A Review of the Concepts and Definitions of the Various Forms of Relational Contracting (original) (raw)
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Managing the relationships between the various parties involved in construction is becoming more crucial as the industry moves away from fragmented and adversarial ways of working. Under less-adversarial procurement routes and contractual arrangements such as partnering, it is essential that the parties develop mutually beneficial objectives and a high level of commitment, cooperation and trust. When disputes do occur, without good relationships between the parties they are likely to refer back to the clauses of the contract which, in turn, may start a return to adversarial ways of working. The concept of ‘relational contracting’ has been developed by Macneil (1974, 1980, 1981 and 1983). This considers a contract to represent a relationship between the parties and introduces a degree of flexibility into the contract on the basis of understanding the other party’s objectives. Based on a review of recent literature, this paper explores the dimensions of relational contracting that are applicable to the construction industry. Since the principles of relational contracting have received relatively little attention in the construction management literature, work from other disciplines have been explored in order to promote a fuller understanding of its implications to understanding the way in which people from different organizations work together. It is suggested that previous work has viewed the concept of relational contracting in isolation rather than as an integrated set of relational principles. It is argued that when viewed as a joined-up set of dimensions, relational contracting has the potential to facilitate a better understanding of interorganizational relationships within the industry. Keywords: relational contracting, long-term relationship, construction supply chain.
2019
This research examines the relationships between the tripartite of Client, Consultant Engineer, and the Contractor during construction project implementation. It examines contract behaviour and how collaborative practices build inter-organisation Trust in construction contracts. Five projects were selected for the study. Three were trust-based Public Private Partnership contracts, while two were Traditional standard contracts. The initial research question was: How do inter-organisational Trust relationships affect construction project management with respect to Cost, Time and Quality? This qualitative research identified the threefold nature of Trust as Contractual Trust, Competence Trust, and Goodwill Trust. By analysing and clustering of respondent themes, two overarching concept themes emerged on how to build Trust between the Client, the Consultant, and the Contractor. The first theme was on financial matters, which included Working Capital Advance payment and Materials pre-purchase schemes. Addressing this theme created inter-party collaboration and Trust which positively affected project Cost, Program and Quality. The second theme was on creation of tripartite Trust by aligning Contractor and Consultant skills, capacity, and experience.
A conceptualisation of relationship quality in construction procurement
International Journal of Project Management, 2016
Relational contracting is often regarded as means to improve performance and profit margins in managing projects. A continuum of contracts in construction projects attempts to provide fit for purpose relationships to different working conditions; hosting levels of relationship quality. This study aims to explore contracting methodologies within construction procurement in search of practical and manageable relationship quality attributes. Initially relational attributes such as teamwork, commitment and trust along with seven main strategies for achieving these attributes are extracted from relevant studies. In the second stage construction expert interviews suggest that performance satisfaction is also a practical attribute and necessity of relationship quality. The study proposes a framework of actions and seven strategies which can facilitate the attributes associated with relationship quality. Finally based on the framework and three case studies five levels of transaction, action, strategy, attribute and relationship are demonstrated for relationship quality evaluation in construction project's procurement practices.
Relationship Contracting: A Strategy For Improved Project Performance?
Traditional 'transactional' contracting methods have been criticised over recent years for being inequitable, adversarial and inefficient. Relationship Contracting however, is proposed as a way to improve construction process efficiency and project outcomes by improving the relationships between project stakeholders, through the use of equitable asset delivery strategies.
An investigation of relational contracting norms in construction projects in Malaysia
2010
The importance of good relationship among parties in the construction industry has been accepted as one of the central issues of an organisation's success. The growing acceptance to the Relational Contracting approaches that representing partnering, supply chain alliances and other types of collaborative working relationships shows how construction organisations are moving forward from the traditional adversarial culture to a more harmonious working environment. However the application of the Relational Contracting ...
Relationship Management in the Australian Construction Industry: A Catalyst for Cultural Change
2006
Numerous studies have been undertaken in the area of construction procurement methods. Recent evidence shows that the construction industry requires cultural change in order to move away from traditional adversarial relationships into cooperative and collaborative relationships. There is also increasing concern and discussion on alternative procurement methods, drifting away from traditional procurement systems to those which are relationship-based. Relational contracting approaches have become more popular in recent years, and have appeared in common forms such as partnering, alliancing and relationship management contracts. This paper reports on a study of relationship management approaches in two public sector organisations in Queensland, Australia. The paper also presents the findings of a survey undertaken with a private organisation based on a no-dispute alliance contract which identifies the critical factors that influence the success of the alliance project.
