Relational Contracting – Creating Value Beyond theProject

Abstract

Relational Contracting is a transaction or contracting mechanism that seeks to give explicit recognition to the commercial “relationship” between the parties to the contract. In essence, responsibilities and benefits of the contract are apportioned fairly and transparently, with mechanisms for delivery that focus on trust and partnership. At a project level in construction, this can improve working relationships between all project stakeholders, can facilitate efficient and effective construction, can enhance financial returns and can minimise the incidence and make easier the resolution of conflict. However, the value of relational contracting can extend beyond the project benefiting for example the relationships between the parties in the longer term, or construction industry productivity or profitability. Less well disseminated is the value that relational contracting can create for the wider community or society. The development of sustainable communities is a goal to which society aspires. The adoption of relational contracting approaches can make a significant contribution to the development of social capital, and the four pillars of sustainable communities, those of connectedness, citizenship, creative citizens and competitiveness. This paper considers relational contracting from this perspective and argues for greater recognition of the value created beyond the project.