overcome the adversarial nature of traditional contracting methods. The purpose of this paper is to investigate factors that influence the successful implementation of Project Alliancing by means of a case study approach focusing on the procurement of a large water treatment plant. The research findings identify critical success factors (CSFs) both from literature and the case study project.

The research traces the origins of Alliancing and identifies CSFs by reviewing literature and analysing a current case study project. The paper first identifies CSFs on a global scale by establishing a theoretical framework of CSFs and then compares this to the case study project. A case study of an Australian Alliance project is investigated whereby a semi-structured interview process, involving senior managers from the six partners from the Alliance, was used in conjunction with a review of project documentation. The findings of the case study project are compared to the literature and any new CSFs are identified.

Alliancing helps to establish and manage the relationships between all parties, remove barriers and encourage maximum contribution to achieve success. Alliancing provides a project delivery method that promotes open communication, equality and a systematic problem resolution process. Team culture focusing on an “open book/no blame” approach is vital to the success of an Alliance. Five CSFs were identified as specifically influencing the success of the case study project: the use of an integrated Alliance office; the staging of project and stretch targets; establishing project specific key performance indicators; facilitating on-going workshops; and the integration of a web-based management programme.

The research findings assist both public and private sectors by identifying factors that are critical for success in Alliancing. Five additional factors were identified as specifically influencing the success of the case study project. Since this research was conducted, Australia has seen a further increase in relationship contracting where the likes of Alliancing is often used as the default approach for certain Public Sector projects. Ongoing research into Alliancing is vital to ensure the development of sustainable procurement models, successful operational viability, fair risk distribution and value for money.

Relational contracting is increasingly being applied to complex and uncertain construction projects. However, it has proved hard to achieve stable performance and industry-level learning in this field. This paper employs an institutional perspective to analyze how legitimacy for relational contracting has been produced and challenged in Denmark, Finland, Norway and Sweden, including implications for dissemination and learning.

A collaborative case study design is used, where longitudinal accounts of the developments in relational contracting over more than 25 years in four Nordic countries were developed by scholars based in each country. The descriptions are underpinned by literature sources from research, practice and policy.

The countries share similar problem perceptions that have triggered the de-institutionalization of traditional contracting practices. Models and policies developed elsewhere are important sources of knowledge and legitimacy. Most countries have seen pendulum movements, where dissemination of relational contracting is followed by backlashes when projects fail to meet projected outcomes. Before long, however, relational contracting tends to re-emerge under new labels and in slightly new forms. Such a proliferation of concepts presents further obstacles to learning. Successful institutionalization is found to rely on realistic goals in combination with broad competence development at the organizational and industry levels.

In seeking inspiration from other countries, policymakers should go beyond contract models to also consider strategies to manage industry-level learning.

The paper provides a unique longitudinal cross-country perspective on the field of relational contracting. As such, it contributes to the small stream of literature on long-term institutional change in the construction sector.

A key argument in transaction cost economics (TCE) is that transactions are aligned with governance structures so as to effect a discriminating – mainly transaction cost economizing – match (Williamson, 1991). The archetypical problem in TCE is the vertical integration or “make-versus-buy” decision, and the focus of transaction cost economizing in this context is on mitigation of “holdup” problems associated with investments in specific assets (Klein, Crawford, & Alchian, 1978; Williamson, 1985). However, this asset specificity condition in only one example (albeit a significant one) of a more general class of contractual hazards. Indeed, in his most recent discussion of the TCE agenda, Williamson (1996, p. 3) suggests that “identification, explication, and mitigation of contractual hazards – which take many forms, many of which long went unremarked – are central to the exercise.”

Trust and control through contracting have been juxtaposed in many studies addressing interorganizational collaboration and knowledge exchange. In this study, the authors move from the opposite ends of a continuum between trust as an attitude and control exercised through formal contracts toward the center of the continuum where trust and contracting start to show similar features. The authors ask how trust in its analytical form and control gained through establishing informal protection for knowledge assets affect the innovation and market performance of firms engaged in research and development (R&D) alliances.

The authors examine the existing literature and conduct a quantitative empirical study to answer the research question.

The authors find, first, that controlling an organization’s own knowledge assets in R&D alliances with informal means of protection can be more effective than a strategy of controlling the alliance through formal contracts. Second, the authors find that an analytical audit of partner trustworthiness, and especially partner capabilities and goodwill can be more effective than trust as an attitude.

The findings support softening the sharp distinction between trust and control and provide evidence on the relevance of highlighting the firm point of view in knowledge management in R&D alliance governance.

