Unstructuring incompetence: problems of contracting, trust and the development of the channel tunnel

Abstract

This paper examines aspects of the contractual relationship between the principal actors in the construction of the Channel Tunnel. Based on interviews with key participants and a wealth of public and semi-public documentary data, the paper presents a case study illustrating the interconnect-edness of contractual form, process and trust, and the management and performance of complex, large-scale technological projects. Theoretically, the research is informed by, a cross-disciplinary approach, taking in contributions to the management of complexig and interrfirm relationships associated with the markets and hierarchies debate in economics and in organization theory, and research on the management of scale from the technology policy and project management literatures. More specifically, the paper builds upon Stinchcombe's findings that:(a) contrary to the Williamsonian view contracts between firms are employed in the practice of administering complex undertakings (i.e. rather than ‘hierarchy’ but (b) to enable such contracting to perform effectively, ‘hierarchical’features are devised by the parties in a bid to ‘structure’ their joint ‘incompetence’ at managing the unknowns and unknowables of complex projects, and of selecting appropriate contract forms, In the case of the Channel Tunnel development, the nature of the various contractual arrangements is described. An evaluation of the extent and qua& of hierarchical aspects o f the contractual relationship between Eurotunnel, TML (the principal constructing contractor), financial, governmental and other organizations is conducted. This is carried out in terms of the ease or diffculty experienced in managing changes in design specfication, monitoring work that was executed or resoluing disputes over the interpretation of contractor performance criteria, for example. Ultimately, the paper points up the extent to which differing expecta-tions from the project, adversarial contractual relations and lack of trust between the client and the main contractor (against a background of ‘fast track development’ contributed to problems of cost-effectively designing, constructing and coordinating Channel Tunnel technology. The conclusions serve to indicate how and why hierarchical elements of contracts may exacerbate ‘incompetence’ in the management of complex or large-scale technology projects, rather than ‘structure’ it, to the detriment Of overall project performance.