Page 413 - Global Project Management Handbook

20-2 MANAGEMENT OF THE PROJECT-ORIENTED COMPANY

and contractor can both influence risk on a project and where the project involves some
complexity (Turner, 2003). In other circumstances, more traditional forms are appropri-
ate, but the parties to the contract still should work together cooperatively. This chapter
describes partnering as a form of project contract management to encourage cooperative
working between the client and the contractor.
I start by considering the need for cooperative working on projects but reflect how the
norm has been to treat the project as a competition between client and contractor. I then
discuss different attitudes toward risk sharing. Building on recent research by the
European Construction Institute, I describe partnering as a form of contract to achieve
cooperation where a formal contract exists between the parties. I describe the problems
with traditional forms of contract and how partnering attempts to overcome those, but I
also consider where partnering is appropriate or where others forms are appropriate.
There are two forms of partnering, single-project partnering or alliancing and long-term
or multiproject partnering. The former is where two or more parties agree to cooperate on
a single project to achieve the best outcome for all on that project. The latter is where two
or more parties agree to cooperate over an extended period of time to achieve perfor-
mance improvements over several projects. Both forms of partnering are discussed. I
define single-project partnering and describe how to establish and manage such a rela-
tionship. I then define long-term partnering and describe how to establish and manage
that form of relationship. I also describe how to work toward a spirit of partnership using
traditional forms of contract.

COOPERATIVE WORKING ON PROJECTS

There are two ways of viewing a project organization, what I would consider to be the
correct way and the normal way, respectively:
● A temporary organization through which the owner assembles resources and moti-
vates them in a climate of cooperation to achieve the owner’s objectives
● A marketplace in which the owner tries to buy the project’s outputs at the cheapest possible
price in a climate of conflict with the owner’s contractors and in which one is going to win
and the other lose

In the more common approach, the client adopts the mind-set that he or she is going
out to buy the project’s outputs in the local bazaar, and he or she must negotiate hard to
achieve the lowest possible price from the vendor (contractor). The negotiation is
viewed as a win-lose game, in which one will gain the greatest share of a fixed cake.
Therefore, a climate of conflict develops where the client and contractor try to outdo
each other, and this spills over into project delivery, where the climate of mistrust con-
tinues. The client mistrusts the contractor throughout, assuming that the contractor is
trying to claw back money through the project’s delivery. This usually leads to a lose-
lose outcome.
Turner and Müller (2003) viewed the project as a temporary organization through
which a client tries to assemble resources to achieve the client’s development objectives.
As in any organization, the owner should view the resources working for him or her as
his or her employees (albeit this will be a temporary employment relationship) and moti-
vate the employees to achieve his or her objectives. Because it is a temporary employ-
ment relationship, the owner often will employ resources from an agency and will ask the
agency (contractor) to do the work on his or her behalf. Effectively, the “employees” will