Abstract

Formal contracts and relationships are the two main types of project governance approaches. Some studies have found that the two approaches are substitutive, while others have shown that they are complementary rather than mutually exclusive. In the construction industry where is common to contract out most of construction work to contractors specializing in project delivery, there has been a marked shift from reliance on tight contract to relationship oriented agreements. The dominant logic of the former is, through exchanges of mostly technical information, to coordinate project’s tasks to delivery project outcomes specified in the contract: a process synonymous to independent value creation. In contrast, the dominant logic of the latter is that by looking after each other’s interests and even sharing gains and pains, parties bounded by common interests collaborate strategically much beyond simple technical level coordination in order to deliver the project: a process referred to as value co-creation. Coordination, however, is not isolated from collaboration. Increased collaboration leads to more and effective coordination. This study examines how coordination and collaboration jointly impact on project value. Adding to the literature, the study shows that the effect of collaboration on project value is mediated by coordination.