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The purpose of this paper is to present a case study on the use of performance-based contracting in the outsourcing of a reliability-centered maintenance program of a Gulf oil refinery.

A case study method is used whereby data are collected through semi-structured interviews, informal discussions with executives from the participant companies, in addition to official documents and secondary materials.

The case analysis reveals the use of a risk–reward payment scheme and key performance indicators (KPIs) deployed to support the management of the outsourced maintenance function. The financial incentive scheme was clearly designed to motivate the outsourcing contractor to achieve more financial benefits when meeting a defined set of KPIs while also delivering operating cost savings and other qualitative benefits to the outsourcing company. Managing the outsourced function also involved the use of routine budgetary control systems, in addition to other informal control mechanisms such as trust, knowledge sharing, mutual understanding and co-operation between the two collaborative partners.

The evidence presented in the case description and analysis may assist in increasing the understanding of how outsourcing relationships in maintenance business are managed and evaluated. The case findings may also provide the opportunity for further research investigating the use of performance measurement systems and incentive-based schemes in a variety of maintenance contracts.

The case study presents new empirical evidence on the use of performance risk–reward payment schemes in the management of an outsourcing relationship. Findings reported in the study will add to the existing literature on maintenance performance measurement and management practices in outsourcing relationships.

The paper aims to examine the role of management accounting and accounting information in decisions to outsource and manage outsourcing relationships.

The paper uses a case study method. Data are collected through semi-structured interviews and informal discussions with executives of the participating companies. Official documents and secondary materials were analysed.

The findings of these cases present evidence of some roles given to accounting information and varying tasks assumed by accountants and finance staff in the outsourcing projects undertaken. These roles and tasks range from financial evaluation of new outsourcing proposals and alternatives, consultation and price negotiations in the planning and feasibility stages to the management of outsourcing relationships including monitoring, cost analysis, performance measurement, internal audit, design and implementation of risk-reward payment schemes. Managing the outsourced functions in one case involved in the use of informal control mechanisms such as trust, knowledge sharing, mutual understanding and cooperation between partners.

The paper highlights the role of management accounting and information in outsourcing relationship management and evaluation. The case findings provide the opportunity for management practitioners to understand the strategic role of management accountants in the management of inter-firm relationships.

The case study presents new empirical evidence of the role of management accounting and accounting information in the management control of outsourcing relationships.

This study aims to empirically test the effects of key characteristics of performance-based contracting (PBC) (i.e. reward/payment scheme, increased supplier autonomy and transfer of responsibilities) on supplier goal commitment.

This study developed a conceptual model applying goal-setting theory (GST), expectancy theory (ET) and job characteristics theory (JCT). Survey data were collected and analyzed using structural equation modeling (SEM) to establish a validated measurement instrument for testing the hypotheses.

The findings revealed that PBC positively affects supplier goal commitment due to its unique characteristics, which translates into improved supplier performance. Furthermore, this study validated the mediating role of goal alignment and felt accountability operating between PBC characteristics and supplier goal commitment.

This study explored the buyer–supplier relationship from the supplier's standpoint. Using a more inclusive data set, future research may involve a dyadic analysis and focus on the effects of the following factors on the supplier goal commitment: relational aspects (e.g. trust and collaboration), the risk transfer from the buyer to the supplier, different incentive schemes and successful PBC implementation factors.

This study presents new, validated insights for contract selection, design and management. It underlines the importance of choosing the proper contract, having the appropriate contract design based on the desired outcomes and effective contract management by exhibiting the psychological/behavioral effect of fundamental PBC characteristics.

PBC represents an active research stream, but its psychological/behavioral implications are understudied. Therefore, this research puts forth a conceptual framework with multiple testable hypotheses illustrating the relationship between PBC and supplier goal commitment.

The purpose of this paper is to explore innovation in alliance contracting in the New Zealand construction industry in terms of features (i.e. development process, risk/reward framework and leadership structure) that could influence successful project outcomes.

This study employed a qualitative research methodology. Three alliancing projects have been identified as the cases. By using interviews with the project’s owner and non-owner participants and related project documentation, the relevant features in the three examined cases were identified and compared.

