systemic contract EURoMA 2013
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systemic contract EURoMA 2013
- 1. The Systemic Contract: Measuring How Effective Contract Rules are in Organising Complex Projects Maria Kapsali, Jens Roehrich, Nigel Caldwell Information, Decisions and Operations (IDO) Group School of Management University of Bath (UK) EurOMA2013 – Dublin/Ireland
- 2. Setting the scene • • Challenges: Time, cost, quality and contractual governance Ashby’s (1958) 'law of requisite variety' – more complex org. settings = more complex contractual governance (e.g. # of contingencies) • This study’s outcomes: – One of the first comprehensive empirical examinations of the effectiveness of different contract rules – Offering a framework for an effective systemic contract – bridging classical, neo-classical and relational contracting theories RQ: Which are the contract rules that successfully drive desired behavior within complex organisational settings?
- 3. Contracts to Manage Organisational Complexity • Explicit and formal agreements specifying legal obligations and roles of parties (Lyons & Mehta, 1997) • Intended to: (i) reduce uncertainty; (ii) minimise the risk of opportunism; (iii) provide a safeguard against ex-post performance problems Complete & optimal contract: stipulates control rules for every possible type of opportunistic behaviour and future contingency at the lowest transaction cost relative to outcome Complex contracts: “structures of rules, which are sets of explicit or understood obligations, incentives, rewards and penalties stipulating conduct, action and behavior within particular activities in different situations” (Barthélemy and Quélin, 2006, p. 1776) Relational contracting also stresses the importance of the longevity of the relationship and positions time at the center of the agreement (Eisenberg, 2000). • • •
- 4. BUT: Contracts & Complexity • • • • • Drafting complete contracts – contract complexity Asymmetric information and incompleteness; bounded rationality Lengthy and continuous re-negotiations Time- and cost-consuming Too rigid to deal with change (classical contract) • • Mixture of classical and relational contracting rules? In practice: Relationships are governed by either a classical or a relational contract • • i.e. equity joint ventures and non-equity partnerships largely follow a relational contracting perspective whilst licensing contracts seem to use classical contracting (Hagedoorn and Hesen, 2007). Which rules are effective in complex organisational settings?
- 5. Methods • Qualitative Comparative Analysis (fsQCA) – Combines depths and breath • 23 public-private relationship cases • • • • N = too large for in-depth case analysis to be able to retain patterns among them, but also too few for conventional statistical techniques to generalise on 6 UK construction Public Private Partnership (PPP) 3 EU Public Health - European Antimicrobial Resistance Surveillance System (EARSS) – develop national ICT infrastructures to collect and analyse epidemiological data 14 ICT EU eHealth projects – develop or deploy R&D for healthcare services • Similar settings, but a few differences • • Similarities: (i) they were large scale projects with multiple diverse actors; (ii) they delivered public infrastructure and services; (iii) procured and controlled by national and/or supranational public sector clients working with private companies; and (iv) subjected to open tendering and rigorous selection and monitoring procedures. Differences: (i) types of contracts – contract complexity; and (ii) their time span, ranging from 2 to 30 years. • 132 interviews (+ secondary data) • Coding cases for memberships in sets of sub-sets of conditions (3 different contract rules) and outcomes (non-/compliant behaviour – e.g. renegotiations/changes/problems in interpreting rules)
- 6. Classification of conditions (contracting rules) Linkage control rules to prevent opportunism Practical decision rules for generating all possible control responses Emancipatory autonomy rules formalisation of action accountability rewards incentives obligations penalties - punishment exclusion fragmentation in supply chain standardisation of tasks communication at the interfaces co-decision processes formal meetings, boards, panels, conferences evaluation, feedback loops overlap and sharing complement of skills negotiations regarding the definition of the goal, planning, monitoring and executing participation of users Rules that empower to selfregulate and self-organise knowledge creation coupling and interdependence adjust processes and habits leverage for change
