Determining the Relational Potential of Public–Private Partnership Surface Transportation Contracts

Abstract

Public–private partnership (PPP) projects have inherent complexities, so relational contracting practices such as partnering can be specified in PPP contracts to enhance their coordination function. This can lead to an enhancement of relational exchanges and the development of known behavior norms such as role integrity. Moreover, relational contracting theory predicts that the development of behavior norms affects relationships during project implementation, so they evolve from those intended in a contract. Consequently, this research develops a methodology to determine the relational potential of PPP contracts that uses manual content analysis and semiautomated natural language processing (NLP) techniques to score the inclusion of relational contracting practices from five categories: communicating/negotiating, partnering, resolving conflicts, monitoring, and executing changes. The methodology was applied to 24 PPP surface transportation project contracts in the United States. Comparative analysis showed that contracts from several states have stronger relational potential scores than others particularly based on their inclusion of practices associated with partnering and resolving conflicts. Further, semistructured interviews of 13 subject matter experts indicated that relational contracting practices do improve coordination, change as necessary, and can facilitate the formation of behavior norms such as harmonization of conflict among PPP project participants. This study validates a robust approach for determining a contract’s relational potential, which is indicative of the strength of its coordination function and its capacity to facilitate relational exchanges. The findings add important insights to recent work that increasingly emphasizes a functional perspective of contracts that enables purposes beyond transactional control and fosters relational exchanges in complex project environments such as PPPs. It also establishes a basis for deriving linkages between PPP project performance and relational contractual designs and additional factors such as project characteristics using qualitative comparative analysis or other methods. Furthermore, public transportation agencies can utilize the results to modify PPP contracts to promote coordination and relational exchanges.