Contracts capture an agreement between two parties to exchange a resource in the future (ex-ante), however the future is not certain. Only after the event has happened, might the two parties compare the resources they have received to what they expected (ex-post). Entering into a contract with unknowns gives rise to incomplete contracts theory, the focus of which includes the study of human behavior. Relational contracting is currently being studied as a method of reducing the transaction costs and incompleteness of contracts. Using case studies, this research aimed to reach a conclusion regarding why certain contractual projects run over budget. Overruns are often related to a variation agreement that is incomplete and open to interpretation. Understanding what the issues are and how to mitigate contractual risks was thus a key focus of this research. The research examined two industries - construction and IT. From the case studies, 16 interviews were conducted and 12 contracts reviewed. The least concern for all the parties was disputes, as the parties find solutions to address issues not considered when drafting contracts. Industry specific experience and knowledge is needed to mitigate some unknown contractual risks, however. Relational contracting was also very evident in resolving issues outside of a contract. Further studies into ancillary contracts will reveal more insight into behavioural and relational contracting. / Dissertation(MBA)--Gordon Institute of Business Science, University of Pretoria,2018. / Gordon Institute of Business Science (GIBS) / MBA / Unrestricted

The importance of good relationship among parties in the construction industry has been accepted as one of the central issues of an organisation's success. The growing acceptance to the Relational Contracting approaches that representing partnering, supply chain alliances and other types of collaborative working relationships shows how construction organisations are moving forward from the traditional adversarial culture to a more harmonious working environment. However the application of the Relational Contracting Norms in the context of national culture has received relatively little attention in the literature. This study attempts to fill this void by investigating how good relationships develop within construction projects in Malaysia. It also investigates the adaptability of the relational contracting norms in different cultural setting and explores whether similar relational contracting norms emerge in different projects before developing a relationship development model that is applicable to the academic and practitioners. By using qualitative approach, the main data was collected from 36 semi-structured in-depth interviews across four case studies. The results were validated by 20 follow-up interviews with selected respondents, two stages of expert interviews and cross-case analysis. This study found that good relationships within construction projects in the Malaysian construction industry developed from the interplay of twelve structural and relational dimensions that went through three stages of relationship development process in project setting. It highlights the significant importance of the value and emotion-related dimensions in developing good relationships. A relationship development model was produced based on these twelve dimensions (special contract directive, power, performance, trust, commitment, loyalty, personal relationships, emotions, values, social interaction, work inter-dependency and political connection). The research contributes to construction management literature by supporting the Transaction Cost Economics Theory and extends the Relational Contracting Theory. It proposes seven new dimensions that are incorporated in the newly proposed relationship development model. Although the study was conducted in a specific national culture, it is argued that the model is applicable to other context on the basis that spiritual, emotional and human components of the work experience could be learned by other cultures.