The findings revealed differences in the reasoning why a particular alliance approach was implemented, how the alliance selection process was conducted and what kind of leadership structure was adopted. Interestingly, a number of unique and innovative practices to alliancing were also highlighted, notably the innovative agreements, innovative governance structure and innovative functional teams that influence the synergistically creative solutions to suit the clients’ needs.

The innovative practices identified in this study have brought the alliancing concept to a new level of practice in the industry. The findings provide a basis and a platform for discussion, both nationally and internationally, to gain greater understanding in managing different alliance contracting towards breakthrough outcomes.

This study extends the alliancing procurement literature, in particular, but also provides significant insights into innovative advancements to the collaborative procurement approaches.

The purpose of this paper is to explore key challenges of adopting, designing and managing performance-based contracts (PBC) for advanced logistics services, as seen by providers. The shift toward performance-based solutions has proved challenging since providers often struggle to link performance to their payment. Despite such managerial challenges, empirical research in this area has been limited.

A multi-case design was adopted. Three cases of logistics service providers were selected based on purposive sampling. Data were collected through 38 semi-structured interviews and review of 43 documents such as contracts and customer target letters.

Key PBC adoption challenges include customer and provider intention to align their goals and incentives as well as their views on risk and reward sharing. Contract design challenges center around performance metric definition and weighting, designing performance monitoring systems that consider service co-production effects and help improve customer relationship and designing incentives with appropriate intensity levels. Contract management challenges include fostering provider pro-activity, provider changes in terms of processes and resource investments, perceived fairness of designed incentives and contract re-design to allow for win-win relationship outcomes.

The study empirically contributes to extant logistics service provider literature by identifying specific challenges that extend also beyond PBC adoption and design and cover contract management (and potential contract re-design). It also unpacks the notion of performance attributability by analyzing its role also in terms of contract and performance management as well as its potential effects on customer relationship management.

The study presents implications for logistics provider managers regarding how the observed PBC challenges can be overcome.

The study unearths several challenges of PBC for advanced logistics services, particularly in connection to contract management and re-design.

The Private Finance Initiative (PFI) is a recent development in the UK in which private sector organisations, design, build, finance and operate assets to deliver a service to public sector clients. The initiative is expected to bring the private sector's finance, management skills and expertise into projects which would normally be undertaken by the public sector. Equivalents of this initiative, also found outside the UK, include DBFO (Design Build Finance Operate), BOO (Build Own Operate) and turnkey projects. Two important considerations for a project to receive an approval for the initiative are that it must represent value for money and there must be sufficient transfer of risk to the private sector. This paper, based on a questionnaire survey, provided the perceptions of clients, contractors and financial institutions on risk associated with PFI and how these determine their approach to PFI schemes. The analysis shows that design changes and the level of information on functional, performance and output requirements for PFI schemes are of major concern to the parties involved in this procurement route.

The purpose of this paper is to identify factors that constrain marketing choices available to smallholders, limiting the chain's robustness from their perspective.

This paper draws on transaction cost economics to develop a model explaining dyadic relationships between smallholders and their buyers. The model was used to analyse a case study of the supply chain for organic fresh vegetables in Kathmandu, Nepal.

This chain is characterised mainly by relational contracting between smallholders and their buyers. There was also evidence of vertical integration by some buyers, and of growers selling on informal markets. However, there was no evidence of spot market trading or of conventional contracting. These outcomes were attributed primarily to the absence effective standards and legal systems. Despite this, the chain offered smallholders a range of dyads with different risk-reward trade-offs.

This paper is based on the findings of a case study. While the results can be generalised to theory, they cannot be generalised to other supply chains.

This study considers supply-chain performance from the perspective of smallholders. The model proposed for the study extends the traditional vertical coordination continuum to incorporate missing dyads and informal markets.

The amalgamation of integrated project delivery (IPD) and building information modelling (BIM) is highly recommended for successful project delivery. However, IPD lacks an accurate cost estimation methodology at the “front-end” of projects, when little project information is available. This study aims to tackle this issue, through presenting analytical aspects, theoretical grounds and practical steps/procedures for integrating target value design (TVD), activity-based costing (ABC) and Monte Carlo simulation into the IPD cost structure, within a BIM-enabled platform.

