Public-Private Partnerships (PPPs) have unique characteristics such as a long time horizon and multiple stakeholders involved. This can lead to common transaction hazards – uncertainty, asset specificity, imperfect information and incomplete contracts, which can further promote opportunistic behavior between parties. Although contracts are designed to govern projects and curb opportunism, their efficacy is limited by these transaction hazards. Therefore, the development of strong relationships and cooperative behavior among stakeholders are often emphasized to complement contractual provisions, which can mitigate transaction hazard impacts.
Relational contracting includes a set of principles such as flexibility and effective communication, which promote cooperative behavior and advance mutually beneficial outcomes for stakeholders. A relational contract can include different relational approaches such as informal resolution procedures, partnering practices and incentives to promote relational exchanges in a project. The level of presence of these relational approaches in PPP contracts is an indication of their ability to further inter-organizational relationships. Although previous studies have summarized and further investigated relational approaches in construction projects using conventional delivery methods, similar investigations for PPP projects are limited.
Furthermore, relational contracting theory suggests that the contractual inclusion of approaches does not assure their implementation in the field. Stakeholders tend to form working relationships different than what is intended in the contract. Therefore, examining the implementation of these approaches is an important precursor to exploring their effectiveness and capacity to promote stronger relationships between parties.
Accordingly, this research presents three complementary studies to enhance understanding of relational approaches employed in PPP projects. The first study focused on the identification of relational approaches described in the literature for specification in PPP contracts to enhance cooperative behavior. A comprehensive literature review process identified relational approaches that were grouped into six categories – communication/nature of negotiations, partnering, conflict resolution methods, monitoring, changes process and risk allocation. The second study examined the extent that the relational approaches identified in the first study were specified in 22 PPP transportation project contracts in the United States. This investigation characterized how relational these contracts are, which is indicative of the capacity of these contracts to promote relational exchanges in a project. For instance, different partnering practices were either included in contracts or not, while the inclusion of conflict resolution methods in contracts was selective. The third study investigated the implementation of relational approaches in practice. Semi-structured interviews of 13 subject matter experts were conducted to obtain perspectives regarding the implementation of different relational approaches. For example, all the interviewees emphasized handling conflicts through informal resolution methods to save the time and effort required in third party methods such as mediation, arbitration and dispute review boards. A framework intended to promote proactive management of stakeholder relationships is proposed based on the findings.
Collectively, these three complementary studies shed light on the current state of contractual inclusion and implementation of relational approaches in PPP projects in the United States. Overall, this research contributes towards the growing literature concerning the complementarity between contractual and relational governance, which is needed for improved project performance. These studies have advanced understanding of relational approaches in PPPs by establishing a baseline for their current contractual specification in PPP projects and identifying factors influencing their implementation in the field. Future research can explore their impact on project performance and counterparty relations. / Doctor of Philosophy / Different life cycle phases and stakeholders involved are some of the unique characteristics of Public Private Partnership (PPP) projects. This can lead to presence of transaction hazards such as uncertainty, asset specificity, incomplete contracts and imperfect information which makes contracts less effective in governing projects. Therefore, developing strong relationships between the stakeholders is necessary to complement contracts which can lead to improved project performance.
Relational contracting includes a set of principles which aim at developing cooperative behavior between the stakeholders through improved communication and flexibility. A contract that includes such principles is called a relational contract. Although projects with traditional delivery methods such as design bid build and design build have been investigated regarding relational approaches in contracts, a similar review for PPP contracts has not been found. On the other hand, relational contracting theory suggests that the working relationships between the stakeholders can turn out to be completely different than what is intended in the contract. Therefore, it is important to investigate the actual implementation of relational approaches in PPP projects which has not been performed till now.
Based on the arguments above, three complementary studies have been performed in this research to overcome the limitations mentioned and to have a better understanding of relational approaches in PPP projects. The first study aims at identifying a comprehensive list of relational approaches from the literature which can be included in PPP contracts to enhance cooperative behavior. A robust literature review process was followed to identify relational approaches which were further grouped into six categories – communication/nature of negotiations, partnering, conflict resolution methods, monitoring, changes process and risk allocation. The second study further investigates the contracts of PPP transportation projects in the United States regarding the level of relational approaches identified in the first study. Contracts from 22 PPP projects were investigated and compared. The findings provided insights into the ability of these contracts to promote relational exchanges in a project. For instance, the inclusion of partnering practices was either all-inclusive or not, whereas inclusion of conflict resolution methods was selective. The third study investigated the implementation of relational approaches in practice. Semi-structured interviews of 13 subject matter experts were conducted to gather insights into the implementation of different relational approaches. For example, all the interviewees emphasized the need to resolve conflicts through informal resolution methods to save time and effort required in third party methods such as mediation, arbitration and dispute review boards. A framework with the objective of promoting proactive management of stakeholder relationships was proposed based on the findings.
Collectively, these three studies provide insights into the current state of contractual inclusion and implementation of relational approaches in PPP projects. This research contributes towards the growing literature concerning the complementarity between contractual and relational governance in PPP projects which is needed for improved project performance.
| Identifer | oai:union.ndltd.org:VTETD/oai:vtechworks.lib.vt.edu:10919/104871 |
| Date | 30 August 2021 |
| Creators | Khurana, Mayank |
| Contributors | Civil and Environmental Engineering, Garvin, Michael J., Mahalingam, Ashwin, Iorio, Josh, Shealy, Earl W. |
| Publisher | Virginia Tech |
| Source Sets | Virginia Tech Theses and Dissertation |
| Language | English |
| Detected Language | English |
| Type | Dissertation |
| Format | ETD, application/pdf, application/pdf |
| Rights | In Copyright, http://rightsstatements.org/vocab/InC/1.0/ |
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