CHAPTER
ONE
1.0 INTRODUCTION
1.1 BACKGROUND AND NEED FOR THE STUDY
Construction project teams are unique entities,
created through a complex interaction of factors, with inter-disciplinary teams
from many countries, varying roles, responsibilities, goals and objectives
(Goodman and Chinowsky, 1996). Collaboration and teamwork are therefore crucial
since sharing up-to-date information between participants lead to minimization
of errors, reduction of time delays and breaking the widespread rework cycle,
and the formalisation of these issues through partnering mechanisms allows a
sustainable relationship between participants to evolve. Benefits of
collaborative, rather than adversarial, working relationships within
construction organisations are well documented.
Furthermore, Partnering in contracting is actually a commitment between
the contracting organizations mainly (clients and contractors) to avoid
adversarialism and cooperate with each other in order to achieve their common
business objectives(CII, 1991; Bennett and Jayes, 1995). Therefore, a working
and a more comprehensive definition of partnering can be a long-term commitment
between two or more organizations for the purpose of achieving special business
objectives‘ (NEDO, 1991).
It can be considered as an individual project
mechanism or can be considered as a long term strategy. Alliancing is normally
assumed to be a long term business strategy linking together client, contractor
and supply chain. The two serves as a variance of Relational Contracting.
Relational contracting is based on a recognition of
and striving for mutual benefits and win-win scenarios through more cooperative
relationships between the parties. It embraces and underpins various
approaches, such as partnering, alliancing, and other collaborative working
arrangements and better risk sharing mechanisms. Relational contracts are
usually long-term, develop and change over time, and involve substantial
relations between the parties.
Relational contracting goes further than this and brings
in the whole philosophy of the value chain and the linking of the
inter-dependent parts within the construction project as a key business
objective.
If we closely analyze the afore
definitions or concepts of relational contracting, we will observe that they
all have a few things in common like, common objectives, inter organizational
trust, procedures for conflict resolution and my working definition of
relational contracting seem to have all in a way that long term commitment is
created only when mutual trust exist among organizations. Further, parties to
relational contracting strive to achieve specific business objectives by
maximizing their effectiveness and minimizing conflicts.
1.2 STATEMENT OF THE PROBLEM
Construction
industry is characterized by increasing competition, rapidly evolving client
preference, rising client expectations, continually changing competitor actions
and uncertain and changing conditions leading to high levels of uncertainty and
opportuinism. Such high levels of uncertainty are bound to affect the
contractual relationship that exists in the buyer-seller relationship,
client-contractors relationship. The considerable amount of literature relating
to uncertainty in the building construction industry suggests that this has long
been a problem. For example, Crichton’s (1966: 57) report concluded that
“nothing contributes more to the industry’s inefficiencies than uncertainty”.
The industry has generally been described as being contested, fragmented and
highly adversarial with inherent problems (Latham 1994, Egan 1998, Cox and
Ireland 2002). These inherent problems include adversarial relationships
between clients and contractors; inadequate information exchanges and
inappropriate contracting styles.
In
an attempt to mitigate these inherent problems, the industry has responded in
various ways, including the formation of long-term contracts and collaborative
working relationships. These include partnering, project and strategic
alliances, joint ventures, supply chain management, lean construction and
others. Such initiatives are supported and embraced by the concept of
‘relational contracting’ (RC) Hence this research work is to help us in assess
the extent to which the professionals have adopted the use of the relational
contracting in the construction to mitigate the above problem.
1.3
RESEARCH QUESTIONS
To guide the study and achieve the
objectives of the study, the following research questions were formulated.
Γ
What
are the difference dimensions of relational contracting practices
Γ
What
are the ways/levels by which relational contracting practices can be deployed
in public project.
Γ
What
are the barriers to the adoption of relational contracting practices
Γ
What
are the benefits of relational contracting
1.4
AIM AND OBJECTIVES
AIM:
The research work has
been designed to assess perception
of Nigeria construction professionals towards adoption of relational
contracting (perspectives of Enugu construction professionals). Moreover, the
aim of the research can be broken down into the following objectives;
OBJECTIVES:
Γ
To
identity and document the different dimensions of relational contracting
practices
Γ
To
assess the level of deployment of relational contracting practices in public
project
Γ
To
assess the barriers to the adoption of relational contracting practices
Γ
To
assess the benefits of relational contracting
1.5 SIGNIFICANCE OF STUDY
The
findings of this study will redound to the benefit of the construction industry
considering that relational contracting plays an important role in construction
today by reducing the tendencies of opportunism and to mitigate risk or
uncertainties. Moreover the project’s
goal is to create awareness of the benefits of relational contracting to the
construction professionals, which include time and cost savings (preventing
delay) achieved through an established relationship among the construction
teams.
1.6
SCOPE OF THE STUDY
The research focuses
mainly on assessing the
perception of Enugu construction professionals towards adoption of relational
contracting.
1.7 LIMITATION OF THE STUDY
This research has been
limited to the adoption of relational contracting practice by Enugu
construction professionals in Nigeria.
1.8 OVERVIEW OF THE STUDY
Chapter
one is the introduction which provides the background of the study, statement
of the problem, research questions, aims and objectives of the study, overview
of the study, scope of the study, limitations of the study and definition of
special terms.
Chapter
two discusses the literature review, different citations of scholars and
highlights facts on and about the variables.
Chapter
three exposes the research design and methodology processes, area of study,
sources of data collection (primary and secondary sources of data), research
design which entails “ Target population, sampling, sampling techniques, data
collections instrument, procedure for data collection, tools for data
presentation analysis”.
Chapter
four discusses the data presentation and analysis and chapter five treats the
summary of findings, conclusion, recommendation and area of future research
relating to the work.
1.9 DEFINITION OF TERMS
Trust: A firm believe in the reliability, truth, or ability
of someone or something. An arrangement whereby a person (trustee) holds
property as its nominal owner for the good of one or more beneficiaries.
Partnering: Means establishing a long term win-win relationship
based on mutual trust and teamwork, and on sharing both risks and rewards.
Partnering agreement can be between labour and management, subordinates and
executive, suppliers and customers. The objective is to focus on what each
party does best, by sharing financial and other resources, and establishing
specific roles for each participant.
Alliancing: Is an agreement between two or more individuals or
entities stating that the involved parties will act in a certain way in order
to achieve a common goal. It is in effect, a virtual organisation.
Relational
contracting: Relational
contracting is defined as the working relationships among the parties who do
not often follow the legal mechanism offered by the written contracts, and
instead govern the transactions themselves within mutually acceptable social
guidelines (Macaulay, 1963).
CHAPTER TWO
LITERATURE REVIEW
2.0 LITERATURE REVIEW
This
chapter presents the result of an in-depth literature review on the effect of
relational contracting in construction industry as discussed and commented by
different authors in the field. It critically examines the definition of
relational contracting, relational contracting tenets, step-by-step approach in
creating a relational contracting, norms and principle of relational
contracting, barriers of relational contracting and the benefits of relational
contracting.
The
review of relevant literature is a very important aspect of any successful
research work, this is so if the literature must be educative, informative and
also if it contributes to the existing body of knowledge.
This
is the part of research work that broadens, enlightens and keep researchers
informed on the existing information in the area of study.
GENERAL CONCEPT OF RELATIONAL
CONTRACTING
A business contract that does not contain a high degree of
planning of the exchange relationship has a greater opportunity for good faith
disputes (Macaulay, 1963). Traditional contracting methods do not provide
sufficient provisions for addressing the future events that will affect project
relationships, nor can they. In a field as uncertain and complex as
construction, these events cannot be perceived or quantified with accuracy.
Therefore contracts should be flexible in order to adjust for future events and
address uncertainties when they arise (Macneil, 1974, 1980). In order to be
flexible, a contract must focus on relationships.
Relational contracting is a topic that has seen increased academic
focus, but there is still no consensus on a precise and comprehensive
definition of the concept (Chan et al, 2010). Ludwig Wittgenstein argued that
complex concepts are unable to be defined in this traditional way because there
may not be a single set of characteristics that are common for all variants of
a concept (NystrΓΆm, 2005; Yeung et al., 2007). He likened this idea to the
resemblance between family members. Some of them may have the same type of
nose, ears, or eyes, but no one feature is common to every member. However,
there is still a family resemblance common to all the members of the family
(Kenny, 1975).
This is a very appropriate way to define relational contracting.
While no specific feature is maintained throughout every example of it, a
family resemblance is maintained. Wittgenstein’s concept has been previously
applied to partnering (NystrΓΆm, 2005) and alliancing (Yeung et al., 2007).
More recently, Chan et al. (2010) utilized the Wittgenstein
concept and both of these previous researchers’ work to develop a model of the
elements of relational contracting. Chan et al. identified twelve elements that
form the family resemblance model (Figure 1). These twelve elements provide one
of the best definitions of relational contracting available in the literature,
and they outline separate concepts that can be used to create a method of
improving project performance.
Figure
1 Wittgenstein Model (Chan et al., 2010)
Using
the terminology of one of the pioneers of relational contracting Wigmore
Professor at Northwestern University Ian Macneil, Psychological research has
revealed the troublesome fact that evolution has made us ill-equipped to make
good plans and at the same time
well-equipped to believe we are good planners. The result is a planning fallacy
leading to the contracting paradox,
which is the delusion that we write contracts to make plans, but we cannot
really plan accurately. And, as a nice twist, we trick ourselves into believing
that we can plan.
