Project governance: Case studies on financial incentives

Appropriate financial incentives within construction project coalitions can contribute to effective project governance. However, the dearth of primary research material is partly attributed to the lack of a suitable methodology with which to study projects. Social network analysis (SNA) is proposed as an analytical tool to explore coalition governance. Primary data are presented for three European case studies employing quite different approaches to the use of financial incentives in project governance. The case studies investigate pain share/gain share arrangements implemented under a prime contracting procurement approach; an unusual use of activity-related penalties in the French system of procurement; and the use of guaranteed maximum price supplements within a UK standard form of (without contractor's design) building contract. The use of SNA enables the observation of a number of transaction sets and the formulation of a framework for the quantification of construction project governance. The first case study demonstrates the decentralization of client-orientated financial management, from consultant quantity surveyor to a number of multidisciplinary cluster leaders. The second case study illustrates the importance of incentive contiguity in effective project governance. The third case study uses SNA to demonstrate the way in which financial governance could be transformed through the transference of client-orientated financial management from the client and their professional adviser to the main contractor.