Elements of relational contract in the delivery of public infrastructure in Malaysia

Abstract

The involvement of private concessionaire in the delivery of public infrastructure worldwide is apparent in reducing the budgetary burden on the government’s part specifically due to the major downturn in the global economy. Their involvement varies from concessionaire, privatization to partnerships. Looking at the most current type of project delivery approach procured around the globe, which is known as Public Private Partnerships (PPP), although the opportunities are widely opened for the private concessionaires to partake in the delivery of public infrastructure projects with numerous incentives by the government, their responses are still minimal. Their reluctance is observed due to the current scenario in the PPP implementation involving the development of monopolies by certain groups of private concessionaires in Malaysia, which consequently reduces the healthy competition among concessionaires. Therefore, this paper is materialized with the aim of determining the elements of relational contract, which can improve the current delivery of public infrastructure project and subsequently eradicate the private concessionaire’s lack of enthusiasm. Questionnaire surveys on 22 respondents of construction industry players are undertaken to determine the elements of relational contract suitable to be adopted in public infrastructure delivery in Malaysia in encouraging the involvement of private concessionaires. The results show that relational contract elements of clearly defined scope, integrated project team, mutual alignment of goals and open honest communication should be included in the relational contract elements frameworks due to its potential in overcoming the current recession of private concessionaire’s initiatives and ultimately improving the public infrastructure delivery in Malaysia.