Formal and informal contracting processes in the competitive dialogue procedure: a multiple-case study

Abstract

The competitive dialogue (CD) procedure aims to align the 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 and how they determine its effectiveness. The major question in this study is how informal and formal contracting processes differ between projects procured through the CD and comparable projects that are traditionally procured. In a theoretical framework, it is shown that both the negotiations and the commitment stages consist of a formal part (formal bargaining/formal legal contract) and an informal part (informal sense-making/informal psychological contract), and that these dynamically interact as problems of understanding are identified and resolved. These elements and their interactions are studied in four comparable construction projects. The results of this multiple-case study show that commitments and negotiations can substitute for one another, whereas the formal and informal processes within these stages are complementary. Problems of understanding are key in the development of both formal and informal contracts.