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Abstract
Relational contracting is not new. But the concept of formal relational contracting is new, especially in the corporate real estate/facility management (CRE/FM) arena. This paper shares the latest research and thinking on relational contracts and explains how using a formal relational contract can boost collaboration and trust with your CRE outsourcing partner. Since the early 1960s, pioneering legal scholars such as Stewart Macaulay and Ian Macneil began promoting the value of the softer ‘relational’ side of contracts. In fact, Macaulay’s original 1963 article on the topic would become the most-cited article in contract law. These pioneers shone a light in the legal and economic fields that fostered intense interest. Still, the concept of using relational contracting practices and relational contracts has never really taken off, specifically in CRE/FM agreements. We believe the time has come for formal relational contracts to take centre stage, especially in light of the need for flexibility and collaboration due to the COVID-19 pandemic.
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Author's Biography
Kate Vitasek is a faculty member for Graduate and Executive Education at the University of Tennessee’s Haslam College of Business Administration. Her award-winning research has been featured in six books including: ‘Vested Outsourcing: Five Rules That Will Transform Outsourcing’ and ‘Vested: How P&G, McDonald’s and Microsoft are Redefining Winning in Business Relationships’. Her most recent book, ‘Strategic Sourcing in the New Economy: Harnessing the Potential of Sourcing Business Models for Modern Procurement’, has been widely endorsed by some of the most progressive procurement leaders across the world.
David Frydlinger is an attorney at Cirio Law Firm in Sweden and an adjunct faculty member at the University of Tennessee where he leads the collaborative contracting executive education course. He is a Vested Certified Deal Architect and has over 15 years’ experience in drafting and negotiating outsourcing and other complex commercial contracts. David is also the author and co-author of several books, including Getting to We – Negotiating Agreements for Highly Collaborative Relationships and Contacting in the New Economy: Using Relational Contracts to Boost Collaboration and Trust in Strategic Business Relationships. He holds a master’s degree in sociology.
Magnus Kuchler is a partner at EY Advisory Services based in Stockholm, Sweden, where he leads EY’s outsourcing advisory practice and EY’s global work as a University of Tennessee Vested Center of Excellence. Magnus has led 125 facilities outsourcing projects in over 60 countries. He is known for being a thought leader and pioneer for CRE outsourcing and was the first in Europe to pilot a request for partner process.
Alexander Lundin is a director at EY Consulting Services in Sweden and an adjunct faculty member at the University of Tennessee, where he leads the Vested executive education course. He has over ten years’ experience in complex facilities outsourcing projects (transactional and relational approaches), as well as inhouse facilities management transformations. He is also a Vested Certified Deal Architect and leads EY’s global Vested Centre of Excellence group.