For
centuries much of the business world ran on “handshake deals,” especially when
it came to buyer-supplier relationships. When he researched the use of
contracts in 1963, Professor Stewart Macaulay discovered that: “Businessmen
often prefer to rely on a ‘man’s word’ in a brief letter, a handshake, or
common ‘honesty and decency’ – even when the transaction involves exposure to
serious risk.”
At
about the same time, legal scholar Ian Macneil coined the term relational contract, referring to the
social contract of moral obligations guiding behavior in business that Macaulay
and others had discovered.
Relational
Contracting (RC) evolved far way back in 1963 when it was initially established
by Macaulay (1963), a legal scholar. Based on Macaulay‘s (1963) work, Macneil
(1980), also a legal scholar develops social contract theory that takes into
consideration the governance of exchange in contractual relations between firms
from both the economic and social perspectives. The social contract theory is
well recognized as Macneil‘s relational contract theory, in which Macneil
defines contract as no more and no less than the relations among parties to the
process of projecting exchange into the future' (Macneil, 1980, p.4).
Relational
contracting is a philosophy or a set of principles that are adopted in a
contract. Relational contracting is defined as the working relationships among
the parties who do not often follow the legal mechanism offered by the written
contracts, and instead govern the transactions themselves within mutually
acceptable social guidelines (Macaulay, 1963). Relational contracting focuses
on trust and partnership (Colledge, 2005). Rahman and Kumaraswamy (2004, 2005)
found that relational contracting provides the means to sustain ongoing
relations in long and complex contracts by adjustment processes of a more
thoroughly transaction-specific, continuous and administrative kind.
The
importance of good relationship among parties in the construction industry has
been accepted as one of the central issues of an organization‘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 organizations are moving forward from the
traditional adversarial culture to a more harmonious working environment.
After extensive
research, Macneil concluded that there are primarily two kinds of contracting
engagements; ‘transactional’ which is product-oriented and ‘relational’ which
is process-oriented. His contention was that the latter is more consistent with
the flow and value generation production theories advanced by the Lean
Construction community. This was substantiated by further discussion of two
salient aspects of contracting- ‘risk’ and ‘(aversion to) collaboration’.
Macneil outlines three fallacies related to risk which render conventional
contracting insufficient when it comes to contracting organizations grappling
with global competition and still trying to maintain profit margins and
deploying cost-effective, time-saving and quality-improving methods.
A
relational contract provides the means for sustaining long-term and complex
contracts with a high degree of flexibility in order to allow parties to
express their detailed knowledge in specific situations and adapt to new
environments (Macneil 1978, 1980; Joskow 1987, 1990;
Relational
contract is a contract whose effect is based upon a relationship of trust
between the parties. The explicit terms of the contract are just an outline as
there are implicit terms and understandings which determine the behavior of the
parties. It is one agreement, signed by the owner, architect and the
contractor; that is later “joined” by sub consultants and sub contractors.
There are no “general conditions”.
2.1 PARTS OF RELATIONAL CONTRACTING
Γ Project Partnering,
Γ Project Alliancing,
2.1.1 Project
Partnering: Every contract contains an implied commitment
requiring each party to not hinder or delay the performance of any other party
(George A. Fuller Co. v. United States, 1947). This sets a basic contract
standard of cooperation. The objective of partnering is to change this from a
standard of non-interference to a team-based standard of mutual benefits. The
basis of partnering is the partnering agreement, a non-contractual but formally
structured charter in which each party promises to act in the best interest of
the project and the project team (Chan et al., 2001). The partnering process
utilizes tools such as regular meetings, partnering workshops, team building
exercises, declarations of common objectives, and dispute resolution
mechanisms. Its goals are to create an atmosphere of communication, problem
solving, harmonious working relationships, and shared goals. While this process
does deliver mutual benefits, it falls short of guaranteeing that each party
will equally benefit (Walker et al., 2002). It encourages a team approach, but
gains and losses are still allocated severally, not jointly. Partnering does
not replace the obligations to adhere to the formal contract, and it lacks the
definite incentives required to elevate collective interests above those of the
individual.
2.1.2 Project Alliancing:
Project alliancing differs from project partnering in that it is
both a relationship management system and a project delivery system (Chan et
al., 2010). Traditional contracting and partnering allocates responsibilities
and risk to individually parties that severally incur consequences for success
or failure of the project. Alliancing requires a ‘joint’ rather than a ‘shared’
commitment; parties consent to their contribution levels and jointly incur
rewards or losses (Walker et al., 2000). Three key features define a ‘pure’
alliance:
1.
Parties are all responsible for performing the work and assume collective
ownership of risk.
2.
Participants share in the “pain” or “gain” depending on how actual project
outcomes compare to targets.
3. The project is governed by a joint body where all decisions
must be unanimous (Chan et al., 2010).
While
alliancing jointly shares the risk and rewards of a project, the parties remain
legally independent organizations with separate ownership and management (Gerybadze,
1995).
2.2 APPROACH TOWARDS RELATIONAL CONTRACTING
The
central premise of relational contracting is that it is trust-based, while
still allowing for a legal core. A relational contracting approach implies:
Γ Moving
towards commitment to common goals (outcomes).
Γ Recognition
of and respect for the roles and expertise each has independently of the other.
Γ Risk
allocation that involves agreed risk-sharing (including policy risks) between
the parties, and, conversely, mutual acknowledgement of the gains from the
relationship.
Γ Each
party well-informed about the other, with appropriately open communication.
Γ Each
party motivated to maintain credibility and reputation with the other, and
ultimately with the client group the service is designed to serve.
The
rationale of relational contracting is the value that accrues through taking a
multiyear, holistic approach to the contracting relationship, rather than
focusing solely on exchanges taking place at any one point of time. The
contract contemplates a future relationship, rather than being conducted
separately from that possibility.
However,
a relational agreement brings added discipline because it codifies the
framework for the relationship the forums, behaviors and mechanisms within
which interactions will occur. It recognizes that relationships are not just
person to person, but also organization to organization.
Therefore
formal definition of a relational contract, at the far right end of the
continuum, is seen as a legally
enforceable written contract establishing a commercial partnership within a
flexible contractual framework based on social norms and jointly defined
objectives, prioritizing a relationship with continuous alignment of interests
before the commercial transactions.
Relational
contracting has equal relevance to achieving desired policy outcomes, because
it creates an environment that implicitly and explicitly promotes qualitative,
or process, ‘outcomes’ such as co-operation and collaboration.
Over
time, a relational contracting approach can potentially allow formal
specification to be replaced, to a degree, by flexibility in the terms of the
relationship and how it is managed by each party.
Moreover
Firms are riddled with relational contracts: informal agreements and unwritten
codes of conduct that powerfully affect the behaviors of individuals within
firms. There are often informal quid pro quos between co-workers, as well as
unwritten understandings between bosses and subordinates about task-assignment,
promotion, and termination decisions. Even ostensibly formal processes such as
compensation, transfer pricing, internal auditing, and capital budgeting often
cannot be understood without consideration of their associated informal
agreements.
Business
dealings are also riddled with relational contracts. Supply chains often
involve long-run, hand-in-glove supplier relationships through which the
parties reach accommodations when unforeseen or uncontracted for events occur.
Similar relationships also exist horizontally, as in the networks of firms in
the fashion industry or the diamond trade, and in strategic alliances, joint
ventures, and business groups. Whether vertical or horizontal, these relational
contracts influence the behaviors of firms in their dealings with other firms.
Relational
contracts within and between firms help circumvent difficulties in formal
contracting (that is
contracting enforced by a third party, such as a court). For example, a formal
contract must be specified ex ante in
terms that can be verified ex post by
the third party, whereas a relational contract can be based on outcomes that
are observed by only the contracting parties ex post, and also on outcomes that are prohibitively costly to
specify ex ante.
2.3 FACTORS THAT ENFORCES THE CREATION OF
RELATIONAL CONTRACTING
There
are quite challenging conditions required of both parties to make relational contracting work in
practice. The range of critical success factors includes the requirements that:
Γ Each
party relinquish some of its independence, that is becomes more inter-dependent
on the other (literature suggests that an organization cannot build trust while
seeking to maintain leverage over another);
Γ Both
parties believe they will gain by becoming a more valuable resource to the
other;
Γ Both
parties acknowledge that the other will prize its self-sufficiency, and that
inter-dependence does not equate with loss of this;
Γ The
relationship involves sharing sensitive information, investing effort in understanding
each other’s business and customizing systems to serve the mutual interests in
the contract better.
A
relational contract thus allows the parties to utilize their detailed knowledge
of their specific situation and to adapt to new information as it becomes
available. For the same reasons, however, relational contracts cannot be
enforced by a third party and so must be self-enforcing: the value of the
future relationship must be sufficiently large that neither party wishes to
renege.
There
are two theoretical approaches to ‘relational contracts’. The first theoretical
approach to relational contracts is described as the ‘norms-based’ approach,
while the second is that of a group of organizational economists and is often
referred as the ‘incomplete contracts’ approach. In comparison only a limited
number of empirical studies have been undertaken.
2.4 THEORIES OF RELATIONAL CONTRACTING
As
a theoretical movement, relational contract theory can be considered as one
attempt to take into account all the surrounding circumstances of
relationships, which was split into two major streams of theoretical enquiry
into the analyses of contracts:
a) the norms-based approach; and,
b) the organizational economists’ study of
incomplete contracts.
2.4.1 The norms-based approach
The
norms-based approach evolved out of the “Relational Contract Theory”1 developed
by Macneil (1974, 1975, 1985, 1987, 2001). Macneil is a law scholar who has
challenged lawyers’ traditional premise that all contracts are mere transactions.