This dissertation explores "fairness" as an ethical construct within federal procurement contracting using 3,548 contract dispute decisions published by the Armed Services Board of Contract Appeals (ASBCA) between 2007 and 2021. It employed a multi-faceted, mixed method research design at macro, mezzo, and micro levels that used a blend of descriptive analysis, computational text analysis, and qualitative thematic analysis to explore a little-studied operational domain within public administration. This investigative approach made possible an examination of how fairness manifests in federal procurement in three aspects: equality (competition), equity (contractor demographic identity), and reciprocity (dispute resolution outcome). Aspects of Moore's Public Values Framework were combined with Lipsky's theories regarding street-level bureaucracy and Maynard-Moody and Musheno's conceptualization of frontline workers as knowledge agents to examine the "human" dimensions of administrative discretion in procurement. In addition to explaining the fundamental differences between "fairness" (between individual entities) and "justice" (fairness writ large at the societal level), the dissertation demonstrates how power dynamics between the government sovereign and its commercial civilian partners complicate contract relationships. Its quantitative findings suggest that fairness is impacted by procurement complexity, entrenched arms-length contracting relationships, and strictly construed risk apportionment when contingencies adversely impact contract performance conditions, and that contractor identity plays some role (though its extent is unclear) in the generation and resolution of particularly contentious disputes. This study's qualitative findings indicate that both parties perceive a breakdown in the contractual duty of "good faith and fair dealing" when rivalry is pursued over cooperation, when the parties fail to understand or respect each other's responsibilities and constraints, and when the behavior of government contracting officials creates role confusion between the protection of government interests and the legislatively required fair treatment of contracting partners. Ultimately, this dissertation speaks to ongoing discussions in diverse fields and disciplines such as public administration, organizational studies, empirical legal research, and relational contracting. It also contributes to developing theories regarding complexity in procurement and existing contracting studies from both sociological and economic perspectives. / Doctor of Philosophy / In popular thought, written contracts exist to protect the rights of both parties should one fail to uphold its part of the "bargain." Some legal theorists argue, by contrast, that the contracting process fundamentally is about interpersonal relationships, and that litigated contract disputes are not merely about material redress, but moreover, a failure of the "spirit of contract." From this perspective, a contract's true value lies more in the quality of the relationships it creates than in its documentary perfection. Interpersonal fairness, where the parties treat each other and their contract promises with integrity and respect, is a key component of that relationship. This dissertation studied the ethical expectation of "fairness" in federal defense contracts using 3,548 formal contract dispute decisions published by the Armed Services Board of Contract Appeals (ASBCA) between 2007 and 2021. These decisions were used to examine what procurement fairness means by focusing on three aspects: equality (fair competition for business opportunities), equity (fair distribution of public funding), and reciprocity (how the "spirit of contract" is honored during contract administration). The study explored how government sovereignty impacts contractors' expectations of fair treatment. It further demonstrated that contract relationships are challenged by the complex technical, administrative, and legal requirements of federal contracts. The study's findings revealed that the most contentious disputes (those that require a judge's ruling on legal merit) result from highly competitive contracts where maximum risk has been placed on contractors for performance and price control. The findings also suggested that contractor demographic identity plays some part in how disputes begin and how they are resolved, though the extent and implications of these differences are unclear. Finally, the study indicated that disputes alleging a violation of the contractual duty of "good faith and fair dealing" showed evidence of entrenched rivalry instead of cooperation, the contracting parties' failure to appreciate each other's operating challenges and constraints, and confusion about how federal contracting officers function as both protectors of the government's interests and as contractor rights advocates under federal contract law.

This dissertation investigates two major themes: (1) the strategies that global firms use to overcome weak institutions in their outsourcing and (2) how local institutions affected how firms reconfigured their global supply chains in response to the financial crisis. All three papers use a unique dataset of international contract manufacturing orders that provides hitherto unavailable insight into the global supply chains of many of the world's largest brands in footwear, sportswear, and apparel. In the first essay I create a formal model that examines the use of relational contracting by firms to overcome weak contracting institutions in their supply chains. The model predicts that, when the risk of future demand shocks is high, buyers make long-term commitments to source from suppliers in weak institution countries. I test this model and find that buyers preserved their relationships with suppliers in weak contract enforcement countries during the financial crisis for reasons that cannot be explained by cost. In conjunction with the model, these results suggest that relying on relational contracting to overcome weak contracting institutions can reduce a buyer’s flexibility in configuring his supplier networks. In the second essay, I examine whether firms choose to source from multinational (MNC) suppliers instead of local suppliers as a means of overcoming weak contract enforcement institutions or as a means of accessing supply chain management capabilities. I find strong evidence that buyers are more likely to source from MNC suppliers in countries where contract enforcement is weak and when they have less experience sourcing from a given country. Buyers are also more likely to source from MNC suppliers when they source a wider variety of products, have smaller supplier networks, and have smaller order volumes. My third essay investigates how trade credit terms are affected by local credit markets, financial institutions, and market power. I find that trade credit terms are longer when local credit markets are more developed and when buyers have market power. I also test how trade credit terms responded to the financial crisis and find that terms lengthened subject to the depth of local credit markets and buyer market power.

The significance of a link between organisational culture and organisational performance has long been recognised in both mainstream management literature as well as in the construction management literature. Within the construction research domain, the impact of culture and organisation on project performance is becoming an increasingly important topic for the establishment of sound partnering or alliancing, or to what has been referred to increasingly in recent years as relational contracting, in the overall approach to project management. However, studies of the efficacy of alliancing or partnering have so far produced mixed results. The present study concerns two public sector organisations in Australia, where the interrelationships between organisational culture and structure, commitment and national culture were investigated. The methodology was triangulated; with a detailed questionnaire survey undertaken with both organisations, and with subsequent interviews and case studies carried out for validation. Multivariate statistical techniques were utilised to investigate complex relationships between variables. The research reports the perceptions of professional personnel in the public sector organisations, and some mismatches found between organisational structuring and organisational culture. Key issues affecting project performance, and the set of project team characteristics enhancing the development of a collaborative project culture, were found to include continuous commitment from all levels, right mix of people, formal and informal communication, continuous facilitation, education and training in the universities, institutions and industry. The combined outcomes of the research provided a framework of fundamental elements for successful relational contracting.

