In recent years, infrastructure advocates have become interested in interpreting the Toyota management paradigm that was lean into new infrastructure development jobs. This strategy supposes client and endeavor providers are willing to work cooperatively. Customers have started to experiment with relational contracts to empower this prerequisite. An empirical study on using a relational contract in the £4.2bn extension of Heathrow airport in London affirms, however, the old adage that the devil is in the details.
Unarguably, relational contracts empower the undertaking client and suppliers to work together for a common goal. However, the interwoven ways in which the contract is implemented by the client - adjusting and interpreting, as well as writing up the commercial details these details through the job-are vital to support the providers meet the expectations of the client and to work cooperatively. This study unpacks five variables for making relational contracts work in undertakings: suppliers are keen to reap reputation gains from project involvement; providers have flexibility within their production processes; customer and providers choose the perfect people for the jobs; customer learns to relationally contract in response to supplier opinions; and client aligns its practices to control and improve performance with the providers' abilities.
PUBLICATION DATE: February 01, 2009 PRODUCT #: CMR422-HCB-ENG
This is just an excerpt. This case is about ORGANIZATIONAL DEVELOPMENT
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