- 7. Projects Performance Bundle EARSS 1 EARSS 2 EARSS 3 IST GALEN IST ODIN IST M2DM Concurrent national project Concurrent national project Concurrent national project Open Source ontology development European nursing informatics and telematics Patient Telemonitoring Ultra Low Discomfort Vital Signs Sensors over Mobile Networks Peripheral Regions Oriented Measure Multi-Access telematic Management of Diabetes Mellitus eTEN AIDMAN feasibility study protocol models, effectiveness and performance for deployment IST TELECARE IST PROMPT eTEN EURODONOR eTEN EVITAL eTEN MEDASHIP eTEN MEDCONTI-NET eTEN IREMMA eTEN TELE-REMEDY eTEN MEDICATE eTEN NIVEMES Hospital A Hospital B Waste Management A Waste Management B Fire and Rescue Service A Fire and Rescue Service B definition, specification realisation of European Organ Data Exchange Portal Data Base validate the European market for remote monitoring service Medical consultation Assistance for ships service analyse market demand for a Home Care system in cross-national context establish a trans-European network, services for environmental diseases, Asthma Allergy feasibility study, commercial validation and largescale deployment Medical Diagnosis, Communications and Analysis Throughout Europe for monitor asthma patients in own homes develop an international network of Telemedicine providers and services Contract length Contract nature and value 1998 – 2006 1998 – 2006 1998 – 2006 1997 - 1999 1999 - 2001 Minimum specifications ** ** Classical- performance ** 2001- 2005 1999 - 2001 ** ** € 1.8 m € 512.419 2001 - 2005 ** € 2.100.578 1999 - 2000 ** €0.73m 2003 - 2004 ** €3.19m 2002 - 2004 ** €2.13m 2002 - 2003 ** €2.73m 2002 - 2003 ** €2.63m 2002 - 2004 ** €1.82m 1998 - 1999 ** €3.2m 1999 - 2000 ** €3.67m 1996 - 1998 Design, build, finance and operate (DBFO); construction of new hospital; hard and soft service FM 30 years ** €3m Classical - Output Non-standard £150m 30 years ** Standard (version 3) £150m DBFO; construction of new waste treatment plants and stations; no waste collection 25 years ** Non-standard £35m 25 years ** Non-standard £100m 25 years ** Non-standard £20m 25 years ** Non-standard £10m DBFO; construction of new training facility; hard (estate) and soft service FM
- 8. Case example – PPP Hospitals Healthcare A Healthcare B Product-service provision Design, build, finance and operate (DBFO); construction of new hospital; Hard (estate) and soft (e.g. cleaning, portering, catering) service FM DBFO; construction of new hospital; Hard (estate) and soft service FM Contract nature and value Non-standard contract; approx. £150m Standard contract (Version 3); approx. £150m Contract duration 30 years 30 years
- 9. Types of Contracts PPP contract Performance-based contract Memorandum of agreement Nature Duration Highly complex Up to 30 years Medium to highly complex 18-36 months Simple 6 years Exemplary Quote “We went through about 438 contract variations. […] the biggest one was for £24 million, which was the Treatment Centre, but the cheapest one was a socket in the office.” (NHS Trust Director) “What needs to be done is highly analysed in relevant documents of the contract.” (Project Manager) “It is not possible to plan or predict, but we had a memorandum of agreement in place.” (Project Manager) Brief description • Extensively bespoke and complicated contract • ‘Classical’ performance-based contract, stipulating time, cost and scope specifications and specific periodic evaluation procedures • Included description of the project outcomes and collaborative activities • Constantly changing requirements regarding portering and cleaning services led to recurring contract renegotiations • Large number of legal safeguards (linkage rules) covering areas such as reporting and information sharing, performance measures, payment mechanisms, dispute resolution and termination procedures. • Top-down, rule-based instruments which embodied the rationale of managing the largest possible number of projects at the lowest possible cost • Completion of certain thresholds, the scope such as achieving 25% coverage of total national laboratory population • 4 aggregate reports a year • Minimum critical specifications (linkage conditions) in the form of flexible output targets