In particular he stressed the role of norms in determining the manner in which
commercial exchanges operate in practice and introduced the concept that
individual transactions lie on spectrum ranging from ‘discrete’ through to
‘relational’.
2.4.2 The organizational economists’ study of
incomplete contracts
The
organizational economists’ study of incomplete contracts recognizes that,
absent vertical integration, some form of contract is needed between a supplier
and a customer. However, such contracts will almost always be ‘incomplete’
because they contain some ‘third-party unenforceable’ elements. Such elements
are described by economists as the relational elements of a contract and are
those parts which help firms “circumnavigate difficulties in formal
contracting, that is contracting enforced by a third party, such as a court”
(Baker et al., 2002, p.40).
The
‘relational contracts’ analyzed by economists do not map exactly onto the
concept of ‘relationships’ as described in Macneil’s studies but they do have a
common viewpoint which is that all contracts contain a relational element.
Macneil reaches this conclusion because he asserts that even a ‘discrete
exchange’ has relational elements as a contract exists within society.
Economists argue that, because it is almost impossible to write a contract
which does not include some elements which cannot be enforced by a third party,
all contracts will contain relational elements. Thus, both Macneil and
economists agree that all exchanges are, to some extent, relational, but the
overall goal remains the same. The main idea is to enhance the project
performance by maintaining long term relationship of parties, which acts as a
buffer under the constraints of uncertainties, complexities, short lead time and
unfavorable market competition.
2.5 RELATIONAL CONTRACTING TENETS
However,
as the nature of what we are exchanging (more intangible goods or services) and
the environment in which we operate (more global, faster changing, less
predictable and more regulated) grows more complex, relational contracts are
increasingly riskier because of the extent of the ‘incompleteness’ or
uncertainty in contracts. Incompleteness has grown from an estimated average of
around 5% when Ian Macneil was writing in 1960 to around 35 – 40% today.
Successful
business relationships find ways to proactively address this incompleteness in
a fair and balanced manner. IACCM research has shown that there are nine
“relational tenets” that typically recur in successful partnerships based on
relational contracts. Those tenets are also areas of unrecognized risk. In
other words, the research showed that their absence increases the likelihood of
failure, yet they rarely appear in any risk register.
They
include,
Γ Communication
Γ Risk
allocation
Γ Problem
solving
Γ No-blame
culture
Γ Joint
working
Γ Gain
and pain sharing
Γ Mutual
objectives
Γ Performance
measurement
Γ Continuous
improvement
2.5.1 Communication:
A
defined framework for communication planning – what, when and how – and a forum
established for monitoring the effectiveness of communications and driving
future improvement.
2.5.2 Risk allocation:
Ensuring
that the allocation of risk under the contract does not act as a disincentive
to collaboration and that there are methods established to deal with the
unknown or unexpected.
2.5.3 Problem solving:
Agreeing
on principles for the way that problems or future misalignments and change requirements
will be identified and resolved, including clarity over review and escalation
procedures and paths.
2.5.4 No-blame culture:
Establishing
operational principles that focus first on resolution and the principle ‘we are
in this together’, but with clarity over individual roles, responsibilities and
accountability for performance
2.5.5 Joint
working:
Defining
the benefits and rationale for joint working and establishing criteria to
determine when and for how long it is required.
2.5.6 Gain and pain sharing:
Ensuring
the allocation of risk and reward provides each party with the right incentives
for success and for introducing added-value through continuous improvement and
innovation.
2.5.7 Mutual objectives:
Aligning
goals and objectives across the parties to ensure consistency or understand
different interests; establish where there are areas of uncertainty and the
likelihood of changes in objectives over time.
2.5.8 Performance measurement:
Determine
the measures and performance indicators that are critical to success for each
party and ensure there are methods for shared data gathering and review.
2.5.9 Continuous improvement:
Develop
a framework for delivery of continuous improvement and verify that the
necessary mechanisms exist; for example through the approaches established for
communication, gain share, performance measurement.
With
the promotion of the use of a structured process to create a relational
contract, we recognize many organizations may find themselves in an existing
relationship and it is impossible to go back and lay the foundation from the
beginning. If you are like many organizations, you may have entered into
discussions with the intent to have a more strategic relationship, but along
the way found you created a more traditional transactional contract. As
mentioned previously, transactional contracts are built around classical legal
theories of risk allocation, which often leads to frustrations and tensions, as
the arm’s length nature of the contract structure encourages more opportunistic
and adversarial behaviors. If this has happened in a relationship you are
involved in, do not become disenchanted because you got out the gate wrong. We
encourage you to not give up. Rather, consider embedding as many of the
relational tenets as possible into your existing relationship with the goal to
improve the relationship, moving from left to right on the continuum. For
example, try adopting a no-blame culture and instead seek to improve processes
for managing performance and joint problem solving to get to the root cause and
focusing on accountability, rather than blame. Or perhaps develop processes to
improve communications and proactively managing changes.
2.6 STEP-BY-STEP APPROACH IN
CREATING A RELATIONAL CONTRACTING:
A
journey towards a relational contract can start by the parties implementing one
and more of the nine relational tenets. While this will definitely benefit both
parties, the full value from relational contracting will not be realized until
the full relational contract with all its components is implemented.
A
key goal of a relational contract is to create a continuous alignment of
interests throughout the contract term. As we pointed out in the introduction,
to achieve the best results it is important to place equal importance on both
the process of entering into the contract as well as on the content of the
relational contract.
There
are two main reasons why the process matters as much as the content of the
contract. The first reason relates to what we explained at the end of Part 2.
Evolution has given us a dualistic nature; a tendency for both opportunism and
a strong sense of fairness. The relational contract attempts to build on and
leverage our sense of fairness while avoiding opportunism and the high
transaction costs and value leakage that come with it. While it is possible to
adopt relational contracting tenets at any point in a relationship, using a
process to lay a strong foundation at the outset of a relationship is the
easiest way to success because it helps us avoid opportunism from the start.
The
importance of this is well illustrated by the research of Kathleen Vohs,
professor at Carlson School of Management, University of Minnesota. Vohs’
research shows how money makes us egoistic.30 For example, in one experiment
some individuals were exposed to words and thoughts about money and some were
not. The individuals were then tested for their willingness to help others.
Those individuals exposed to money prior to being asked to help others showed a
significantly lower willingness to help than individuals who had not been
exposed to money. Vohs’ work suggests it is critical not to start a relational contracting process by negotiating the
deal, where money is always a key component. Instead, the seeds of a
non-opportunistic relationship must first be cultivated, by which our
opportunistic tendencies can later be avoided or at least minimized.
The second
reason we recommend using a formal process at the start of the contracting
process is to ensure organizations and individuals feel there has been a fair
process for establishing the contract. The situation is analogous to
legislation in a democracy. In legislation, both the content and the process
for generating the content matter. A law adopted through democratic voting that
denies a group of people fundamental rights will be fair from a process
perspective, but will be unjust from a substance perspective. Likewise, a law
adopted by a dictator giving equal voting rights to men and women will be just
from a substance perspective, but will be unfair from a process perspective. If
the process is perceived as unfair, the adopted laws will lack legitimacy and
the people’s willingness to follow them will be diminished.
For
these two reasons, we believe the
process for developing the relational contract is equally as important as the
contract’s content. The process of negotiating and jointly creating the
relational contract is not just a means to get to the written document, but an
important part of creating what is actually in focus: the relationship. As
outlined in Part 1, there are five essential focus areas for developing a
relational contract and nine main relational tenets. We use these five focus
area to outline each of the high-level steps in the relational contracting
process. Through the process, the nine relational tenets are also implemented.
More
still, traditional contracts are formulated on two foundations – price and
power. Within these parameters, there is little room for shared values or
principled governance. Therefore, one of the main reasons why organizations
fail to implement relational tenets into their contracts, moving from the left
to the right on the continuum, stems from using conventional procurement and
contracting processes that are not fit for establishing the trust and aligned
interests needed to succeed with relational contracting.
For
this reason, using a formal process or steps and framework for mutually
creating a relational contract is recommended.
1.
Focus on the relationship, not the deal
2.
Establish a Partnership
3. Embed
social norms in the relationship
4. Avoid
and mitigate risks by alignment of interest
5. Create
a fair and flexible framework
2.6.1 FOCUS ON THE RELATIONSHIP, NOT THE DEAL:
This
step is designed to help you build the trust necessary to focus on the
relationship. It includes ensure alignment within your own organization and
using a process for choosing a partner that considers relational competencies
in addition to service offerings, quality levels, etc.
To
focus on the relationship and not the deal can be detailed by picking out a
classic from the library based on an excellent analogy of what it means to have
a long term view versus a short term view by “thought leader” Jim Collins, in
his book Built to Last (co-written
with Jerry Porras). The book provides a telling comparison between successful
and less successful companies by using the terms ‘clock builders’ and ‘time
tellers.’ Some companies are successful
because they have amazing products and services, but their success fades when
those products and services fade in popularity. When the exchanges planned for
in the deal have been carried out, the relationship terminates and no more
value is created. Those companies are
time tellers. Other companies have successful products and services because
they are created by amazing companies, clock-builders who will generate profits
year after year by always producing new products and services that the market
wants. In the race of the market, it is always the clock builders that win in
the long run.
In
relational contracting, instead, the focus is on building a clock, that is a
relationship that can continue to generate value when all the transactions of
the initial deal have been carried out. This means the parties must begin
discussions with a potential partner that send signals about the importance of
the partnership, and not the importance of the deal.