A critical review was conducted to study the status of cost estimation within IPD, as well as exploring methods and tools that can enhance the cost estimation process for IPD. Thereafter, a framework is developed to present the proposed methodology of cost estimation for IPD throughout its entire stages. A case project is used to validate the practicality of the developed solution through comparing the profit-at-risk percentage for each party, using both traditional cost estimation and the proposed solution.

After applying the proposed IPD's cost estimation framework, on a real-life case project, the findings demonstrated significant deviations in the profit-at-risk value for various work packages of the project (approximately 100% of the finishing package and 22% of openings package). By providing a precise allocation of overhead costs, the solution can be used in real-life projects to change the entire IPD cost structure and ensure a fair sharing of risk–rewards among the involved parties in IPD projects.

Using the proposed methodology of cost estimation for IPD can enhance the relationship among IPD's core team members; all revealed financial deficiencies will be considered (i.e. compensation structure, profit pooling), hence enhancing the IPD performance.

This paper presents a comprehensive solution for integrating BIM and IPD in terms of cost estimation, offering three main contributions: (1) an innovate approach to utilise five-dimensional (5D) BIM capabilities with Monte Carlo simulation, hence providing reliable cost estimating during the conceptual TVD stage; (2) mathematical models that are developed through integrating ABC into the detailed 5D BIM to determine the three IPD's cost structure limbs; and (3) a novel mechanism of managing cost saving (rewards) through distinguishing between saved resources from organisation level, to daily task level, to increase trust among parties.

The purpose of this paper is to present an analysis of current practices of Islamic mortgages in the light of the principles of Islamic financial system, to document divergences – if any. A subsidiary goal is to develop an Islamic Mortgage Model (IMM) based on Musharakah principles.

The author documents theoretical underpinnings of risk-return sharing from the Shari’ah perspective. A comparative study of conventional and Islamic mortgages is completed; existing practice of Islamic mortgages analyzed in the light of Musharakah principles and divergences identified. IMM is developed after taking divergences and Musharakah principles into considerations. A housing case is used to highlight differences (in financial terms) under multiple methods and scenarios.

Study documents multiple divergences from Musharakah principles in the existing practice of Islamic mortgages including ignorance of market pricing in the negotiation of rentals and trading of equity units, and transfer of all ownership risks and rewards (vacancy, damage, destruction and market) to one partner (i.e. customer). Practice is divergent from principles in the area of economic substance. Modified IMM is developed by taking into account Musharakah principles; and differences highlighted by calculating financial figures – to determine financial rights and liabilities of the parties.

Divergence from the principles of risk-return sharing leads to failure in the achievement of Islamic finance objective of equitable distribution of wealth. Moreover, protection of capital for financier reduces the market abilities to achieve financial stability by matching credit expansion with the rise in the real economy. Shari’ah boards and regulators, as well as, management of Islamic banking industry are expected to incorporate proposed changes in-practice for the realization of Islamic finance objectives.

This study contributes to Islamic finance literature in the area of risk-return sharing. Based on important objectives of Islamic finance – equitable distribution of wealth and financial stability – divergences identified and a modified IMM in the light of Musharakah principles is presented. Descriptive rules are transformed into financial figures to document financial rights and liabilities of the concerned parties.

Contemporary supply chain relationships inherently rely on delegation of work between organizations and, thus, are subject to agency problems for which a wide range of governance mechanisms exist. This review of agency theory (AT), across four distinct fields, explains the connection between governance mechanisms and supply chain relationship types.

The study uses a systematic literature review (SLR) of articles using AT in a supply chain context from the operations and supply chain management, general management, marketing, and economics fields.

The authors categorize the governance mechanisms identified to create a typology of agency relationships in supply chains.

The developed typology provides parsimonious theory on different forms of supply chain agency relationships and takes a step towards a “supply chain-oriented agency theory” explaining and predicting relationship types and governance in supply chains. Furthermore, a future research agenda calls for more accurate measuring of agency costs, to examine residual gains alongside residual losses, to take a dual-sided perspective of agency relations and to adopt AT to examine more complex supply networks.

The review provides a menu of governance mechanisms and describes situations under which these mechanisms could be deployed to guide managers when developing their supply chain relationships.

The first review to combine and elaborate views from four major disciplines using AT as a lens to supply chain relationships. Expanding the traditional set of governance mechanisms provides academics and practitioners with a bigger “menu” of options to consider.