FORMAL AND INFORMAL CONTRACTING WITH THE COMPETITIVE DIALOGUE PROCEDURE

misbe2011 Tracking Number 52

The combination of increased project complexity (Baccarini, 1996; Laufer et al., 1996; Alderman et al., 2005; Walker, 2007), changed role of the government (Blanken, 2008) and the sector’s poor professional functioning (Latham, 1994; Egan, 1998; National Audit Office, 2001; Dorée, 2004) form the context in which several changes in the construction industry are embedded. These changes are twofold: on the one hand they are aimed at new structures (formal processes and contracts) and on the other at new working relationships (informal processes and understandings). Formal tasks and roles of the market and of government have changed. Public clients have less influence on the contents of works and confine themselves to monitoring and checking the public’s interest. Conversely, market organizations have, alongside the executive, also more substantive tasks. Stemming from these changing tasks and roles, structures have been amended and are continuously developing. Integrated contract forms, PPP constructions and active discussions on aspects such as prices, risks and contractual terms are becoming more common during the procurement of construction projects. Further, there is also growing attention paid to the ‘soft’ aspects of construction. The call for new cooperative forms, increased mutual trust, improved communication and mutual understanding becomes louder. In this context, the Competitive Dialogue (CD) was introduced by the European Commission in 2004. This procurement method consists of several discussion rounds between the principal and potential suppliers, during which all aspects of the tender can be discussed. The CD procedure aims to align complex demands of principals with possible solutions that contractors have to offer (Hebly and Lorenzo van Rooij, 2006). It is, however, unclear how formal and informal structures and processes in the CD are interrelated and are determining its effectiveness. In essence, there are two perspectives. In the first perspective, formal and informal structures and processes in the CD are serving as alternatives: what is arranged in a contract does not need to be discussed informally and vice versa. In the second perspective, formal and informal structures and processes are considered as complementary. Formal contracting processes can lead to informal processes such as the development of mutual expectations and social relationships. Major question in this study is how formal and informal processes are interrelated in interorganizational contracting by the CD procedure. Insights of both formal and informal contracting processes are combined in a theoretical framework. The aim of this theoretical framework is to study how processes of formal and informal contracting affect each other and the effectiveness of the CD procedure. Basis of the framework to be developed in our study is the process model of Ring and Van de Ven (1994). This model gives an overview of how both formal and informal processes are involved in relationship development. However, in order to understand how these processes are interrelated, especially during the contracting process, a more detailed overview is needed. To make the model of Ring and Van de Ven (1994) useful for our study of (in)formal contracting with the CD procedure, the model is expanded with the models of Ring and Van de Ven (2000) and Vlaar et al. (2006). These three relationship development models are combined to one model for studying formal and informal contracting processes in procurement by the CD procedure.