To
focus on the relationship instead of the deal has important consequences for
both the contracting process and the actual contract content and this can be
achieved by:
§ First,
an organization must seek to create trust. Much has been written on the
importance of building and sustaining trust in a relationship. Trust is
generated when there is alignment between words and actions, i.e. when you can
feel confidence that what someone is saying also will be followed by their
actions. You can trust a person that shows integrity in this sense. But trust
is not only something shown by and to individuals. There is such a thing as organizational trust and organizational integrity. To build
trust, the organization must speak with one voice, or at least not with
inconsistent voices. But since every organization is made of individuals, it is
critical to identify all relevant stakeholders within your own organization as
early as possible that may impact the trust level in the relationship you are
about to enter into. And in addition, it is important to achieve alignment of
goals and objectives among those stakeholders, laying the foundation for later
on implementing the relational tenet of mutual objectives.
§ Second,
organizations must seek to find partners – not just vendors to provide a good
or service. An interesting finding is that most organizations shift to
relational contracts with pre-existing relationships by converting their transactional
contract into a relational contract. But what if your organization does not
have an existing business partner to fulfill a particular need? In that case,
it is necessary to first find the right partner.
To achieve this first step, one needs to Identify
all relevant stakeholders involved in the process, including top management,
external advisors, procurement and sales managers. Ensure alignment before
approaching potential business partners.
2.6.2 ESTABLISH A PARTNERSHIP:
This
step is designed to explore and lay the foundation of trust, transparency and
compatibility between the parties to lay the foundation for a successful
partnership. Before starting to build the relationship, analyze together
whether there is enough trust, transparency and compatibility between the
parties to create a successful partnership.
Establishing
a partnership requires a different process. You must first start by
understanding if you and your potential partner have a foundation that is
strong enough to build a partnership.
As
mentioned previously, trust is a critical success factor in all successful
relationships. However, trust does not exist at the start of a new
relationship. Trust must be consciously built and the relational contract is a
fundamental building block. Trust must
be combined with a high degree of transparency
and compatibility,
because given our limited abilities for planning, a high degree of transparency
from both parties will be critical. You will need as much facts on the table as
possible to be able to cope with the future in a changing market. But even if
trust and transparency levels are high, differences in organizational cultures
could lead to friction and problems to make the relationship work.
Compatibility is not absolutely necessary, but is still highly important.
Using
the process we have outlined enables the potential partners to sit down, first
by themselves and then together, and ask some serious and sometimes also
uncomfortable questions:
Γ Are
we trustworthy? Do we align our actions with what we say?
Γ Are
we prepared to work collaboratively and in good faith with in our partner, or
do we feel that we must use power to induce them to do as we want?
Γ Is
there evidence that our potential partner(s) share our values and readiness to operate
under shared principles?
Γ Are
we both prepared to be transparent, i.e. to share information about our plans
for the future, our internal challenges, our risk register, our costs and even
margins?
Γ Are
we compatible? Do we share a base of organizational value, interests and views
of the world? Is this alignment likely to continue?
Γ Do
we have evidence to support our answers, or are we just hoping?
By
using this process, the parties lay the foundation for implementing the
relational tenets of a joint working relationship and communication, which are
critical for successful of governance of any commercial partnership.
To achieve this step, parties need to find
out if you are ready to become partners with each other by understanding your
initial levels of trust, transparency and compatibility.
Once
you have ensured you have laid a strong foundation, you will then be able to
create a strong ‘society of principles’ by embedding social norms in the
relationship.
2.6.3 EMBED SOCIAL NORMS IN THE
RELATIONSHIP:
Many
researchers define norms as shared expectations regarding behaviour (e.g.
Axelrod, 1986; Bendor and Mookherjee, 1990; Gibbs, 1981; Macneil, 1980; Thibaut
and Kelley, 1959).
Macneil
(1980, p.38) explicitly emphasizes that
norms serve to guide, control or regulate proper and acceptable
behaviour, setting limits within which individuals may seek alternative ways to
achieve their goals‘. Thus, in achieving long term goals that is open-ended;
norms act as essential social and organizational mechanisms of control. They
provide a frame of reference, order, and standards for evaluating appropriate
behavior in uncertain situations (e.g. Bettenhausen and Murnighan, 1991).
However, norms can differ in their content and orientation from one context to
another (Thibaut and Kelly, 1959). . The role of norms in determining the
manner in which commercial exchanges operate in practice has been central to
Macneil’s work.
Building
on the work of Macaulay (1963), Macneil developed a set of norms that determine
“the behavior that does occur in relations, must occur if relations are to
continue, and hence ought to occur so long as their continuance is valued”
(Macneil, 1980, p. 64).
Furthermore,
Macneil recognizes that contracts vary widely in the depth of the relationship
to which they are applied. Thus, he states that “nevertheless, some contracts
are far more relational than others. They lie towards one end of a relational
spectrum of contractual behavior, opposite from the non-relational end where
the discrete transaction is found.” (Macneil, 1983, p.342). Initially Macneil
developed nine norms or principles ‘of right action binding upon the members of
a group and serving to guide, control, or regulate proper and acceptable
behavior’ (Macneil, 1980: 38). He later (1983) developed a tenth and changed
the label applied to one of the original nine. He suggests that these ten norms
constitute an abstract summary of the wide variety of specific norms that can
be found in the many different forms of exchanges that occur in a modern
society. These ten common norms are:
1. Role
integrity.
2. Reciprocity.
3. Implementation
of planning.
4. Effectuation
of consent.
5. Contractual
solidarity.
6. The
linking norms: restitution; reliance; and expectation.
7. Creation
and restraint of power.
8. Flexibility.
9. Proprietary
of means.
10. Harmonization
of the social matrix.
2.6.3.1 Role integrity
The norm of role
integrity obliges the
parties to be consistent over time, that is to treat like cases alike and to
avoid opportunistic behavior but to always, when in doubt, act in accordance
with the other guiding principles. Role
integrity occurs when both partners fulfill their respective
responsibilities. Greater complexity to
exchange relationship portrays higher levels of role integrity.
In relational
exchange theory, parties engaged in the exchange processes have to fulfill
certain roles (Ivens, 2004) in which they reflect mutual promises made during
the development of their relationship. The promises lead each member to develop
expectations concerning each other‘s behaviour (Kaufmann and Stern, 1988). In
business-to-business relationship, Ivens (2004) found that the role integrity
of the suppliers positively influence customer satisfaction and trust.
2.6.3.2 Reciprocity
The
norm of reciprocity obliges
the parties to return in kind.
Where an exchange is freely entered into it will only occur when both parties
perceive that it will result in an improvement in their pre-exchange position.
Therefore each party assumes it will get something back for something given.
This is perhaps more apparent in a discrete exchange than in a relational one
because of the immediacy of a discrete exchange. However, the vital point is
that this is a more open-ended perception of reciprocity than that held by
economists where exchanges are seen as being of roughly equal value.2 As has
been pointed out, the discharge, through social exchange of obligations
incurred as a result of services received in the past, entails obligations not
specified in advance and the exact nature of the return is left to the
discretion of the respondent (Blau, 1967: 93, 113).
2.6.3.3
Implementation
of planning
Planning
is involved even in discrete contracts because they may well encompass
commitments to be fulfilled in the future though with exchanges that are more
relational the planning element is generally likely to be larger. Furthermore,
once one moves away from the most simple exchange a contract will include some element of defining how it will be
implemented.
2.6.3.4 Effectuation of consent
Any
exercise of choice involves the sacrifice of other opportunities. In a discrete
exchange, by agreeing to sell my watch to another person it is clear that I
give up the opportunity to sell it to somebody else. However, in a relational
contract, I may in fact or by implication give the other party the ability to
take actions that, while not fully determined in advance, will limit my future
actions (Hakansson and Snehota, 1995).
2.6.3.5 Contractual solidarity
Solidarity
is the extent to which unity or fellowship that arises from common
responsibilities and interest dominates an exchange relationship (Kaufman and
Dant, 1992; Gundlach et al, 1995). In simple terms, it is the preservation of
the relationship, particularly when one partner is in a predicament (Ivens,
2004). It is expressed through behaviors, which contribute directly to
relationship maintenance (Heide and John, 1992; Macneil, 1980). It assures the
preservation of the unique and continuing relationship in which the commercial
transactions take place (Kaufman and Stern, 1988). The extent to which an
actor‘s behaviours express solidarity with the exchange partner functions as an
indicator of the stability of the long-term business relationship (Ivens,
2004). In industrial marketing relationships, solidarity is defined
operationally (Lusch and Brown, 1996; Heide and John, 1992) as a willingness to
help in occurrence of any problems, sharing of problems and committed to
improvements for mutual benefits. Based on similarity of definition, Medlin and
Quester (2001) is associated solidarity with commitment.
2.6.3.6
The
linking norms: restitution, reliance and expectation interests
This
is a body of principles relating to the acceptance that within an exchange it
may be necessary to make adjustments after agreement has been reached to
undertake the exchange. Thus restitution might be necessary if, for whatever
reason, one party gains unfairly from the exchange; reliance is needed with
regard to promises made but is not necessarily legally binding; and,
expectation is what has been promised. In circumstances where a discrete
exchange occurs then restitution, reliance and expectation interests are served
by rigorous adherence to the contract. In a more relational exchange these
three issues become factors that contribute to determining the nature of any
change to the contract that is necessary in response to unforeseen
circumstances.
