Flexible contracting in project business

Abstract

Purpose – The purpose of this paper is to increase the understanding of the main challenges of the contracting process and project contracts in the context of project business characterized by a high level of complexity and uncertainty. The authors argue that understanding contracting as a flexible process and as a business tool will contribute to creating more value in projects which are implemented in constantly changing circumstances or which require gradual and iterative development. Design/methodology/approach – This is a conceptual paper with illustrative examples from the software industry. Findings – A prevailing approach for both managing contracts and the contracting process focuses on careful planning and drafting of contracts that protect each party in the case of conflicts and disagreements. The underlying assumption is that all activities can be planned and documented in a formal contract. According to this approach, the contracting process is seen only as a bargaining negotiation and the project contract as a detailed agreement of the responsibilities and safeguarding clauses to protect one’s position in the event of conflicts and failures. However, in the context of project business characterized by complexity and uncertainty, there is a need for flexible project contracts. The authors suggest that there are two fundamentally different approaches to implementing flexibility in both the contracting process and the project contract: postponing the decision until there is adequate information for decision making or making decisions that allow flexible adaptation to changes during the project lifecycle. Practical implications – The authors suggest that organizations in project business should pay closer attention to how contracts are formed and how flexibility is introduced to projects. Organizations are encouraged to see contracts as a business tool, not as rigid documents which are taken into use in case something goes wrong. Originality/value – This paper contributes to the understanding of how to adapt the contracting process to overcome challenges related to uncertainty, especially during the early phases of the project lifecycle. The authors provide a novel perspective on contracting as a process that extends over the lifecycle of a project and on the project contract as an agreement between parties formed during the contracting process. This perspective includes formal contract documents as well as various other documents, oral communication, commitments, actions and incidents.

Understand, reduce, respond: project complexity management theory and practice

“…In addition, the workshops demonstrated that there was a whole response group that did not appear to have been given much attention in project management. We noted previously that flexibility in contracting conditions was a recognised response to emergent complexity (Kujala et al, 2015). However, many of the responses went beyond exploiting such flexibility and took the form of entrepreneurial actions.…”

“…This initial judgement is important for complex project work. Flexibility in contracting under conditions of complexity can also be valuable (Kujala, Nystén-Haarala and Nuottila, 2015), and again this can be expressed as a response to emergent complexity.…”

Parameter Penakrifan Perjanjian Tahap Perkhidmatan bagi Penggubalan Draf Kontrak Sistem Maklumat Sektor Awam

“…Walau bagaimanapun, kajian-kajian terdahulu (Al-Aaidroos et al 2011;Jamaiah et al 2015;Kujala et al 2015;, 2016a, 2016bRady 2012;Sobinska & Willcocks 2016) mengakui terdapat isu-isu berkaitan PTP yang perlu diambil perhatian. Langkah-langkah penambahbaikan berkaitan PTP juga telah dicadangkan (contoh: Deloitte Consulting 2016; De Silva & Golding 2005;Busalim et al 2013), namun belum ada kajian serta bahan rujukan yang berkaitan parameter PTP yang penting dan bernilai semasa proses penggubalan draf kontrak sistem maklumat sektor awam sedangkan perkara tersebut sangat penting untuk diberi keutamaan pada fasa awal kitar hayat PTP.…”

“…Jika tidak, fasa 'pra kontrak' bagi perolehan baru SM akan berulang (Chou & Chou 2009 (Chou & Chou 2009;Deloitte Consulting 2013). Proses kontrak adalah proses lelaran sehingga mencapai satu persetujuan yang diperakukan (Kujala et al 2015). PTP menggambarkan tahap prestasi perkhidmatan yang perlu disediakan dan juga bagi menunjukkan tahap prestasi pihak pembekal.…”

“…Perundingan dua hala tersebut mesti membincangkan tentang semua kandungan PTP yang telah ditakrifkan atau diperlukan oleh penerima perkhidmatan dan juga cadangan daripada pihak pembekal agar dapat mencapai persetujuan bersama bagi membentuk PTP dinamik (Al-Aaidroos et al 2011;Busalim et al 2013;Lee et al 2015;Lourenço et al 2014;Zheng et al 2010 Organisasi digalakkan untuk melihat kontrak sebagai alat bisnes dan bukan dokumen yang hanya dirujuk apabila sesuatu isu dibangkitkan seperti kes mahkamah atau pengauditan TMK. Kontrak SM perlu dibangunkan dan diselaraskan bersama-sama pihak penerima perkhidmatan dan bukannya melibatkan pegawai undang-undang sahaja (Kujala et al 2015) terutamanya bagi penentuan parameter PTP. Pendapat tersebut selaras dengan Keller dan Ludwig (2002), pembangunan PTP dalam kontrak SM perlu melibatkan penerima perkhidmatan.…”