The study adds to the existing understanding of trust and control in R&D alliance governance. Specifically, the authors turn the focus from interorganizational governance to intra-organizational knowledge management measures, and particularly toward how a focal actor can take an analytical approach to evaluate partner trustworthiness and use informal control in protecting its own knowledge assets. Consequently, this study also provides a plausible explanation for the contradictory findings in studies that examine the relationship between trust and control. The study indicates that depending on the specific nature of trust and control, they can be either a complement or a supplement factors: the extreme forms of trust and control are notably different from those forms that share similar features.

The purpose of this paper is to examine the dynamics of contractual and relational mechanisms during different phases of multi-partner R&D alliances.

The paper uses a longitudinal single case study to gain in-depth understanding of which governance mechanisms are best suited for different phases of alliance collaboration. Applying a retrospective strategy for data collection, three rounds of interviews were conducted with representatives of all partner firms. The data were complemented by documentary analysis of both internal documents and publicly available information.

The findings suggest that the use of governance mechanisms in multi-partner alliances depends on the characteristics of alliance phases. Relational governance is most important in the exploration and development phases, while the importance of contractual governance comes to the fore during the development and finalization phases. Despite the predominance of one type of mechanism, the findings support a complementary perspective of governance mechanisms.

The results of a single case study offer limited generalizability and should thus be treated with caution. More cross-industry, cross-national studies should be conducted to verify the applicability of the findings to other industries, cultures and geographical contexts.

Managers should be aware that different phases of the alliance life cycle have different control and coordination needs, and should rely on different mechanisms during different phases of the alliance.

The authors have synthesized insights from various perspectives (transaction cost economics, organization theory, social exchange theory), and developed a multidisciplinary approach to multi-partner collaborations.

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.

The purpose of this paper is to review the use of various construction procurement systems in the past and present, specifically within the Australian construction industry and to overview the historical development of procurement both globally and in the Australian context through the existing literature.

The paper is an in-depth literature review of various construction procurement systems used in the past and present, both in general and within the context of Australian construction industry.

The findings suggest that even though relationship-based procurement (RBP) systems offer significant benefits to all project participants, they are unproved by many decision makers because of lack of robust theoretical concept and inability in demonstrating value for money (VfM) for public projects, which would be one of the factors causing move away from RBP in the future.

This review is one of its kind. There is no such review done before within the context of Australian construction industry in such a detail. This review is a part of a recently completed PhD study.

The goal of interfirm contract research is to examine how formal contracts impact transaction success, firm relationships, and ultimately individual and collaborative firm performance when two or more firms interact. Most contract literature uses an economic lens to examine contracts: the property rights perspective, agency theory, and TCE. Property rights-based contract research (Coase, 1960; Demsetz, 1967; Alchian & Demsetz, 1973; Cheung, 1969) examines how efficient property rights assignment mitigates ex ante hazards. Similarly, agency theory-based contract research (e.g., Ross, 1973; Jensen & Meckling, 1976; Harris & Raviv, 1979) investigates how incentive alignment between the principal and agent leads to the mitigation of ex ante hazards. In contrast, TCE-based research (Williamson, 1975, 1985) examines contractual safeguards to mitigate both ex ante and ex post hazards (e.g., Joskow, 1985, 1987, 1990; Crocker & Reynolds, 1993). Because the three economic perspectives dominate, most research addresses how contracts are used to mitigate ex ante or ex post hazards. Therefore, many topics still need to be investigated to enhance our understanding of interfirm contracting.

This paper aims to examine alliance governance at different hierarchical levels.

The data is collected from both top-level and operating-level managers in 286 strategic alliances in China (a total of 572 managers). Hierarchical moderated regression models are adopted to test the hypotheses and two-stage regression analyzes are used to correct for endogeneity.

This paper finds that relational governance has a greater impact on alliance performance than contract utilization at the top level. Furthermore, the simultaneous use of relational governance at the top and operating levels have a detrimental impact on alliance performance. Finally, top-level contract utilization has a negative interaction with operating-level relational governance but a positive interaction with operating-level contract utilization.

First, the cross-sectional nature of the data collection approach provides only a snapshot of how each type of governance mechanism and its interactions affect alliance performance. Second, the sample is limited to firms located in emerging markets.

Managers should realize that the effectiveness of contract and relational governance mechanisms varies across different management levels and they should be cautious about the cross-level governance mechanism alignment.

This study advances the interfirm governance literature in that this paper examined alliance governance at different hierarchical levels and provides new insights into the ongoing debate on whether the contract and relational governance mechanisms function as complements or substitutes by exploring the governance alignment across different alliance hierarchies.