2.6.3.7 Creation and restraint of power/The norm of autonomy/Limitation of power.
This
refers to the degree of restraint with regards to contractual power over one or
other of the parties (Kaufmann
and Dant, 1992). The more relational values are put to an exchange, the less likely the parties
will exercise their legitimate or coercive power (Macneil, 1981; Young et al., 1996). Limiting the power of one
party over another is perhaps
the best way to maintain a business relationship. For example, in construction industry, if a supplier faces some
problems and is not able to supply the materials within the time required, the customer may exercise their power to
penalize the supplier.
Relationships
could be adversely affected with the use of such power. However, a business
relationship could be improved by limiting such power and a good relationship
would be maintained if both parties can provide some forms of co-operation and
taking steps in resolving such problems.
2.6.3.8
Flexibility
Flexibility
refers to the willingness of parties to adjust practices and policies in
response to unforeseen or changing conditions (Boyle et al., 1992). As
Stinchcombe (1990: 207) suggests, there are three categories of uncertainties
which may have to be coped with in an exchange: the client’s uncertainties
about what it will want; cost uncertainties, due to contractor technical or
cost uncertainties, to client ignorance, or to commercial or legal
uncertainties in the client-contractor relationship; and, problems of
observability of contractor faults.
Due
to uncertain business environment, planning and adjustment are required to
continue business in the future. Flexibility allows for ongoing planning and
continuous adjustment of obligations between the exchange partners, whereas a
more rigid approach leads to fixed terms of working (Boyle et al., 1992; Young
et al., 1996).
2.6.3.9 Propriety of means
There
are often several ways of achieving a given end. Those that are seen as appropriate will vary between
industries and cultures. Thus, in the case of a relationship, resolving conflicts by the use of
formal means will usually be seen as injurious
to the relationship. However, ways of working together may develop between relationship partners that
while acceptable to them, may simply not
‘work’ in their links with any other partners that they may have.
2.6.3.10 Harmonization with the social matrix
Macneil
argues (1983: 344) that the social matrix stipulates the minimum necessary for exchange to occur. This comprises:
a means of communication which both
parties understand; a system of order so parties exchange instead of robbing; a monetary system; and, a mechanism to
enforce promises.
Where
these factors exist then a society
shares a number of common norms. He proposes that these ten norms [that is role integrity, reciprocity, implementation
of planning, effectuation of consent, flexibility, contractual solidarity, restraint of power, propriety of means,
the linking norms (restitution,
reliance, and expectation interest) and harmonization with the social matrix] comprise a summary of specific norms
that may occur in a range of different exchanges within the modern society (Macneil, 1980; 1983).
The
guiding norms/principles fulfill at least four important functions in the
relational contract:
I.
They will guide the parties during the
rest of the negotiations. The only valid arguments in the discussions are those
than can be justified under one or more of the guiding principles.
II.
All the contract clauses shall be
aligned to the principles. This will to a maximum extent ensure that the
contract is fair, balanced and facilitate creation of a frictionless
relationship.
III.
The guiding principles shall, together
with the shared vision, constitute the basis for interpreting the agreement,
both when the written clauses are ambiguous and when the contract is silent on
a particular matter. We will deal with this further in the next section.
IV.
The guiding principles will also assist
the parties when making changes to the contract.
Not
only will the guiding norms/principles ensure a fair and balanced agreement,
they will also ensure that the contract remains mutually beneficial throughout
its term. The guiding norms are therefore also a key instrument for risk
avoidance and mitigation.
By
embedding the guiding principles in the relationship, the parties also lay the
foundation for implementing the relational tenets of risk allocation,
communication, pain and gain sharing and no-blame culture, to be formalized in
the fourth and fifth steps of the relational contracting process.
The
parties should “discover” and together define the guiding principles and
formalize them as part of their contract.
2.6.4 AVOID AND MITIGATE RISKS
THROUGH ALIGNMENT OF INTERESTS:
To
lay the foundation for continuously aligned interests, agree upon a shared
vision and strategic objectives for the partnership, specifying what joint
success and value looks like. In the relational contract, you take a different
approach: you attack the causes of conflicting interests and not their
symptoms. The intention is to always keep interests aligned.
Misaligned
interests are the most common cause of value leakage and unnecessary
transaction costs. It is only when the
parties interests are misaligned that opportunism becomes a problem in a
commercial relationships. The source of misaligned interests is conflicting goals and objectives. If
a customer’s goals and objectives can only be achieved at the cost of a
supplier achieving its goals and objectives, interests will be misaligned and
opportunism and friction will follow as a necessary consequence. For example,
an important source of value leakage is the fact that customers’ goals of
lowering their costs comes into conflict with the suppliers goals of increasing
their revenue and margin. This is not a goal conflict given by nature, but
instead a result of conventional economic models most often used in commercial
relationships today.
A
relational contract by design seeks to align interests by avoiding goal
conflicts between the parties. Joint not separate goals and objectives should
be adopted. Effectuation of consent requires that each party’s interests are
treated with equal value.
There are three main components in a
relational contract that aim for risk mitigation and avoidance through aligned
interests:
I.
The ten norms
II.
A shared vision and a set of common
strategic objectives for the partnership
III.
A governance process for continuous risk
and change management
When you have
created a shared vision, it is often a good idea to break it down into a number
of shared objectives, which specifies in more detail what the shared vision
means. The objectives range based on the intent of the relationship. Having
adopted a shared vision and strategic objectives, the relational tenet of
mutual objectives will have been implemented. We must however emphasize that
these alone may not be enough to align interests. It is typically also
necessary for the parties to take a hard look at how risks will be allocated
and at the economics of the deal, as both can create perverse incentives due to
conflicting interests.
2.6.5 CREATE FAIR AND FLEXIBLE
FRAMEWORK:
A
relational contract gives up the ambition of completeness and accepts that
complete planning is impossible. The contracting parties try to establish a
fair and flexible framework for their deal and their relationship. The relational contract operates as a framework, setting forth clear rights
and obligations as the parties pursue their mutually defined shared vision and
objectives. But on a more general level, a relational contract is designed for flexibility, enabling the parties to
deal with change not just change control. This means creating a sound
governance structure and mechanisms to help the parties manage the business in
a dynamic environment, not just enabling the customer to manage the supplier.
The guiding norms and relational tenets ensure that the explicitly laid out
rights and obligations and the
processes for managing the relationship are kept fair during the term of the contract.
As
stated previously that the foundation of a relational contract is trust.
Sometimes we are asked if the relational contract should contain common clauses
like service scope, service levels, confidentiality, termination clauses,
limitation of liability, dispute resolution etc. The underlying question is
whether it is compatible with trust to want to implement legally enforceable
rights and obligations in the relationship.
Trust is a
complex phenomenon. But it should not be mistaken for naivety. We have noted
how as humans we have a tendency for opportunism, looking out for our own
interests to the detriment of others. Evolution has made us that way and it
would be naΓ―ve to ignore this fact. And somewhat paradoxically, trust exists
because of opportunism. To trust someone is to have confidence that she will do
what she says, despite her
opportunistic DNA. Without opportunism, trust would serve no purpose.
The
aim of the relational contract is to create circumstances as favorable as
possible for our sense of fairness to dominate over our opportunistic nature.
But that does not mean that this opportunistic nature is ignored.
At
this stage of the process, three cornerstones of the framework have been
placed. These cornerstones are the shared vision, the strategic objectives and
the guiding norms/principles. Here is how they work together.
v The
shared vision and the objectives are set at the beginning of the relationship.
They can of course be changed over time, but they should typically lay the
foundation for the foreseeable duration of the contract.
v The
guiding norms/principles should be considered fixed and should be strictly
adhered to not only during the contracting process, but also post contract
signing.
v The
parties should be flexible in the means they use to achieve shared vision and
objectives, as long as they always act in accordance with the guiding
principles.
To
create a fair and flexible framework based on the three cornerstones requires
the parties to agree on clear rights and obligations regarding ‘the deal’ and
the risks related to it and the relationship. In addition, the parties must
agree on a robust governance process for managing the relationship.
The
use of a relational contract approach from a certain perspective is an
all-or-nothing choice. You cannot, if
you want to succeed, play an opportunistic and a collaborative game at the same
time. The opportunistic player will then take advantage of the
collaborative player and the relationship will fail. Therefore, you have to jointly choose which game to play and
stick to that choice. With that in mind, you can then determine how formal of a
process you want to use for embedding the concepts we outline into your
relationship. We highly recommend that no matter what process you use or how
formal or informal the process, it is essential to make the ten guiding
norms/principles a key focal point of any relational contract. A relationship
where reciprocity, autonomy, honesty, loyalty, equity and integrity do not
exist will never succeed in establishing the level of trust and transparency
needed to get out of the contracting paradox discussed previously.
2.7. COMBINATION OF THE PROCESS STEPS AND TENETS
Table
below outlines a process based on a combination of the five focus areas
defining the relational contract set forth above and the nine IACCM relational
tenets.
|
PROCESS STEP
|
DESCRIPTION
|
TENETS
|
|
1.
Focus on the relationship, not the deal
|
To
build the trust necessary to focus on the relationship, ensure alignment
within your own organization and thereafter use a process for choosing a
partner that considers relational competencies in addition to service
offerings, quality levels, etc.
|
Mutual
objectives
|
|
2.
Establish a Partnership
|
Before
starting to build the relationship, analyze together whether there is enough
trust, transparency and compatibility between the parties to create a
successful partnership.
|
Joint
working, communication
|
|
.
