University of Twente Student Theses


Relational Contracting in the Construction Industry : Applying the Sourcing Business Model theory to research a contract's influence on the cooperation between client and contractor

Kok, E. (2023) Relational Contracting in the Construction Industry : Applying the Sourcing Business Model theory to research a contract's influence on the cooperation between client and contractor.

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Abstract:Within the Dutch construction industry, it is common practice to capture every agreement made between client and contractor in a contract: a legal document that serves as the basis of the relationship between the involved parties. Small and uncomplicated projects suffice with a traditional distribution of responsibilities between the two parties, but the complexity of long-term and multi-disciplinary construction projects requires a higher degree of cooperation between the client and the contractor. This need stimulated the rise of relational contracts, which feature a high degree of cooperation between parties to make optimal use of each other’s strengths and expertise. The agreements made in such contracts determine how this cooperation can be shaped, which in turn determines the success of the project itself. Hence, the main question to be answered in this research is how the choices made in the contract characteristics influence the cooperation between the client and the contractor and thus the achievement of the project objectives, focused on two-phase contracts within the Dutch construction industry. To analyse how the cooperation between a client and a contractor is influenced by contractual characteristics, the Sourcing Business Models framework (SBM framework) as introduced by Vitasek et al. (2016) has been used. This framework proposes seven Sourcing Business Models, ranging from transactional contracts to relational contracts and investment contracts. Research of Van de Rijt and Witteveen (2021) stated that ‘in order to achieve the project’s goals, a high degree of adherence to the characteristics of one [Sourcing Business Model] is required’; however, this research also stated that contracts often include characteristics of different models, a phenomenon that is called ‘cherry-picking’. This thesis aims to map contracts against the prior mentioned SBM framework, which has been done for three case studies within the construction industry. Interviews with the involved clients and contractors were conducted to gain insight in their perspective towards the influence of contractual choices on the intended cooperation. The results of the three case studies have been compared to one another and subsequently to the statements in literature, to assess whether these are applicable and relevant to the Dutch construction industry. After the gathering and comparison of the results, it was concluded that even though no contract follows the characteristics of only one single Sourcing Business Model in the SBM framework, this does not have a negative consequence on the cooperation between the client and the contractor. This can partly be explained by the fact that the parties took the liberty to deviate from the contract in situations where this benefited the cooperation. Besides, it was observed that the original SBM framework contained elements that were not applicable to the construction industry. This led to a proposal for adjustments to the content of the SBM framework, to increase its applicability within the construction industry. The framework can then be used to create awareness of the various ways agreements can be captured in a contract, to show parties that such agreements allow for freedom to shape the desired cooperation. With this knowledge, the suggestion has been made to see the Sourcing Business Models in the adjusted SBM framework as a starting point and means for contract design, rather than a goal that must be achieved.
Item Type:Essay (Bachelor)
Faculty:ET: Engineering Technology
Programme:Civil Engineering BSc (56952)
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