A review of the concepts and definitions of the various forms of relational contracting

Abstract

Construction project teams are unique entities, created through a complex integration of factors, with
inter-disciplinary players, varying roles, responsibilities, goals and objectives (Goodman and Chinowsky,
1996). Collaboration and teamwork are therefore crucial since sharing up-to-date information between
participants leads to minimising errors, reduction of time delays and breaking the widespread rework
cycle, which allows a sustainable relationship between participants to evolve. Benefits of collaborative,
rather than adversarial, working relationships within construction organisations are well documented
(Walker and Hampson, 2003).
Successful sustainable relationships rely on relational forms of exchange characterised by high levels of
trust. However, it was shown in the past that the construction industry has a stronger preference for
distrust rather than the full benefits of cooperation (Wood and McDermott, 1999). There is a need for
culture change to bring about increased cooperation between parties on a long-term basis. With relational
contracting, based on the sustainable relationship and trust, a win-win situation can be created for both the
client and contractor. The development of trust between organisations is seen as a function of the length
of the relationship between them (Bresnen and Marshall, 2000a). It is also believed that the construction
industry is one which requires lots of trust between participants due to the high uncertainty in the
industry.
This paper aims to look at the how traditional procurement methods are changing and moving towards
sustainable procurement forms through the relational contracting approach. A critical review on first and
second generation partnering will be presented, followed by a discussion of how change in procurement
culture, towards sustainable business relationships, can be investigated.