3. Embed social norms in the relationship
|
Jointly
discover and agree on following the ten guiding principles or social norms of
the relational contract
|
Risk
allocation, communication, pain and gain sharing, no-blame culture
|
|
4.
Avoid and mitigate risks through alignment of interests
|
To
lay the foundation for continuously aligned interests, agree upon a shared
vision and strategic objectives for the partnership, specifying what joint
success and value looks like. Also ensure that the economic/pricing
mechanisms later agreed upon support achievement of the vision and the
objectives.
|
Mutual
objectives, risk allocation, gain and pain sharing
|
|
Create
Fair and Flexible Framework
|
Agree
upon the written contract clauses necessary to establish the more specific
rules of the relationship, all of them aligned with the six guiding
principles. Finally establish a robust governance framework for continuous
relationship managemen
|
Communication,
problem solving, no-blame culture, joint working, mutual objectives,
performance measurements and continuous improvements
|
Whether
you start with the formal process we discussed above or you work to embed the
relational tenets into an existing relationship, I believe the investment will
pay off.
As
you make the shift to relational contracting, it is important to understand why
it is essential to add relational contracts to today’s contracting toolkit.
2.8
FACTORS USED TO MEASURE THE RATE OF RELATIONAL CONTRACTING
The
relational extent of a contract may be measured by factors such as cooperation,
organizational culture, risk, trust, good faith, flexibility, use of
alternative for dispute resolution and contract duration (Cheung 2002, Feinman
1992, Goddard 1997 Macneil 1974, 1975, 1978, 1987, 2001,2003a,b, Williamson
1979, 1985).
v ‘Cooperation’
is a situation under which the contracting parties work toward the common goals
and benefits of the project
v ‘Organizational
Culture’ is the social energy which guides human behavior in an organization. It
provides implicit directions for the organization’s members
.
v ‘Risk’
refers to a situation in which the assessment of the probability of a certain
event is statistically measurable. It relies upon the availability of known
events for this purpose.
v ‘Trust’ is a
complex construct with multiple bases, levels, and determinants (Hart 1988),
and is often associated with situations involving personal conflict, uncertain
outcomes, and problem solving. It is also a prediction and expectation of
future events. Varying in intensity this is the confidence in and reliance upon
the prediction
v ‘Good
Faith’ governs the contracting parties’ behavior in terms of honesty.
v ‘Flexibility’
in a contractual performance is made explicitly or implicitly contingent upon external
events affecting one of the parties, therefore making it a form of insurance
and risk sharing. The riskier the environment, the higher the need for
flexibility, the higher the likely incidence of contract nonperformance, and
the higher the expectation to renegotiate.
v Use
of alternative dispute resolution- is an alternative to adjudicatory
procedures. The ADR includes conciliation, mediation, adjudication, and the
dispute resolution advisor system.
v Contract
duration- refers to the length of the contract period. Generally, the longer
thecontract period, the higher the chance that changes will occur and thus a
greater reliance on the relationship is needed to maintain the contractual
bond.
2.9
BARRIERS IN ADOPTING RELATIONAL CONTRACTING
When contracting
parties adopt relational contracting as opposed to formal contracting stance,
the construction project may achieve good outcomes. However, public project
usually face more constraints in adopting relational contracting, as close
relationship may lead to allegations of corruption.
The
barriers to adopting relational contracting practices are reviewed and
classified into 5 constructs. These are discussed below.
Γ Lack
of experience/knowledge in relational contracting
Γ Misalignment
among project participants
Γ Adversarial
environment
Γ Cost
and time to conduct relational contracting
Γ Uniqueness
of public projects
2.9.1 Lack
of experience/knowledge in RC
The
lack of experience or knowledge in RC can impede the adoption of RC practices.
Kumaraswamy et al. (2005) found that clients' lack of knowledge of relational
approaches significantly deters the implementation of RC and the formation of a
project-based integrated team. They argued that commitment from clients is
imperative as they can more effectively drive the team building process as the
project sponsor. Ng et al. (2002) found that the lack of training and guidance
in RC affected the attainment of project goals. Moreover, when parties have
past negative experience of relational arrangement, it is difficult for them to
adopt RC practices again
(Glagola
and Sheedy, 2002). Lastly, the lack of experience in relational arrangement
poses a barrier to implementing RC due to a lack of understanding on how it
works (Glagola and Sheedy, 2002).
However,
from a critical point of view it has been pointed out that training and
education are key issues which can facilitate this move from adversarial to
proactive relationships in the project team. This training and education needs
to be focused on the skills and techniques and philosophy of relational
contracting.
2.9.2 Misalignment
among project participants
A
misalignment among project participants may impede the adoption of RC. Eriksson
et al. (2008) reported that not all organizations have the will and ability to
cooperate with other parties and their unenthusiastic participation is a common
barrier to adopting relational approaches.
Akintoye
et al. (2000) found that a lack of senior management support contributes to the
failure of collaboration in construction projects. Lack of top management
support may discourage individual decision makers from seeking new and more
effective RC approaches (Eriksson et al., 2008). Furthermore, the lack of
client's initiative in implementing RC practices dissuades other parties from
adopting it (Rahman and Kumaraswamy, 2008). The lack of common goals among
contracting parties may be a barrier to implementing RC (Drexler and Larson, 2000).
Packham et al. (2003) found that many problems arise because of different
definitions of project goals. Drexler and Larson (2000) also pointed out that
it is necessary to recognize that parties should work toward the same goals and
need each other to achieve them.
2.9.3 Adversarial environment
1.
The antagonistic culture and incompatible personalities between parties
(Kumaraswamy et al., 2005) engender adversarial environment which impedes the
adoption of RC. Contracting parties are used to working in opposition to each
other to achieve their own objectives (Eriksson et al., 2008). The adversarial
“win–lose” attitude exists due to a lack of trust among contracting parties (Ng
et al., 2002).
2.
Another barrier to RC adoption is the presence of opportunistic behaviors due
to commercial pressures, absence of risk-reward plans and cultural clash at
individual levels (Ke et al., 2011). The persisting adversarial setting deters
contracting parties from adopting RC and instead may cause them to behave opportunistically
(Rahman and Kumaraswamy, 2008).
3.
Incompatible culture at organizational and inter-personal levels may deter
parties from adopting RC practices. Incompatible organizational cultures among
contracting parties arise due to short-term focus on single projects (Eriksson
et al., 2009). Inter-personal cultural clash may take place among project team
members because they are of different nationalities (Hofstede, 2012).
2.9.4 Cost and time to conduct RC
The
additional cost and time needed to conduct relational contracting may impede
its adoption. A substantial amount of cost may be needed to establish and
maintain relational approaches (Ross, 2003). Cost may be incurred in cultural
management which includes activities such as coaching and workshops (Ross,
2003). Bresnen and Marshall (2000) found that organizations need to spend
additional cost to change their systems to facilitate open communication and
information sharing between partner organizations.
To
have successful relational contracts, a considerable amount of time is needed
to find the right partners and develop the partnership (Cook and Hancher,
1990). Time is required to set up partnering charters and dispute resolution
mechanisms, conduct team bonding exercises and workshops (Bresnen and Marshall,
2000).
2.9.5 Uniqueness
of public projects
The
uniqueness of public projects may be a barrier to adopting RC. Palaneeswaran
and Kumaraswamy (2000) observed that clients, especially in the public sector,
showed great reluctance to adopt changes and innovations as beliefs such as
“there is no need to change current approaches/practices that are good enough”
or a “not invented here” syndrome, do exist. Conservatism and inflexibility are
barriers to RC since they hamper team work (Ng et al., 2002).
Parties
adopting RC may project their current exchange into the future (Macneil, 1974).
However, contracting parties have misgivings about future relationships because
fresh tenders need to be called for each new public project (Drexler and
Larson, 2000). The need to call fresh tenders is because the public sector
needs to maintain transparency to avoid allegations of corruption, and it needs
to be accountable to tax payers (Ke et al., 2013). The need for transparency
and accountability leads to the enactment of stringent rules, regulations and
laws.
2.10 BENEFITS OF RELATIONAL CONTRACTING
2.10.1 Rapid decision making
During
the course of this research a series of benefits, to different people at
different levels, were identified to come about through the adoption of
relational contracting approaches. A major advantage was identified in
operating on a face to face basis. When the “protective barrier” of “paper
warfare” is broken down by a collaborative approach the need to formally
document every discussion or event disappears and the traditional, contract
specified route for resolution of discrepancies is circumvented. Direct
discussion between decision makers is legitimized, as is rapid decision making.
The consequence is that participants are more comfortable at devolving decision
making to appropriate levels within the organization and greater job
satisfaction ensues.
2.10.2 More eager to go to work
More
enjoyable to go to work was a commonly cited view of relational contracting.
When the adversarial nature of the conventional contract is replaced by
collaborative, proactive working then participants find work more rewarding and
enjoyable. People enjoy going to work in an atmosphere which allows each to
make a positive contribution to moving the project forward. Most people are
part of this industry because they like to see, and are proud of, their
achievement being used and the contribution it makes to society.
