Contract Strategies for Major Projects

CHAPTER 6Collaborative and Relational Contracting Strategies

I define collaborative contracting as attempts to foster better working relationships between parties through the terms and conditions of the contract itself. Not included in this contracting strategy is the use of conventional incentive clauses. I define relational contracting as attempts by owners and contractors to establish long‐term working relationships without changing the contract terms and conditions—a conventional contracting form is employed.

There are two types of collaborative contracting: alliancing/integrated project delivery (IPD) and partnering alliances. One type of relational contracting is discussed that we call repeat supply chain. These three types of contracting strategies are associated with very different project outcomes.

IPD/Alliancing: In Search of Collaboration Through Contracting

Projects are joint products of owners and contractors. Collaboration—which means “to work together”—is important to project success. Collaboration at the working level is essential. Collaboration all the way up to the owner and contractor top managements is desirable. Some contracting approaches, in particular integrated project delivery/alliancing and partnering alliances, were developed with the goal of maximizing the potential for collaboration.

Integrated project delivery, which is usually called alliancing in the petroleum sector, is aimed at aligning the objectives of owner, contractors, licensors, and ...