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Farsighted project contract management: incomplete in its entirety

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  • J. Rodney Turner

Abstract

The purpose of project organization is to create a cooperative environment. Contracts are the method by which the owner creates a project organization to employ resources to achieve their development objectives. Contracts should aim to produce a cooperative organization, aligning the contractors' objectives with the owners. A three-dimensional vector (reward, risk, safeguard), adapted from the Transaction Cost Economics literature, is used to analyse the efficacy of contract types to do this. Contracts are also unavoidably incomplete. They need to respond to unforeseen circumstance. A four-dimensional vector (incentive intensity, adaptiveness, reliance on monitoring and control, reliance on the courts), also from the Transaction Costs Economics literature, is used to analyse the governance efficacy of contract types. The results are used to develop a contract selection strategy, depending on whether the uncertainty is controlled by the client or the contractor, the project is simple or complex, and the uncertainty is in the project's product, method of delivery or both.

Suggested Citation

  • J. Rodney Turner, 2004. "Farsighted project contract management: incomplete in its entirety," Construction Management and Economics, Taylor & Francis Journals, vol. 22(1), pages 75-83.
    • Handle: RePEc:taf:conmgt:v:22:y:2004:i:1:p:75-83
    DOI: 10.1080/0144619042000186077
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    Citations

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    Cited by:

    1. Cécile Fonrouge & Christophe Bredillet & Charles Fouché, 2018. "Entrepreneurship and project management relationships," Post-Print hal-01768062, HAL.
    2. Kerkhove, L.-P. & Vanhoucke, M., 2017. "A parallel multi-objective scatter search for optimising incentive contract design in projects," European Journal of Operational Research, Elsevier, vol. 261(3), pages 1066-1084.
    3. Marco Furlotti, 2007. "There is more to contracts than incompleteness: a review and assessment of empirical research on inter-firm contract design," Journal of Management & Governance, Springer;Accademia Italiana di Economia Aziendale (AIDEA), vol. 11(1), pages 61-99, March.
    4. Rose, Timothy & Manley, Karen, 2011. "Motivation toward financial incentive goals on construction projects," Journal of Business Research, Elsevier, vol. 64(7), pages 765-773, July.
    5. Yongcheng Fu & Yongqiang Chen & Shuibo Zhang & Wenqian Wang, 2015. "Promoting cooperation in construction projects: an integrated approach of contractual incentive and trust," Construction Management and Economics, Taylor & Francis Journals, vol. 33(8), pages 653-670, August.
    6. Haoyang Song & Jianhua Hou & Shiqi Tang, 2021. "From Contractual Flexibility to Contractor’s Cooperative Behavior in Construction Projects: The Multiple Mediation Effects of Ongoing Trust and Justice Perception," Sustainability, MDPI, vol. 13(24), pages 1-21, December.
    7. Kerkhove, L.P. & Vanhoucke, M., 2016. "Incentive contract design for projects: The owner׳s perspective," Omega, Elsevier, vol. 62(C), pages 93-114.

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