Relational Contracting Creating Value Beyond the Project

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Relational Contracting Creating Value Beyond
the Project

• Barbara Colledge
• Leeds Metropolitan University, UK

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Relational Contracting Creating Value Beyond
the Project

• Relational Contracting
• A transaction or contracting mechanism
• Explicit recognition to the commercial
  relationship
• Focus on trust and partnership

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Relational Contracting Creating Value Beyond
the Project
Globalisation of markets Developments in ICT
Collaboration Partnership Trust-based approach
Innovation Competitiveness
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Relational Contracting Creating Value Beyond
the Project

• Co-operative or relational approach
• Use of partnering
• Supply chain management

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Relational Contracting Creating Value Beyond
the Project

• Relational Contracting in the UK
• Construction Industry
• Latham 1993, Trust and Money
• Latham 1994, Constructing The Team
• Partnering RCF, ECI, CIB
• Housing Grants Construction and Regeneration Act
  1998
• Egan 1998 Rethinking Construction

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Relational Contracting Creating Value Beyond
the Project

• New Contracts
• Engineering Construction Contract spirit of
  mutual trust and co-operation
• GC Works 1 Suite good faith
• PPC 2000 Partnering agreement
• Dispute Resolution Adjudication and Mediation

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Relational Contracting Creating Value Beyond
the Project
Mutual Trust Co-operation
Commercial Competitiveness Business Advantage
Enhancement
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Relational Contracting Creating Value Beyond
the Project

• Value of Relational Contracting

Industry
Sustainable Community
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Relational Contracting Creating Value Beyond
the Project

• Value of Relational Contracting
• Value in General
• Value for the Project
• Value Beyond the Project

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Relational Contracting Creating Value Beyond
the Project

• A Contribution to Sustainable
• Communities
• Social Capital
• The Four Pillars
• Greater recognition of value

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Relational Contracting Creating Value Beyond
the Project Value in General

• The wider economic context
• Micro economic approach individual exchange or
  discrete transaction
• Relational Contracting approach wider framework
  of rights and duties by law and social value

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Relational Contracting Creating Value Beyond
the Project Value in General
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Relational Contracting Creating Value Beyond
the Project Value in General

• Relational Contracting Outcomes
• Trust
• Co-operation
• Dependency
• Sharing of knowledge
• Shared values
• Innovation

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Relational Contracting Creating Value Beyond
the Project Value for the Project

• Relational Contracting Project
• Outcomes
• Project Duration
• Project Cost
• Project Quality
• Client Satisfaction

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Relational Contracting Creating Value Beyond
the Project Creating Value for Sustainable
Communities
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Relational Contracting Creating Value Beyond
the Project Creating Value for Sustainable
Communities

• The Notion of
• Community
• Reciprocity
• Beliefs and values in common
• Relations that are direct and many sided

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Relational Contracting Creating Value Beyond
the Project Creating Value for Sustainable
Communities

• Putnam, 2000 - Social Capital
• social capital refers to connections
• among individuals social networks
• and the norms of reciprocity and
• trustworthiness that arise from them

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Relational Contracting Creating Value Beyond
the Project Creating Value for Sustainable
Communities

• Social Capital Features
• Trust
• Shared Norms
• Networks
• Co-operation and Collaboration

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Relational Contracting Creating Value Beyond
the Project The Four Pillars of Sustainable
Communities
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Relational Contracting Creating Value Beyond
the Project The Four Pillars of Sustainable
Communities
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Relational Contracting Creating Value Beyond
the Project The Four Pillars of Sustainable
Communities

• Competitiveness
• Knowledge transfer is critical to innovation
• Innovation is key to higher productivity and
  greater prosperity
• Innovation relies on people

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Relational Contracting Creating Value Beyond
the Project The Four Pillars of Sustainable
Communities

• The Competitiveness Pillar

Knowledge Skills creativity
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Relational Contracting Creating Value Beyond
the Project The Four Pillars of Sustainable
Communities

• Competitiveness - The Relational
• Contracting Response
• Long term relationship development
• Knowledge transfer and sharing
• Rich interaction with Stakeholders
• Learning organisation project culture
• Increased efficiency and productivity

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Relational Contracting Creating Value Beyond
the Project The Four Pillars of Sustainable
Communities

• The Citizenship Pillar
• Corporate/Individual Citizenship
• Community and Social Responsibility
• The Relational Contracting Response
• Project/Transaction Community
• Alignment of corporate and social agenda

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Relational Contracting Creating Value Beyond
the Project The Four Pillars of Sustainable
Communities
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Relational Contracting Creating Value Beyond
the Project The Four Pillars of Sustainable
Communities
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Relational Contracting Creating Value Beyond
the Project The Four Pillars of Sustainable
Communities

• The Connectivity Pillar

Relational Response
Sustainable Community
Trust Social Capital Connectivity Networks
Long term relationships Trust Partnership Network
s
Economic Prosperity Tolerance Innovation
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Relational Contracting Creating Value Beyond
the Project The Four Pillars of Sustainable
Communities

• Creative Citizens Pillar
• New Skills
• New Behaviour
• New Knowledge

Team working
Culture Change
Shared Values
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Relational Contracting Creating Value Beyond
the Project The Four Pillars of Sustainable
Communities

• Creative Citizens Case Study 4 British Airports
• Authority Heathrow Terminal 5 Project 3.7
  Billion
• Innovative partnership and integrated seamless
  team approach
• A culture of personal responsibility and
  improvement
• Investment in team development
• No blame culture and open door management
• Working with supply chain to improve the design
  and construction
• process.
• Set target for team to reduce project costs by
  10.
• The adoption of best practice for productivity
  and quality gains

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Relational Contracting Creating Value Beyond
the Project
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Relational Contracting Creating Value Beyond
the Project

• Conclusions
• Relational Contracting adds value
• Project value for stakeholders
• Individual skills development
• Industry and sustainable community benefit
• Further empirical research needed

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Relational Contracting Creating Value Beyond
the Project

• Barbara Colledge
• Leeds Metropolitan University, UK
• b.colledge_at_leedsmet.ac.uk