Case Study
Cass
DEVELOPING COOPERATIVE project CLIENT-SUPPLIER RELATIONSHIPS: How much to Expect from Relational Contracts?
FORTHCOMING CALIFORNIA MANAGEMENT REVIEW, WINTER 2009
NUNO GIL
SENIOR LECTURER (ASSOCIATE PROFESSOR) CENTRE FOR RESEARCH IN THE MANAGEMENT OF PROJECTS (CRMP), MANCHESTER BUSINESS SCHOOL, THE UNIVERSITY OF MANCHESTER, BOOTH STREET WEST, MANCHESTER, M156PB, UK, E-MAIL: NUNO.GIL@MBS.AC.UK, TEL: +44 (0) 161 3063486
Organizations promoting new infrastructure projects range from private owners of airports, hospitals, and utilities to governments and local authorities. They typically chose to strategically position themselves as the project clients. Instead of building in-house capabilities to design and build new infrastructure, they opt to intermittently source works from the fragmented architecture-engineering-construction supply chain. In the last decade, infrastructure promoters have become increasingly interested in translating the Toyota lean management paradigm ─ its underlying business infrastructure as well as technical processes ─ into the project-based environments associated with new infrastructure developments.[1] A prerequisite at the core of this strategic approach is the development of cooperative relationships with members of the architecture-engineering-construction supply chain, the project suppliers. To enable this, infrastructure promoters realized they needed to rethink commercial practices, and started to experiment with ‘relational’ contracts. A relational contracting strategy ─ or ‘intertwined’ strategy in that personal relations become heavily intertwined with the economic exchange[2] ─ presumes that the project clients are willing to discard adversarial forms of contracting for others that nurture cooperative, long-term relationships with the preferred project suppliers. Through an in-depth empirical study on the implementation of relational contracts with all the first-tier suppliers involved in a large-scale
DEVELOPING COOPERATIVE project CLIENT-SUPPLIER RELATIONSHIPS: How much to Expect from Relational Contracts?
FORTHCOMING CALIFORNIA MANAGEMENT REVIEW, WINTER 2009
NUNO GIL
SENIOR LECTURER (ASSOCIATE PROFESSOR) CENTRE FOR RESEARCH IN THE MANAGEMENT OF PROJECTS (CRMP), MANCHESTER BUSINESS SCHOOL, THE UNIVERSITY OF MANCHESTER, BOOTH STREET WEST, MANCHESTER, M156PB, UK, E-MAIL: NUNO.GIL@MBS.AC.UK, TEL: +44 (0) 161 3063486
Organizations promoting new infrastructure projects range from private owners of airports, hospitals, and utilities to governments and local authorities. They typically chose to strategically position themselves as the project clients. Instead of building in-house capabilities to design and build new infrastructure, they opt to intermittently source works from the fragmented architecture-engineering-construction supply chain. In the last decade, infrastructure promoters have become increasingly interested in translating the Toyota lean management paradigm ─ its underlying business infrastructure as well as technical processes ─ into the project-based environments associated with new infrastructure developments.[1] A prerequisite at the core of this strategic approach is the development of cooperative relationships with members of the architecture-engineering-construction supply chain, the project suppliers. To enable this, infrastructure promoters realized they needed to rethink commercial practices, and started to experiment with ‘relational’ contracts. A relational contracting strategy ─ or ‘intertwined’ strategy in that personal relations become heavily intertwined with the economic exchange[2] ─ presumes that the project clients are willing to discard adversarial forms of contracting for others that nurture cooperative, long-term relationships with the preferred project suppliers. Through an in-depth empirical study on the implementation of relational contracts with all the first-tier suppliers involved in a large-scale