Beyond ContractProcess Dilemma: Management of Convergent Commitment, Collective Learning, and Solidarity between the Project Members

Beyond Contract/Process Dilemma: Management of Convergent Commitment, Collective Learning, and Solidarity between the Project Members

The first immediate consequence of the competition by innovation context is to increase the risk level of projects. Uncertain projects are of course not new in industry. But what is more original is to consider such projects as a normal and repetitive way to sustain survival, and, if possible, growth of the firm. Therefore, the level of efficiency required for risky projects has significantly increased in terms of functional performances, quality, costs, and lead-time. The importance of risk management as a key point in recent project management conferences is a significant reflection of such a trend.

In that context, uncertainty creates many surprises that imply the need for revisions in means and ends of the project. Therefore, the efficiency in such projects depends on:

• First, the efficient collective learning processes that will permit the rapid detection of the problems and generate satisfactory answers.

• Second, the solidarity between the contributors, in order to reallocate the resources, constraints, and performances among the contributors, for the best of the global project.

The classical contractual and standardized coordination model is not adapted to such priorities (Lundin 1995; S derlund 1998). In that model, the targets are precisely specified and contracted in advance with each contributor. The coordination logic is the fulfillment of these contracts. Revising the initial contracts in order to face unpredicted events leads to difficult and often unproductive debates, because the solution-finding target is put behind the responsibility attribution question. Moreover, the contractual system is a significant obstacle to the creation of collective solidarity on the global objectives of the project: for contributors not directly confronted with a problem appearing to another contributor (a delay for example) it is often taken as a good opportunity to elude their own difficulties.

Modern concurrent-engineering literature insists on the importance of process coordination to ensure project efficiency. Characteristics, such as collocation, mutual understanding, trust, and leadership styles in project teams, problem-solving methodologies, and reactive decision processes, appear as variables of great importance in risky projects, compared to formal, initial detailed contracting. In the case of important projects (such as automobile development), far from neglecting the contractual side, this emphasis on collective design processes has experienced a growing interest in renewed contracting philosophy, to coordinate the contributors inside the firm (internal contracts as studied by Naklha and Soler [1998]) as well as to regulate inter-firm relationships within a partnership relation (Garel and Midler 2001). The role and the form of the contracts are different than in the market-oriented regulation. In the traditional project regulations, contracts are supposed to ensure, by their fulfillment, the coordination of the project. They are supposed to be the "invisible hand" of the project. Adjusted penalties in case of failure are supposed to be the effective defense against the risk of opportunistic behavior and incompetence. In the renewed philosophy, contracts have no such ambition. They appear not as a substitute to the coordination process, but more modestly, as a component of it. In particular, to solve the classical problem of trusting the contributors, other certification processes are called upon. Their specific functions are:

• In the beginning, to force the actors of the project to make their expectations and priorities for the project explicit.

• To formalize, confront, and share the strategies and hypothesis that underlie the commitment of the contributors.

• To negotiate incentives that are coherent with these priorities and strategies.

• To define collective and accepted "warning processes" that will serve as the basis of the collective learning process when surprises occur.

Such an approach to contracting within projects is similar to modern conceptions in the strategic planning of firms (Ponssard 1992). On the contrary, it contradicts in many ways the juridical approach, where the contract is conceived as an instrument to solve contentious business, whereas it is here mainly an instrument to make the project converage and prevent legal dispute.