- 10. Findings • Observations across successful projects: • Extensive use of control rules increases complexity of project routines and reinforces inflexible action • Fewer control rules (~linkage) is both sufficient and necessary for contracts to be effective and more successfully implemented • Provided a combination of communication and decision-making rules swift decision making and autonomous action leading to adaptable responses on the project level • However, the configurations also show that less control rules in contracts should be an inverse proportion of the other two rules. • Practical and emancipatory rules are significant for communication, but not easily compatible. • But, transferring more autonomy to projects through emancipatory rules in order to increase flexible local action introduces instability to the entire programme because it decreases control of the local parts within the projects • Communication-practical rules are then necessary for balance because these prevent the projects becoming increasingly modularised and remote from each other
- 11. Conclusions and Implications • Org. complexity should not necessarily be reflected in complex contracts • Accept contract incompleteness, but focus on adaptation and interdependence and use control to a measure • Consider a combination of minimum critical specifications as control (linkage) rules and strong combinations of either practical and/or emancipatory rules (=systemic contract) • Flexible and enabling, directs evolutionary-emergent action and desirable behaviour, not just controls to deal with complex contingencies
- 12. Ideas for Improvements & Further Suggestions
- 13. Dr Maria Kapsali Browaldh fellow - Assistant Professor in Projects, Innovation and Networks Umeå School of Business and Economics Umeå Universitet Dr Jens Roehrich Lecturer (Ass. Prof.) in Operations and Supply Management School of Management Biblioteksgränd 6, 901 87 Umeå, Sweden Information, Decision and Operations Group University of Bath e: maria.kapsali@usbe.umu.se e: j.roehrich@bath.ac.uk w: www.bath.ac.uk/management w: http://uk.linkedin.com/in/mariakapsali
Notes de l'éditeur
- Increased frequency and magnitude of various types of inter-firm arrangements: alliances, joint ventures, partnerships While prior studies have explored social phenomena such as the importance of trust, cooperation, collaboration, commitment and social capital in these inter-organizational supply relationships (e.g. Lui and Ngo, 2004; Kale et al., 2002), limited research investigated the existence and consequences of inter-organizational conflicts when actors seek to facilitate cooperation (Jehn, 1995; Jehn and Mannix, 2001). However, interdependence, as evident in long-term cooperative supply relationships, increases both the likelihood for conflict and the need for coordination through governance mechanisms (Kumar and van Dissel, 1996). Surprisingly, the majority of conflict studies adopted a more micro, such as focusing on individuals, teams or groups (e.g. Amason, 1996; Jehn and Mannix, 2001) or macro, focusing on governments and countries (e.g. Bercovitch, 1996), unit of analysis, neglecting to extend the research to the meso level representing the inter-organizational relationship level of analysis. To fill this existing gap, this paper empirically investigates inter-organizational conflicts between partnering organizations in long-term relationships over time.
- – UK NHS IT system, PPP Challenge Ashby’s rule – complex contracts to govern complex org. settings s etc. Law of requisite variety Ashby’s (1958) 'law of requisite variety' which states that governance is effective only if the number of its control mechanisms is greater than, or equal to, the number of potential states in the system being controlled. (i.e. more contractual control rules and hence larger contracts, requiring more lawyers, more managers, more Key Performance Indicators, more meetings, etc.). This presumption leads to contracts which are often too complicated to be effective more complex contractual governance = more rules, more possible future contingencies etc. Although some studies have uncovered the fact that rules are often inefficient, extant literature offers limited insights into which contractual rules are actually effective in complex organizational settings. In effect, extant contracting theory cannot provide guidance about a suitable contract structure, cannot actually support the presumption that complex contracts can provide successful safeguards against opportunistic behavior, and is not in a position to advise contract regulators. Based on our comprehensive literature review on contracting theory, we argue that the lack of knowledge with regards to the effectiveness of contract rules stems from deploying quantitative and qualitative methods which do not sufficiently explain the causal complexity between the multitude of contractual rules and the emergent behavior within complex settings. Causal complexity is the asymmetrical, non-deterministic and non-linear entanglement among causes and effects which is characteristic in social systems (Goertz, 2006). Which contracting rules are effective in dealing with org. complexity?