No description available.

Abstract Large engineering projects are executed by a network of heterogeneous organisations. In order to be effective, risk management in large engineering projects needs to take the perspective of the entire project network instead of focusing on risk management practices of single actors. Contextual factors such as complexity of the project network and the challenging institutional environment pose additional challenges to risk management. The purpose of this study is to increase the understanding of the sources of risks in engineering project networks and the role of risk sources in determining risk management practices. The perspective of information processing theory is used. The role of equivocality and uncertainty as organisations’ rationales for processing information is examined to gain new insights into the selection of appropriate risk management practices. Literature introduces relational contracting as a response to the need for collaboration in project networks. In this study collaborative risk management practices in the workshop-type meeting and in the project alliance were studied. A qualitative research method was employed to study the nature of risk sources, the role of risk sources in determining risk management practices and collaborative risk management practices. The results of this study enhance the understanding of the nature of risks in engineering project networks. The current project risk management literature proposes that contextual factors related to technology, organising projects and environment increase uncertainty in projects. This study shows that it is relevant to categorise risk sources based on their contingency factors related to uncertainty (lack of information) and to equivocality (the existence of multiple interpretations). It is shown how risk sources impact the selection of project risk management practices. Collaborative risk management practices of workshop-type meeting and project alliance are depicted. Project-based companies and organisations executing investment projects can benefit from the results of this study. This study can guide managers when developing practices to enhance risk management. This study shows how informal risk management practices should be considered in addition to the traditional formal risk management practices, particularly in cases when projects confront situations of equivocality. / Tiivistelmä Suuria projekteja toteutetaan heterogeenisten organisaatioiden muodostaman projektiverkoston avulla. Projektiverkoston tehokkaaseen riskienhallintaan tarvitaan koko verkoston näkökulma yhden organisaation näkökulman sijaan. Tilannetekijät kuten projektiverkoston monimuotoisuus ja projektin haasteellinen ympäristö asettavat lisää haasteita riskienhallinnalle. Tämän väitöskirjan tavoitteena on lisätä ymmärrystä siitä, mitkä ovat riskien lähteitä projekteissa ja kuinka riskien lähteet vaikuttavat riskienhallintamenetelmien valintaan. Väitöskirjassa on käytetty teoreettisena viitekehyksenä informaation prosessoinnin näkökulmaa. Erityisesti on tutkittu monimerkityksisyyden ja epävarmuuden roolia organisaatioiden perusteena käsitellä informaatiota. Kirjallisuudessa on esitetty luottamukseen perustuva sopiminen vastauksena projektiverkostojen yhteistoiminnallisuuden tarpeelle. Väitöskirjassa on tutkittu yhteistoiminnallisina riskienhallintamuotoina työpajatyyppistä työskentelyä sekä projektiallianssia. Tutkimuksessa on tapaustutkimuksen avulla selvitetty projektien riskien lähteitä, riskien lähteiden roolia riskienhallintamenetelmiä määritettäessä, sekä yhteistoiminnallisia riskienhallintakeinoja. Tutkimuksen löydökset lisäävät ymmärrystä projektien riskien lähteistä. Nykyinen projektin riskienhallintakirjallisuus esittää, että projektien tilannetekijät, jotka liittyvät teknologiaan, projektien organisointiin ja ympäristöön kasvattavat epävarmuutta. Tämä tutkimus osoittaa, että on tärkeää jaotella projektien riskit tilannetekijöittäin. Jaottelu tulee tehdä sen mukaan onko vallitseva tilannetekijä epävarmuus eli tiedon puute vai monimerkityksisyys eli tilanne, jossa on paljon keskenään ristiriitaista tietoa. Tässä tutkimuksessa osoitetaan kuinka riskien lähteet vaikuttavat projektiverkoston riskienhallintamenetelmien valintaan. Lisäksi kuvataan yhteistoiminnallisia riskienhallintamenetelmiä projekteissa. Projektitoimintaa harjoittavat yritykset sekä investointiprojekteja tekevät organisaatiot voivat hyödyntää tämän tutkimuksen tuloksia. Tutkimuksen tulokset ohjaavat riskienhallintamenetelmien muokkaamista erilaiset tilannetekijät huomioon ottaen. Tämä tutkimus osoittaa, kuinka epämuodollisia riskienhallintamenetelmiä tulisi suosia perinteisten muodollisten menetelmien ohessa erityisesti tilanteissa, joissa monimerkityksisyys on vallitseva tilannetekijä.