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Kwawu, W and Hughes, W (2005) The impact of relational contracting on the construction industry. In: Khosrowshahi, F (Ed.), Proceedings 21st Annual ARCOM Conference, 7-9 September 2005, London, UK. Association of Researchers in Construction Management, Vol. 2, 1195–204.

  • Type: Conference Proceedings
  • Keywords: communication; contracting; procurement; negotiation; tendering
  • ISBN/ISSN: 0 902896 93 8
  • URL: http://www.arcom.ac.uk/-docs/proceedings/ar2005-1195-1204_Kwawu_and_Hughes.pdf
  • Abstract:
    Relational contracting (RC) is a generic term for collaborative approaches to procurement, such as partnering, strategic and project alliances, supply chain management, joint ventures and lean construction. These approaches are based on trust, cooperation and commitment. Since the 1980s, various forms of relational contracts have been advocated as an alternative to traditional arm's length relationships. RC is based on the proposition that economic exchanges contain a significant social component, which is reflected in the behaviour and social relationships of the parties to the exchange. In such circumstances, the need to maintain the relationship overrides the gains achieved by enforcing the appropriate legal contractual obligations. While these attitudinal and behavioural norms are typically considered to be essential to the success or failure of RC, the manner in which they are understood, communicated and acted out is less clear. The practice and usage of RC is explored as an alternative to formal contracting. A case study approach is proposed for the in-depth analysis necessary to explore and capture the potentially diverse practices, attitudes and extent of usage of RC. The way RC agreements are practically understood, communicated and acted out; and their impact on exchange performance will be explored. Understanding of the realities of RC in practice can help researchers and practitioners choose the most appropriate business relationship to adopt and the practical ways forward.