- Different types of rules are suitable for different types of temporal relations (i.e. control rules for long temporal duration and cooperation practices for short temporal duration) (Martinsuo and Ahola, 2010). Complex contracts “composed of elaborate clauses or rules” – e.g. multitude of risk allocation, transfer or sharing, goal alignment and incentives rules Neo-classical contracts introduced mediation through ‘third party assistance’ for resolving disputes or performance problems (Williamson, 1996; Macneil, 1978). Although beneficial, this solution did not reduce the complexity of standard contracts, consequently relational contracting suggested mechanisms of trust and the development of a network of social ties that guarantee exchange-specific investments (Poppo and Zenger, 2002; Baker et al., 2002; Klein et al., 2005), reputation, hostages and the ‘shadow of the future’ (Barthélemy and Quélin, 2006) and commitment to obligations that affect power and dependence in relationships (Provan and Gassenheimer, 1994
- Different types of rules are suitable for different types of temporal relations (i.e. control rules for long temporal duration and cooperation practices for short temporal duration) (Martinsuo and Ahola, 2010). One idea is, for example, that these frameworks could be used in sequence during the various phases of collaboration. At the start of the contractual relationship, when exchange hazards are high, the use of more complex classical contracts could successfully deter behaviors that could compromise the buyer–supplier transaction (Poppo and Zenger, 2002). Then, relational contracting norms may prove more useful during the implementation phases in order to facilitate adjustments caused by extremely unpredictable disturbances (Macneil, 1978; Williamson, 1991). It seems, however, that in reality different modes of business are governed by either a classical or a relational contract, i.e. equity joint ventures and non-equity partnerships largely follow a relational contracting perspective whilst licensing contracts seem to use classical contracting (Hagedoorn and Hesen, 2007). Consequently, extant literature does not offer conclusive empirical evidence as to how this kind of combination can be achieved in one contract structure, as there have been only a few empirical studies on the comparative properties of classical contracts vis-à-vis relational contracts (Carson et al., 2006; Luo, 2002; Poppo and Zenger, 2002) mostly because of the fuzzy boundary along the continuum of implicit-explicit rules (Aulakh and Gençtürk, 2008).
- I would either keep previous table or this figure. It ultimately shows the same.
- “the best features of the case-oriented approach with the best features of the variable-oriented approach” (Ragin, 1987: 84) Qualitative Comparative Analysis (fsQCA) – Combines depths and breath (i.e. data richniess to acquire in-depth knowledge of the causal complexity among contract rules and project behaviour) Qualitative comparative analysis has the advantage that it may not require as many cases as a case survey. comparative research designs involve small and intermediate-size Ns (e.g., 5-50), but this range of cases is often too large for in-depth case analysis to retain patterns (analysis becomes too complicated), but also too few for conventional statistical techniques It can be used with previously conducted studies as well as with new studies, and thus encourages an evolutionary and integrative approach to knowledge creation. It allows easy integration of both qualitative and quantitative forms of evidence, and is transparent and systematic ‘fuzzy’ logic is a recent refinement of QCA so that it is not necessary to dichotomise variables so precisely and allows for more variation in set theoretic membership (continuous instead of binary) Used in : sociology, psychology, political science and history Second, comparative research designs involve small and medium-size Ns (e.g. 5-50 cases), but this range of cases is often too large for in-depth case analysis to be able to retain patterns among them (analysis becomes too complicated), but also too few for conventional statistical techniques to generalize on. In our study we need to establish generalizable patterns from a larger case sample (N=23), but we still need to analyze ‘rich’ data in order to acquire in-depth knowledge of the causal complexity among contract rules and project behavior. For this reason, we chose an established method that combines ‘the best features of the case-oriented approach with the best features of the variable-oriented approach’ (Ragin, 1987: 84): qualitative comparative analysis (QCA) which offers this study two advantages as concerns the two previously mentioned problems in comparative research. Firstly, QCA analyses the three elements of causal complexity – multiple conjunctural causation (different combinations of causal conditions), equifinality (different combinations capable of generating the same outcome) and asymmetric causal relationships (negative outcomes are not the invert of positive ones) which makes it possible to study ‘INUS’ conditions - causal conditions that are insufficient but necessary parts of causal recipes which are themselves unnecessary but sufficient (Wagemann and Schneider, 2010; Fiss, 2011, 2007). As in other QCA methods, rather than analyzing the net effect of variables and understanding them as competing, fsQCA models conjunctural causation and equifinality (Ragin, 2000; Schneider and Wagemann, 2010) which suits situations where single causes may be neither necessary nor sufficient. in the process identifies equifinal and asymmetric configurations because different rules co-exist in contracts to various degrees and may combine in different ways to affect behavior. We give details about the construction of our independent and dependent metrics (conditions and outcomes) in the next section, then we describe with the process of our analysis (see Figure 2). We conclude the methods section by describing the sources and contexts of our case studies. The three important issues in QCA are firstly, that the data sets are aligned with the theoretical concepts studied, secondly that the causal conditions and outcome are well represented by the measures, and thirdly that the case evidence (i.e. the qualitative classifications) is adequately reflected in the fuzzy-set values. In order to address these issues we assigned and revised fuzzy-set values thoroughly by revising interview, contract and report data and carried out rigorous calibration to avoid overlooking a clue or bias in the data that might affect the classifications. A check was also carried out as to whether the definitions of the fuzzy-set scores have been adjusted appropriately to the context and dimensions of the theoretical concepts (Mendel and Korjani, 2012). Data study, consequently, was deep enough to provide us with a good grasp of the cases in order to be able to assess to which degree a case is within or outside the target set (Marx and Dusa, 2011).
- Selecting conditions (independent measures) In order to select the conditions an inductive approach was applied, we reviewed in the cases and categorized the rules according to three types, enlisting the argument from Smith (2006) and Klein (1996) that the contract must provide the following rules: i) enough control rules (i.e. cost and quality management controls, customer interaction rules, regulations about handling of supplier networks and interface management) which we call linkage conditions; ii) rules about decision-making for generating responses which we call practical conditions; and ii) rules that incentivize and allow self-organization and self-enforcement for partners to act autonomously which we call emancipatory conditions Identifying outcomes (dependent measures) We defined outcomes in terms of compliant and non-compliant behaviour, firstly by the number of times that each contract had to be renegotiated or/and changed, and secondly by which projects faced problems with the rules and acted inconsistently. Again the aforementioned anchors were used, one for highly compliant behaviour (1); mostly compliant (0.75), the crossover point (0.50), less compliant (0.25) and one for noncompliant behaviour (0). The set of projects with highly compliant behaviour was scored one (1= full membership); if projects showed above average or below average compliant behaviour
- The programs’ two characteristic differences lay in their contracts (see Figure 3): (i) the programs were governed by different types of contracts: one program was governed by a simple memorandum of agreement and the other two were governed by classical-complex, hybrid (classical-relational) highly complex contracts, thus there was a continuum in the levels of complexity in the contracts; and (ii) programs differed in their time span, ranging from two to 30 years. These differences are vital to elicit the potential impact of short versus long-term program spans on the effectiveness of contract forms. In the next three sections summaries concerning the contracts are given. Memorandum of agreement The first contract type was a memorandum of agreement in an EU Public Health program called European Antimicrobial Resistance Surveillance System (EARSS) that aimed to develop a Europe-wide network of national ICT infrastructures collecting and analyzing epidemiological data. The goals of the program were: (a) the recruitment of laboratories (expansion of participation and use of protocols), (b) the operation of national networks (data collection and analysis) and (c) the deployment of electronic data submission. The EU lacked the capability of enforcing public health legislation in member states; which made it impossible to coordinate implementation centrally or prescribe controls: ‘The design phase was actually the one with the contract with the management people. It is not possible to plan or predict’ (Project Manager 1). National project managers were responsible for the operation of each national project and the promotion of the program to each member states’ political echelons. The memorandum stated the final product and the collaborative activities the project managers were to conduct within EARSS, and the completion of certain thresholds, the scope such as achieving 25% coverage of total national laboratory population, 4 aggregate reports a year, quality and reliability of data collected by the national networks. These thresholds acted as minimum