Partnering relationships in construction: A literature review
Journal of Purchasing and Supply Management, 2010
There is no unified view as to what partnering relationships are in the construction industry. The purpose of this paper is to examine the literature in order to identify the main assumptions about partnering relationships in construction research and practice. The literature is compared to the Construction Industry Institute's (CII, 1991) frequently cited definition of partnering as a long-term commitment between two or more parties in which shared understanding and trust develop for the benefits of improving construction. The literature review reveals a tendency to focus on project partnering in dyads between clients and contractors and there is also an emphasis on formal tools to develop these relationships, even if social aspects and relationship dynamics are recognised. The paper discusses these findings and suggests that, in order to increase the understanding of the substance and function of partnering relationships, it could be useful to incorporate knowledge from theoretical perspectives that are more in line with the CII definition. Two perspectives that seem particularly interesting in this respect are Supply Chain Management (SCM) and the Industrial Network Approach (INA), both of which focus on long-term relationships between actors beyond the dyad. INA also emphasises the informal aspects of relationship development. Incorporating these dimensions of partnering relationships requires processual and longitudinal studies, which are relatively rare in the contemporary partnering literature.
Accelerating Change in the Malaysian Construction Industry through Relationship-based Procurement
To ensure the success of a construction project, the strategies adopted to procure the products are of paramount importance. Although the industry has long been using the traditional method to procure projects, however, with the increasing complexity and uncertainty in the construction industry, the traditional procurement procedure has become obsolete and inappropriate, thus putting pressure on the local construction industry to look for a more efficient alternative approach. The aim of this research is to look into the applicability of a relationship-based procurement in the Malaysian construction industry. The objectives of this research include: to identify the critical success factors of construction projects in Malaysia’s context; to examine the procurement procedures that are currently used by Malaysian construction clients and to find out the strength and weaknesses among all these procedures; to investigate the perceptions of the Malaysian construction industry players regarding their understanding and acceptability of a relationship-based procurement; to develop a suitable model of relationship-based procurement process for Malaysian construction industry and to validate the workability of the model through real life project and expert opinion. The scope of this research will focus on different construction participants in the Malaysian construction industry which includes the clients, contractors, and consultants. In addition to that, case studies will be conducted on the application of relationship-based procurement in Hong Kong, Australia, United Kingdom, Japan and Sweden to identify possible areas of improvement for the local context. The research methodology will be triangulation method with the combination of quantitative and qualitative research. The implementation of relationship-based procurement is still in its “infancy” in Malaysia as the local construction industry remained relatively silent on this subject matter. Thus, this research is exploratory in nature and will attempt to fill in the gap.
Building a relational contracting culture and integrated teams
Canadian Journal of Civil Engineering, 2007
Targeting integration in construction, this study compares the suitability of various factors and strategies to provide suitable contractual and noncontractual incentives for building a relational contracting (RC) culture and fostering effective teamwork. Results from statistical analyses of 96 questionnaire responses from Singapore contractors, consultants, and clients are presented. Despite obvious differences in perceptions among different groups of respondents on the relative usefulness of individual factors, it was observed that trust should broadly be at the core of RC and teambuilding. Although some factors appear to be more important than others, the overall results indicate that Singaporean industry participants prefer to target integration in construction through (i) trust-based contractual and operational arrangements and (ii) extended use of relational qualities in team selection for postcontract partnering-type RC arrangements between clients and contractors. The results also suggest the need for an interrelated and consolidated approach, both for propagating RC and for building integrated project teams. Like many other countries, the results indicate the readiness of Singaporean industry participants to incorporate RC and team-building techniques in a move towards improved performance and value for money. The results may be applicable to other countries or contracting regimes, especially where the practice of RC is at an early stage. Outcomes of this study are expected to benefit both industry practitioners and researchers in exploring, designing, and implementing suitable contractual and noncontractual incentives.
Critical Factors Affecting Trust in Construction Partnering in UK
2014
Critical Factors Affecting Construction Partnering has been advocated for use in the construction industry as a new procurement approach that tries to create an effective project management process between two or more organisations with the aim of providing a sound basis for a win-win climate. Among the success factors of partnering, trust and mutual understanding have been identified as the most important components. However establishing trust among partners in construction is very daunting especially when they are operating under a bid-price driven environment which promotes suspicious behaviours. A questionnaire survey was conducted on client organisations, consultancy firms and contractors in the UK to assess the role of trust in partnering. Results from the study indicated that the relationship between trust and partnering is not always linear suggesting that apart from 'trust' other elements are required to achieve success in partnering. Moreover, 14 trust attributes ...