Relational Investments and Contractual Choices for Diverse Engineering Designs

Engineering design has a major impact on the downstream performance, but is often guided, in both procurement and solution type, by intuition rather than a solid science base. Engineering is also increasingly collaborative, crossing organizational boundaries. However, the long-term close partnerships, as often proposed, are difficult to achieve in the context of individual engineering projects. Building on the concepts related to investments in specific assets, in this article, we
describe the underlying characteristics of engineering design investments and then prescribes the relational investment and contract forms to select them,
thereby contributing to our understanding of the engineering design and relational investments that can and should be made
.
We undertook multiple case study research articles, which are presented in two phases. The descriptive phase identifies the positive outcomes for solutions based on off-the-shelf designs with fixed price mechanisms, for solutions based on the adaptive designs with target cost mechanisms, and for bespoke solutions contracted either on cost-plus mechanisms or, if in bite-sized pieces, on fixed price mechanisms. Negative performance outcomes were found for adaptive solutions with fixed price mechanisms. A prescriptive phase, yielding a visualized model, then offers guidance for relational investments and contract mechanisms that are suitable for different engineering designs. Applicability zones and three potential transitions to challenge and guide current practice are developed to inform decision making.