Increased cooperation through immediate post contractual negotiation

Traditional contracting has been largely shown to cause adversarial relationships between client and contractor in the construction sector. This leads to claims during construction by contractors, which increase transaction costs for both parties in the form of policing and enforcement costs. In literature, partnering is widely advocated as a governance form to more cooperative relationships between client and contractor. The partnering approach, however, requires a significant investment in elaborating a specific procurement approach, and is therefore regarded as inappropriate for small, one-off, less complex projects which are of low strategic importance. Municipal governments in the Netherlands are searching for alternative solutions to increase cooperation with contractors and reduce transaction costs by applying immediate post contractual negotiations in traditionally procured projects. We studied four such municipal projects which have showed that immediate post contractual negotiations positively influence cooperation as it creates joint risks analysis and management, stimulates a reduction of design errors, stimulates design and planning optimization, provides a platform for joint problem solving, leads the contractor to involve key participants early in the process, and leads them to align goals and expectations. We observed these effects that partnering aims to achieve despite the initial traditional procurement procedures applied in these projects. These negotiations seem to reduce the transaction costs of traditional procurement making them particularly applicable in smaller projects where high set up costs would not be justifiable due to their limited size, complexity, or cost