Contracting dynamics in the competitive dialogue procedure

Abstract

PurposeThe competitive dialogue (CD) aims to align complex demands of principals with possible solutions that contractors have to offer. It is, however, unclear how formal and informal structures and processes in the CD are interrelated. The purpose of this paper is to provide insights in to the development of and the relationship between interaction processes during negotiations and commitments in terms of formal and informal contracts during a CD‐procured project.Design/methodology/approachBased on a case study of a complex construction project, an event‐driven explanation is provided of the sequence in which a discrete set of critical events occur.FindingsCritical events show that problems of understanding are caused by differences between the formal legal and the informal psychological contract of one of the parties involved. During all phases of a project, the parties involved oscillate between negotiations and commitments, depending on whether there is understanding or not. Negotiations and commitments act as substitutes. The formal legal contract and the informal psychological contract are complementary.Practical implicationsThe competitive dialogue develops less promisingly than hoped for due to risk aversion actions by at least one of the parties involved. Insights of this study help to create more cooperative working relationships and to reduce failure costs of large complex projects.Originality/valueThe in‐depth case study offers a unique opportunity to reconstruct an intensive procurement process by detailed first‐hand information in a specific case.