Flexible contracting in software project business

Research output: ThesisMaster's thesisTheses

Abstract

One of the most important issues in project business is to reach the goals set for the project, both monetary and non-monetary goals. This is also how project success can be measured and company’s activities can be evaluated for future adjustments in different project functions. As project management literature suggests, several types of uncertainties and changes in project requirements or project environment create the most severe source of risk preventing to reach project goals. The traditional way to control the risk during the implementation of the project is to use different project management techniques. However, these techniques are many times reactive as nature; even they usually try to foresee the future problems in project implementation and delivery.

To overcome these challenges, project contracts can be seen as a potential source of flexibility for the project implementation and delivery phase, and as a potential tool for better cooperation and communication between the project parties. The goal of this research was to look at the contracting process and capabilities and see if they, along with the project contract, can support a company to reach its business goals within a project. Furthermore, another goal was to consider a concept of proactive contracting from flexibility point of view and increase understanding how flexibility can be applied in project business and what are the risks and benefits in doing so. To achieve these goals, the research questions of the research were:
- What are the phases of contracting process and the elements of project contract?
- How is flexibility implemented in contracting process and into project contract?
- What type of benefits and risks does flexibility bring to software project vendor?

The main finding of the study was that it is possible to use two different approaches to implementing flexibility in the contracting process: Postpone decisions until there is enough adequate information available for decision making or make decisions that allow flexible adaptation to changes during the project lifecycle.

The other findings can be concluded in three notions. First, flexible contracting requires certain level of relational accumulation and trust. Secondly, flexible contracting plays a vital role in value creation of a software project. Based on this research, flexible contracting creates synergies with agile software development in project business. And lastly, safeguarding is an important function of a project contract but with flexible contracting approach, contracts can work as a business tool to enable proactive coordination and flexible adaption for changes in a complex project environment.
Translated title of the contributionJoustava sopiminen projektiliiketoiminnassa, case: ohjelmistoprojektit
Original languageEnglish
Awarding Institution
  • University of Oulu, Faculty of Technology, Industrial Engineering and Management Research Unit
Supervisors/Advisors
  • Kujala, Jaakko, Supervisor, External person
Award date12 Nov 2013
Publication statusPublished - 27 Oct 2013
MoEC publication typeG2 Master's thesis, polytechnic Master's thesis

Keywords

  • Flexible Contracting
  • Project Contracts
  • Project Business
  • Software Project Business
  • Software Contracting

Field of science

  • Business and management

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