Contracting and Innovation in Megaprojects

Abstract

Over the past decade, the field of project management has increasingly focused on understanding the balance between two distinct forms of learning within megaproject organizations: one centered on exploiting existing project capabilities and another aimed at exploring innovations. However, there remains a gap in comprehending how contractual arrangements can effectively promote ambidextrous activities that balance exploitation and exploration in projects, especially beyond the scope of partnering arrangements. This thesis seeks to bridge this knowledge gap by investigating the use of innovative contracting strategies to tap into contractors' insights regarding innovations implemented in previous projects. It adopts a multiple case study approach, with a specific emphasis on offshore oil and gas projects situated on the Norwegian Continental Shelf. The research includes 67 semi-structured interviews with insights from 72 informants. Within this thesis, three distinctive contracting approaches emerge: front-end studies (comprising appraisal, feasibility, conceptual, and FEED studies), two-stage tendering, and a suite of relational governance mechanisms employed to enhance collaboration within megaproject coalitions. These innovative contracting strategies enable better management of megaproject innovation, allowing oil companies to both leverage the supply industry's experience and explore alternative solutions for optimizing their new offshore fields. The findings are organized in papers according to different megaproject lifecycle phases: first, when the utility of innovative ideas is at its highest (paper 1); then, as innovation gradually shifts to more practical issues like construction optimization (paper 2); and finally, during the development phase, when innovation generally entails a change in project routines to cope with opportunities and challenges (paper 3).