2.10.3
Cost and time savings
Undoubtedly,
the atmosphere on a well managed relational contract is more pleasurable to
work in and conducive to joint decision making. Innovative solutions are more
likely to develop, and consequent cost and time savings and quality
improvements accrue, when a number of heads are put together to solve a
problem. The range of perspectives brought to bear on the problem may well be
enlightening to participants and help them to understand and appreciate more
fully the differing objectives which always exist in a project. By building the
level of trust and being convinced of the contractors competence and
trustworthiness, the organization personnel can be freed from the chore of
being on the spot all the time in order to conduct supervision. When the
situation arises, when the organization personnel can trust the Contractor to
carry out the job correctly, not only is work more enjoyable but time can be
spent on more creative issues
It
also aid in reducing time in delivering the project, reduces risk and mitigate
their influence. Relational contracting also helps to reduce the cost of
changing partner in projects, at the same time maximizing resource utilization
2.10.4 More
focus on work issues
The
organization is capable of providing assistance on the technical and knowledge
aspects of the project and can, in a relational contracting approach, provide
faster, better and more solutions to construction problems. More harmonious
working relationships allow both parties to focus on work issues rather than
other contractual issues. The organization becomes more proactive in helping
the Contractor. The lower level of necessity to use formal channels and
documentation allows for more focus on project problem solving but this new
regime is dependent on trust being established. Undoubtedly, the sources of
claims still need to be documented but this is not the central focus of either
party. When the situation arises as “business as usual” when both sides are
proactive in solving construction problems then a new focus of attention can
emerge.
2.10.5 Best
quality
Improve
the design which leads to improved quality of project. Moreover it also helps
to achieve better safety performance, through response to technology changes.
It also help to facilitate creative and innovative approaches.
At
a state level, relational contracting has the potential to deliver on
government priorities such as regional and industry development, empowerment,
work life balance and a sustainable industry (in terms of economics,
environment and people). This being an internal marketing issue should be fully
realized and utilized by the organization.
CHAPTER THREE
3.0 RESEARCH METHODOLOGY
This chapter is concerned with the
methodology used in arriving at the research topic. It comprises the reason for
the study or research work while the opinions of professionals in the industry
are sourced.
This
chapter also contains the area of study, instrument of data collection and this
includes structured survey design administered to the relevant professionals in
the field.
3.1 AREA OF STUDY
The
study area encompasses a number of private quantity surveying, architectural
and civil engineering consultancy firms in Enugu State, South-eastern Nigeria,
that have been involved in building projects in a school.
3.2 SOURCE OF DATA COLLECTION
The
source for this study were primary and secondary data
v Primary
data
v Secondary
data
3.2.1 PRIMARY DATA
This
is the first hand information collected, upon which data analysis is carried
out to draw conclusions satisfying the research questions. The primary data
method used were direct oral interview with the practicing Quantity Surveyors,
Architectures and Civil Engineers in the consultancy firms and questionnaires
submitted to construction professionals, to get detailed information on their
perception of the adoption of relational contracting
3.2.2 SECONDARY DATA
This
method is based mainly on the review of related past literatures and write ups
from books, journals, seminars, paper reports and other forms of published and
unpublished materials that were considered relevant in the research exercise.
These sources however helped immensely to give the useful and relevant
information with regard to their views and opinions concerning the topic.
3.3 RESEARCH DESIGN
Research
design may be defined as the plan for getting the research question up to the
conclusion. It is a blue print for data collection and interpretation. It deals
with the logic of scientific inquiring, a strategy for testing the hypothesis
or the interpretation work, for understanding phenomena. The research design
employed for this investigation was written questionnaires and from practicing
Quantity Surveyors, Architectures and Civil Engineers in consultancy firms.
3.3.1 TARGET POPULATION
The
totality of all observations with specified characteristics of interest
relevant to particular decisions constitutes a population. The word population
is in fact used in this study to indicate any well defined class of people that
satisfies this study objective. From the above, the population has been drawn
from Quantity surveying, Architectures and Civil Engineers consultancy firms in
Enugu State.
3.3.2 SAMPLE SIZE
Since the research study focuses its
intention on an assessment of
the perception of Nigeria construction professionals in Enugu, towards adoption
of relational contracting , the researcher meticulously
selected his sample size of five professionals from each field summing it up to
fifteen professionals.
3.3.3 SAMPLING TECHNIQUES
The
sampling methods employed in the course of this research was random sampling.
This method accords each entity in the population an equal probability of being
chosen for the sample without showing bias.
In
order to ensure that data obtained are reliable, the data were collected from
consultant Quantity Surveyors, Architectures and Civil Engineers in the
consultancy firms, being that they keep appropriate record of contract
documents.
3.3.4 DATA COLLECTION INSTRUMENT
This
was done through a well structured survey design which involves questions
specifically drawn up to be answered by the professional Quantity Surveyors,
Architectures and Civil Engineers in consultancy firm for the purpose of
getting facts and information. The questions contained in the survey are
designed and directed towards obtaining enough facts and information as
required by the researcher to fully exploit the topic of the study.
3.3.5 PROCEDURE FOR DATA COLLECTION
The
data collection instrument was administered to the target respondents by the
researcher and complete responses were obtained. At this point, adequate time
and care was taken in order to explain and ensure that the target respondent
understood what was required of them to do when answering the questions.
3.3.6 TOOLS FOR DATA PRESENTATION/ANALYSIS
It
is important to examine the relevant statistical techniques for all the
decision making procedures built in the study. It is also pertinent to discuss
the methods which will elicit the raw data for empirical analysis. To achieve
the aims and objectives of this research work, certain methods were used which
includes percentage indexes and graphs.
3.4 METHODS OF DATA PRESENTATATION/ANALYSIS
In
the data analysis, data collected and research question testing are represented
using the Correlation analysis. According to Eze et al (2005) Correlation can
therefore be regarded as a form of statistical analysis or test used to measure
the degree of relationship between two or more different sets of data, one
independent(x) and the other dependent(y).
CHAPTER FOUR
DATA PRESENTATION AND
ANALYSIS
4.0 INTRODUCTION
In
this chapter, the data gathered by the researcher during the process of this
research are hereby presented, analyzed and interpreted. The data collected
based on the Research Methodology prescribed in Chapter 3 are a response to the
research questions outlined in Chapter 1. The research questions are as
follows:
Γ
What
are the difference dimensions of relational contracting practices?
Γ
What
are the ways/levels by which relational contracting practices can be deployed
in public project?
Γ
What
are the barriers to the adoption of relational contracting practices?
Γ
What
are the benefits of relational contracting?
4.1 QUESTIONNAIRE SURVEY RESPONSE
4.1.1
RESPONSE RATE
The questionnaire survey was
conducted in August 2017. The researcher advanced to submit the survey questionnaires
to construction professionals (Quantity Surveyors, Architectures and Civil
Engineers) in fifteen consultancy firms and a number of responses were obtained
unfortunately a number of the professional consultancy firms were absent at the
locations sourced via their different bodies’ official website and a few where
present but not available to attend to the researcher during the period of the
survey. However, survey questionnaires where successfully administered to nine
construction professionals. A total of 5 respondents from these 5 firms were
issued with the survey questionnaires all of which responded to it,
representing a 100% per 60%(27%,20% and 13%) response rate (Table 4.1.1.1 and
fig 4.1.1.2 below). This is considered adequate for the reporting and analysis
of the collected data.
|
PROFESSIONALS
|
NUMBER
|
PERCENTAGE(%)
|
|
Engineers
|
4
|
27
|
|
Architects
|
3
|
20
|
|
Quantity Surveying
|
2
|
13
|
|
None
|
6
|
40
|
|
Total
|
15
|
100
|
Table
4.1.1.1: RESPONSE RATE
|
|
Source: Field
Survey 2017
Fig
4.1.1.1: RESPONSE RATE
4.1.2
RATE
OF ADOPTION
|
PROFESSIONALS
|
NUMBER
|
PERCENTAGE(%)
|
|
Engineers
|
3
|
33
|
|
Architects
|
1
|
11
|
|
Quantity Surveying
|
1
|
11
|
|
None
|
4
|
45
|
|
Total
|
9
|
100
|
Table 4.1.2.1: RATE OF ADOPTION Source: Field Survey 2017
Fig 4.1.2.1 RATE OF ADOPTION
Table
4.1.2.1 and fig 4.1.2.1 above indicate the rate at which the construction
professionals adopt the relational contracting. Out of the nine professionals
that responded to the questionnaires, only five indicated that they adopt
relational contracting while four do not.
4.1.3
BARRIERS
IN ADOPTING RELATIONAL CONTRACTING
Table
4.1.3.1 BARRIERS IN ADOPTING RELATIONAL CONTRACTING
|
ITEMS
|
NUMBER
|
PERCENTAGE (%)
|
|
Lack of experience/ knowledge
|
4
|
23.52
|
|
Misalignment of interest
|
1
|
5.88
|
|
Adversarial Environment
|
4
|
23.52
|
|
Cost and Time
|
2
|
11.76
|
|
Uniqueness of project
|
6
|
35.29
|
|
Total
|
17
|
100
|
Source: Field Survey 2017
FIG
4.1.3.1 BARRIERS IN ADOPTING RELATIONAL CONTRACTING
Table
4.1.3.1 and fig 4.1.3.1 above indicate the
rate or extent at which some items canbe a barrier towards the adoption of the
relational contracting. The result was obtained from those that adopt
relational contracting(what can hinder the adoption) and those that do not.
4.1.4
BENEFITS
OF RELATIONAL CONTRACTING
|
ITEMS
|
|
PERCENTAGE(%)
|
|
Rapid decision making
|
5
|
25
|
|
More eager to go to work
|
2
|
10
|
|
Cost and time savings
|
3
|
15
|
|
More focus on work issues
|
5
|
25
|
|
Best quality
|
5
|
25
|
|
|
20
|
100
|
Table
4.1.4.1 BENEFITS OF RELATIONAL CONTRACTING Source: Field Survey 2017
Fig
4.1.4.1 BENEFITS OF RELATIONAL CONTRACTING
Table 4.1.4.1 fig 4.1.4.1 above
indicates the benefits of adopting relational contracting. The result was
gotten from the response of the five professionals that adopt relational
contracting.
