Barriers to realizing a stewardship relation between client and vendor: the Best Value approach

Abstract

This study identifies barriers to realizing a stewardship relation instead of a classic principal–agent relation between client and vendor through implementation of an innovative procurement and risk management method, the Best Value approach. This approach focuses on calculus-based trust development through the use of metrics and alignment of goals and risks between client and vendor. Barriers to realizing a stewardship relation are analysed with the use of a theoretical framework that incorporates agency theory and stewardship theory. Data was collected in 2013 and 2014 through project documentation and interviews for four case studies at the Dutch Highways Agency. Collected data was used to analyse the roles of the client and vendor, the scope and level of the products and the overall process of the clarification phase of the Best Value approach to identify barriers in practice. Case study findings are analysed and explained by agency theory and stewardship theory. From a theoretical perspective the Best Value approach shows large similarities with stewardship theory. In practice, however, the cases show that the often traditional background of project teams and the lack of experience with Best Value result in a control-oriented relationship between client and vendor characterized by information asymmetry, lack of transparency and distrust. These characteristics of the relationship between client and vendor inhibit the realization of a stewardship relation using the Best Value approach.

Keywords:

• Agency theory
• Best Value approach
• contractor selection
• performance-based procurement
• stewardship theory.

Disclosure statement

No potential conflict of interest was reported by the authors.