Farsighted Project Contract Management: Incomplete in Its Entirety

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FARSIGHTED PROJECT CONTRACT MANAGEMENT: INCOMPLETE IN ITS ENTIRETY
PROFESSOR J RODNEY TURNER, (Department of Marketing and Organization, Rotterdam School of Economics Erasmus University Rotterdam) 1. PROJECT ORGANIZATION: COOPERATION VERSUS CONFLICT

There are two ways of viewing a project organization, what I would consider to the correct way, and the normal way, respectively: • • a temporary organization, (Turner and Müller 2003), through which the owner assembles resources and motivates them, in a climate of cooperation, to achieve their objectives; a market place, in which the owner buys the project’s outputs at the cheapest possible price, in a climate of conflict with their contractors, where one will win the other lose.

In the more common approach, the client adopts the mindset they are going to buy the project’s outputs in the local bazaar, and negotiates hard to achieve the lowest possible price from the vendor (contractor). The negotiation is viewed as a win-lose game. A climate of conflict and mistrust develops, and this spills over into project delivery, usually leading to a lose-lose outcome. Scott (2001) says this approach results in misalignment between the client's and contractor's objectives, between the objectives of multiple contractors, and between the client's objectives and the contractor's remuneration. Turner and Müller (2003) view the project as a temporary organization, through which the client assembles resources to achieve their objectives. As in any organization, the owner should view the resources working for them as their employees, and motivate them to achieve their objectives. Because it is a temporary relationship, the owner often employs resources from an agency (contractor). Thus, their “employee” is a company rather than a person, what the Dutch call a legal person rather than a natural person. But the owner should view…...

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