critical specifications (linkage conditions) and were in the form of flexible output targets. Project time and cost were constraining factors, but they were not the criteria used to evaluate and monitor the projects. The emphasis was on project managers being given enough support in the form of technical tools, expertise and funding and that they had to collaborate and liaise with each other to share results at regular conferences. Performance-based contract The second type of contract was a ‘classical’ performance-based contract, stipulating time, cost and scope specifications and specific periodic evaluation procedures. Although it has been clearly stated in EU Commission documents (e.g. COM(2003)226,OM(2003)112) that there was a need for a ‘broad and systemic’ approach to research policies, the implementation rationale was based on Framework Programs (FPs) that were top-down, rule-based instruments which embodied the rationale of managing the largest possible number of projects at the lowest possible cost. By standardising contracts that (were thought to be) complete and optimal the Commission kept the cost of program administration to a minimum. The FP had four thematic priorities, of which eHealth aimed to coordinate technology projects developing or deploying R&D for healthcare services. The programs run under eHealth were the Information Society Technologies (IST) and the Electronic Trans-European Networks (eTEN). The IST and eTEN contracts were to monitor the implementation of plans and to overcome inherent risks. There was a strict tendering process and there were consortium rules regarding the composition of the teams and accountability rules resting on the managing partner who had no formal authority over the other partners. The responsibilities of the partners were divided into detailed modular work packages which were independent of each other in the eTEN projects (however there were more interdependencies in the IST projects). “What needs to be done is highly analyzed in relevant documents of the contract signed (I refer to the work breakdown and the tasks). There is no magic formula however […]” (IREMMA project manager). There were detailed forms and a structured procedure for periodic evaluation of implementation which allowed for notoriously difficult renegotiation processes in cases of change, inhibiting any alteration of initial projects plans. There were specific cost, time and scope specifications for evaluation. However all these prescriptions were not found useful by projects: ‘On the other hand the nature of the work makes us self-reserved. …. A project manager could not be in a position to have sufficient in-depth knowledge so as to use the tools to accommodate the needs of the project. Sometimes a manager would do the opposite; in order to create the documents they “adjust” project tasks to fit the requirements of a proposal, contract, etc.’ (TELEREMEDY project manager). Public Private Partnership contract There were two different types of PPP contracts for the construction and maintenance of hospitals, waste/training facilities and emergency services: (i) non-standard and (ii) standard. In early PPP projects, partnering organizations jointly drew up non-standard ‘output-based contracts’ to govern long-term relationships i.e. up to 30 years. Later PPP projects, such as the Hospital B project, used PPP standard version 3 as a template to then further engage in long-term (i.e. 3 years) contract negotiations. Because of the complexity and size of PPP projects, all contracts are governed both by EU and national regulations, prescribing a tight legal framework. Because the supply arrangement between the individual NHS Trust and its private contractor was long-term and highly risky, an extensively bespoke and complicated contract was drafted to govern each relationship. Complexity was further exacerbated by the dynamic and volatile relationships between partnering organizations. For example, changing requirements regarding portering and cleaning services led to recurring contract renegotiations in two of the cases. PPP contracts included a large number of legal safeguards (linkage rules) covering areas such as reporting and information sharing, performance measures, payment mechanisms, dispute resolution and termination procedures. These contracts were pretty much ‘highly complex’, classical but incorporating bespoke, relational rules. However, no matter how much time was spent in ex ante negotiation, the contract remained incomplete. The cases exhibited a great deal of post-contractual variation. For example, in Case 1 the Trust’s former director mentioned “[…] that is probably because the specifications were not robust. We went through about 438 contract variations. […] the biggest one was for £24 million, which was the Treatment Centre, but the cheapest one was £238 which was a socket in the office […].” Similarly, in the Waste Management Case 2, the council’s project manager described the continuous contract renegotiations that were necessary during the implementation phase. “Now, of course, the project slowed down and we have to revise the contract. That is a very time consuming process and I wonder why we spent so much time upfront to negotiate the contract.”
