Relational contracting, culture and globalisation

Abstract

Successful sustainable relationships rely on relational forms of exchange characterised by high levels of trust but it is generally accepted that the construction industry has a stronger preference for distrust rather than the full benefits of cooperations (Wood and McDermott, 1999). There is a need for culture change to bring about increased cooperation between parties on a long-term basis. However, this trust must be developed across cultures with different values and mores and this presents a unique and complex problem when taken in the context of the temporary multi-organisations which are endemic in the construction industry. With relational contracting, based on sustainable relationships and trust, a win-win situation can be created for both the client and contractor. The development of trust between organisations is seen as a function of the length of the relationships between them (Bresnen and Marshall, 2000). It is also commonly believed that the construction industry is one which requires lots of trust between participants due to the high uncertainty in the industry. This paper aims to look at how procurement methods are changing and moving towards sustainable procurement forms through a relational contracting approach in a global context. A critical review of partnering and alliancing approaches will be presented, followed by a review of how the change in procurement culture towards sustainable business relationships benefits different parties in the industry and has the potential to achieve empowerment and regional development despite, or maybe because of, the global perspective of the key players. This review is based on research being undertaken in Queensland, Australia but has general applicability