Constituents of performance : investigating relational contracting in a construction industry setting to establish a framework for drivers of performance
The analysis of contractual relationships between different parties has been the subject of wide research aimed at understanding the factors that affect project outcomes in major capital investments. Yet experience from the construction industry has shown that conventional project execution, based on transactional contracting, may not be suitable in ensuring delivery of high profile projects on time, within allocated budget and to the required standards. In addressing such issues, this research investigates an innovative approach to project management, adopted by BAA for the building of Terminal 5 at Heathrow airport. During this major £4.3 billion project, the overall manager BAA attempted to create an environment for collaborative behaviour amongst parties to the contract by, firstly, managing the majority of the risks and, secondly, through integrating construction contractors within teams at several levels, thus establishing the concept of integrated teams. In addition, reward and monitoring procedures were deployed to motivate suppliers to deliver in accordance with the project parameters. In the event, BAA found that certain integrated teams performed better than others even when they contained the same set of contractors. This affected the overall project performance in terms of cost and delivery because of the inter-dependency of work output between different integrated teams. In an effort to understand and explain this phenomenon, research on this case study adopted a qualitative approach to establish key behavioural and organisational attributes that can lead to desired performance. Semi structured interviews were adopted for data collection and analysis, and were used to develop a Framework that can explain and account for performance drivers when delivering large capital projects of this nature. Using an integrative approach based on agency theory, organisational control, and motivational dynamics, this research has enabled the devlopment of a Framework that can help a construction client focus on controlling factors that affect the supplier's performance. The results suggest that these factors fall into four quadrants of control; behavioural, social, output and process. That is, the client has to ensure control mechanisms are prevalent in these four areas and exerted through their constituent factors such as the skills of the project manager, training, appropriate performance measures, goal congruence and leadership. The existence of these factors in the right magnitude is a vehicle in realising the potential of the performance Framework.