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.
Highlights
Many researchers have discussed increased projectification and its consequences for organizations and societies (e.g. Packendorff and Lindgren, 2014; Schoper et al, 2018)
The traditional view in the literature that the task of a temporary organization is something that can be completed and (Lundin and S€oderholm, 1995; Burke and Morley, 2016) did not match the condition of the task in the studied projects since the operation and maintenance (O&M) activities were repetitive and more of an ongoing process that was not to be completed by the end of the projects. This is connected to “transition”: the studied project organizations did not set out to accomplish any transformation of the facility, which could be expected by the temporary organization based on the original work by Lundin and S€oderholm (1995). In their own response to the debate on the theory of the temporary organization, Lundin and S€oderholm (2013) acknowledge that what is understood as a project may vary, and there are projects based on the classical engineering-type and ideas of rigorous planning and control, just as there are projects based on the ideas of continuation and standardized repetition
6.1 Theoretical contribution We have shown that O&M project organizations within a projectified public infrastructure sector include a mixture of interdependent temporary and permanent aspects
Summary
Many researchers have discussed increased projectification and its consequences for organizations and societies (e.g. Packendorff and Lindgren, 2014; Schoper et al, 2018). The increased use of project organizing in what were traditionally perceived as permanent organizational settings has been seen in a wide range of contexts, and both in private and public sectors (Fred, 2015). By acknowledging that “No project is an island” (Engwall, 2003), researchers exploring tensions between temporary and permanent aspects of organizing have emphasized the importance of studying project organizations in the light of their more permanent organizational settings (e.g. Sahlin-Andersson and S€oderholm, 2002; Nesheim, 2020; Sergeeva, 2020). This wider perspective has spurred project studies to move from focusing on the “lonely project” In our study of the public infrastructure sector, we argue that this mix of temporary and permanent aspects of organizing exists in the interface between project organizations and their surrounding (permanent) organizational contexts and within single project organizations
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