CHAPTER FIVE
5.0 SUMMARY, CONCLUSION AND RECOMMENDATIONS.
This
chapter summarizes the study by highlighting the research conducted on the
topic. The conclusions given were drawn up from the outcomes of the research
and observations on the rate of adoption of relational contracting by
construction professional. Moreover, recommendations were based on findings and
conclusion of the study.
5.1 SUMMARY OF FINDINGS
This
study was conducted for the purpose of assessing the perception of Nigerian construction professionals
towards adoption of relational contracting (perspectives of Enugu construction
professionals). The random sampling technique was used
for gathering data, and direct oral interview through a well structured survey
design with drawn up questions was used as the instrument for collecting data.
In
the light of this, the findings of this research were summarized as follows:
1.
Most of the construction professionals
have been adopting this type of contracting without the knowledge that they are
into it. Rather they took it as an informal contracting.
2.
Moreover, due to the condition of the
country, some of the professionals have preferred to carry out work by
themselves due to lack of trust or opportunism.
3.
Furthermore, client’s desire to maintain
the same type of construction style(uniqueness of project) has been the
greatest reason or barrier to the adoption of relational contracting.
4.
Hunger for best quality(especially
between a contractor and supplier) has been one of the sole reasons why
relational contracting is been adopted by some of the consultants.
5.2 CONCLUSION
Alliancing,
partnering and relational contracting, all have a common theme, which is to
develop a long-term relationship for such to
be applied successfully. Successful sustainable relationships rely on
relational forms of exchange, with high levels of trust and open and frank
communication. Also, the issues concerned in relationship at each level are
different. In order for relational contracting to be successful, realising and
understanding the different levels at which relational contracting takes place
is an extremely important issue.
Relational
contracting brings about a more proactive and collaborative working approach.
People find work more rewarding and enjoyable. There is much less paperwork to
deal
with
and the traditional, contract specified route for problem resolution is
circumvented.
During
the process, a level of trust is built. Also, problem resolution on the
technical and
knowledge aspects of the project is shared,
providing faster, better and more solutions in a relational contracting
approach. Other than at the operation level, relational contracting, at a state
level, has the potential to deliver on government priorities such as regional
and industry development, empowerment, work life balance and a sustainable
industry.
Problems
may be overcome by education, training and experience. By making the management
of relational contracting project part of craft training, tertiary education
and management policy, project team members can be predisposed to buying into
the relational contracting philosophy, even those who have not attended all (or
any) of the workshops. A good facilitator is important to the success of a
relational contract but, other than a good facilitator, the right attitude of
senior management in both organisations
is also important.
5.3 RECOMMENDATIONS
Here
are four things you can start doing today in your journey towards relational
contracting:
1. Arm yourself with facts about relational
contracts. Investigate whether you suffer from problems in your relational
contracts and analyze whether the problems can be understood as result of your weaknesses.
Investigate your most successful commercial relationships and analyze whether
success may be a result of use of relational contracting elements. Facts must
be your weapon when confronting superstitious beliefs and skepticism about
relational contracts.
2.
Involve the right stakeholders. Upper management should become aware of the
potential advantages and economic upside associated with relational
contracting. Make them your allies and sponsors.
3. Start with lower-risk contracts and call it
a pilot. De-risk and build a success story from which you can continue using
relational contracting for bigger and more business critical contracts.
4.
Be very forgiving and patient with nay-sayers and skeptics. Relational
contracting will meet resistance, regardless of the undeniable evidence of its
advantages in many situations. We are all humans and typically don’t like
change. Hesitation should not be confused with bad intentions. Instead, try
education as your change agent. Please remember that this white paper is
available as a free, open source document and we encourage you to share it with
your colleagues, clients, customers, suppliers and business partners. ‘
If
you are hesitant and still want to try, start by implementing one or a few of
the relational tenets and see what happens. It should then be clear to you that
this will not mean that you are creating a relational contract - that will only
happen when you make the guiding norms/principles the true North of the
relationship. But you will then maybe have started a relationship journey that
hopefully will lead you to adopt the relational contracting approach in full in
those commercial relationships where this contract model is the best fit and
will produce most value to your organization.
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APPENDIX
QUESTIONNAIRE
TOPIC:
ASSESSMENT OF THE PERCEPTION OF NIGERIA
CONSTRUCTION PROFESSIONALS TOWARDS
ADOPTION OF RELATIONAL CONTRACTING
“Relational
contracting is defined as the working relationships among the parties who do
not often follow the legal mechanism offered by the written contracts, and
instead govern the transactions themselves within mutually acceptable social
guidelines (Macaulay, 1963)”.
Name of the firm……………………………………………………………………………………
………………………………………………………………………………………..
Address…………………………………………………………………………………………………………………………………………………………..
What number of
school public building projects have the firm carried out?
Role of the
respondent in the project………………..
Name of the
project……………………..
Location…………………..
Which tender
procedure was used in those projects:
• Invited
tendering
• Open
competitive tendering
•
Project-specific prequalification/short listing
• Negotiated
tendering
Which delivery system
was used in this project:
• Traditional
• Turn-key
• Public-private
partnership
• Design &
Construct
• Other, namely:
______________________
1(Strongly
agree) 5(Strongly disagree)
To assess the level of deployment of relational
contracting practices in public project
|
S/N
|
ITEM
|
1
|
2
|
3
|
4
|
5
|
|
1
|
Most of the projects are based on trust and not formal contract
|
|
|
|
|
|
|
2
|
I established a relationship/partnership between I and the other
parties
|
|
|
|
|
|
|
3
|
During
the project, contractor/consultant/supplier and I reached an agreement on the
principles/norms to guild our relationship?
|
|
|
|
|
|
|
4
|
There was an alignment of interest between us
|
|
|
|
|
|
|
5
|
Both partners fulfill their responsibilities
|
|
|
|
|
|
|
6
|
We adjust practices and polices in response to unforeseen conditions
|
|
|
|
|
|
|
7
|
Both parties were willing to help in occurrence of any problem
|
|
|
|
|
|
|
8
|
Any party can exercise power in penalizing other party in the case of
delay
|
|
|
|
|
|
|
9
|
I focused more on maintaining the relationship than the deal
|
|
|
|
|
|
|
10
|
During
this project, the contractor/consultant/supplier and I treat problems
constructively
|
|
|
|
|
|
|
11
|
I
do not have the feeling of being misled by the contractor/principal/supplier
|
|
|
|
|
|
|
12
|
The
contractor/consultant/supplier provides me with information relevant to the
project
|
|
|
|
|
|
|
13
|
The
relationship helped in rapid decision making
|
|
|
|
|
|
|
14
|
The
relationship helped in motivating the teams or creating more eagerness to
work
|
|
|
|
|
|
|
15
|
I was able to save cost and time
|
|
|
|
|
|
|
16
|
The
alignment of interests help in mitigating risks
|
|
|
|
|
|
|
17
|
This type of contracting has been of good help to our firm
|
|
|
|
|
|
|
18
|
My partners have experience of this type of contracting
|
|
|
|
|
|
To assess the
benefits of relational contracting practices
|
S/N
|
ITEM
|
1
|
2
|
3
|
4
|
5
|
|
|
The
relationship helped in rapid decision making
|
|
|
|
|
|
|
|
The
relationship helped in motivating the teams or creating more eagerness to
work
|
|
|
|
|
|
|
|
Relational
contracting provide faster, better and more solutions to construction
problems
|
|
|
|
|
|
|
|
Relational
contracting helps in saving costs and time
|
|
|
|
|
|
|
|
The alignment of
interests help in mitigating risks
|
|
|
|
|
|
|
|
The embedded
social guildlines helped to checkmate the activities of the contractor/consultant/supplier
|
|
|
|
|
|
To assess the barriers to the adoption of relational contracting
practices
|
S/N
|
ITEM
|
1
|
2
|
3
|
4
|
5
|
|
1.
|
Relational
contracting been of good help to my firm
|
|
|
|
|
|
|
2.
|
I
still maintained the relationship after the project
|
|
|
|
|
|
|
3.
|
The
contractor/consultant/supplier once experienced the relational contracting
before the project
|
|
|
|
|
|
|
4.
|
With
reference to number 3, my firm incur cost in cultural management which
includes activities such as coaching and workshops
|
|
|
|
|
|
|
5.
|
It
takes time to set up partnering charters and dispute resolution mechanisms,
conduct team bonding exercises and workshops
|
|
|
|
|
|
|
6.
|
My firm spends
additional cost to change the systems to facilitate open communication and
information sharing between partner organizations.
|
|
|
|
|
|
|
7.
|
The time and
cost incurred limit the adoption of relational contracting
|
|
|
|
|
|
|
8.
|
The
contractor/consultant/supplier see the embedded social guild lines as
evidence of lack of trust
|
|
|
|
|
|
|
9.
|
My
firm has the will and ability to cooperate with other parties
|
|
|
|
|
|
|
10.
|
My client has
the initiative of implementing relational contracting
|
|
|
|
|
|
|
11.
|
There is still
incident of opportunism and uncertainty in the adaptation of the relational
contracting
|
|
|
|
|
|
Apart from formal contracting, what other ways can
opportunism or uncertainty be abolished from construction
industries…………………………………………………………………………………………………………………
……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………….
Thanks and God bless you.
……………………………………………
Name of respondent and signature
