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Relational investments and contractual choices for diverse engineering designs

Gosling, Jonathan ORCID:, Hewlett, Bill and Naim, Mohamed ORCID: 2022. Relational investments and contractual choices for diverse engineering designs. IEEE Transactions on Engineering Management 69 (4) , pp. 1335-1347. 10.1109/TEM.2020.2981611

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Engineering design has a major impact on downstream performance, but is often guided, in both procurement and solution type, by intuition rather than a solid science base. Engineering is also increasingly collaborative, crossing organisational boundaries. However, the long-term close partnerships, as often proposed, are difficult to achieve in the context of individual engineering projects. Building on concepts related to investments in specific assets, this study describes the underlying characteristics of engineering design investments and then prescribes the relational investment and contract forms to select them, thereby contributing to our understanding of the engineering design and relational investments that can and should be made. We undertook multiple case study research, which is presented in two phases. The descriptive phase identifies positive outcomes for solutions based on off-the-shelf designs with fixed price mechanisms, for solutions based on adaptive designs with target cost mechanisms, and for bespoke solutions contracted either on cost-plus mechanisms or, if in bite-sized pieces, on fixed price mechanisms. Negative performance outcomes were found for adaptive solutions with Fixed Price mechanisms. A prescriptive phase, yielding a visualized model, then offers guidance for relational investments and contract mechanisms that are suitable for different engineering designs. Applicability zones and three potential transitions to challenge and guide current practice are developed to inform decision making.

Item Type: Article
Date Type: Publication
Status: Published
Schools: Business (Including Economics)
Publisher: Institute of Electrical and Electronics Engineers (IEEE)
ISSN: 0018-9391
Date of First Compliant Deposit: 2 April 2020
Date of Acceptance: 10 March 2020
Last Modified: 07 Nov 2023 03:20

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