- Briefly introduce you to two of my six case studies. Two similar PFI hospital which have been DBFO by the private sector following a public sector output specification. Private sector is responsible for maintaining the building including the provision of cleaning, portering and catering services). All PFI projects have to go through similar stages (bid/contract negotiation, construction, operation).
- Analysis across cases: Less control rules (~linkage) is both sufficient and necessary for contracts to be effective Contracts with fewer control rules were more successfully implemented; these simpler contracts had rule structures which elicited desirable behavior with fewer deviations. However the configurations also show that less control rules in contracts should be an inverse proportion of the other two rules. When practical rules are significant for communication, emancipatory rules ensure effective modularisation of projects, and therefore it is logical to expect that these types of rules are not easily compatible. These simpler contracts were more successful not just because they provided fewer controls to comply with, but because they provided a combination of communication and decision-making rules that acted as platforms for swift decision making and autonomous action leading to adaptable responses on the project level. The findings were observed in successful projects in all three programs despite their differences in the timing of contractual relationship, which opposes the argument that different types of rules are suitable for different types of temporal relations (i.e. control rules for long temporal duration and cooperation practices for short temporal duration) (Martinsuo and Ahola, 2010; Eisenberg, 2000). There was, however, variability in the combinations of these rules that appears to depend on two other structural characteristics of these programs. The first characteristic is interdependence and the second is modularity The role of the control rules in these contracts allowed the projects to work concurrently, however their extensive use in program contracts actually increases complexity of project routines and reinforces inflexible action. On the other hand, transferring more autonomy to projects through emancipatory rules in order to increase flexible local action introduces instability to the entire program because it decreases control of the local parts within the projects. Communication-practical rules are then necessary for balance because these prevent the projects becoming increasingly modularized and remote from each other At this point, the unsuccessful classical IST/FP and relational PPP contracts introduced more control rules. Instead, the successful contracts included a combination of minimum critical specifications as control (linkage) rules and strong combinations of either practical and/or emancipatory rules. Creating the right balance in contract rule structure in a systemic contract might not be a simple task as shown in equifinal configurations. This point needs further investigation as the root cause of this phenomenon lays in the obvious link regarding risk and devolution in contract rules, which is linked to modularity and interdependence within the complex setting.
- Org. complexity should not necessarily be reflected in complex contracts Accept contract incompleteness, but focus on adaptation and interdependence and use control to a measure Consider a combination of minimum critical specifications as control (linkage) rules and strong combinations of either practical and/or emancipatory rules Systemic contract is flexible and enabling, directs evolutionary-emergent action, not just controls Creating the right balance in contract rule structure is not be a simple task a systemic contract with a customized combination of rules related to organizational characteristics that concern routines and behavior within projects, rather than the time and risk of the regulated relationships. since only a limited range of pre-specified control rules are needed, and they do not focus on the transfer of risks through milestone-driven objectives, they rely on risk management tools (Curlee and Gordon, 2011) The focus of the systemic contract is to direct activities towards desirable behavior through alternative routes of action, providing the platforms so that decision making, problem solving and action are flexible enough to deal with complex contingencies. In other words, the systemic contract dictates or controls behavior only to a certain extent (therefore they are by definition incomplete, Lyons and Metha, 1997) and then creates platforms that enable flexible action, and thus demotivate undesirable behavior.
- Many thanks for your attention and I am looking forward to answering your questions.