Project Outsourcing Contracts Reshape Industries, Empower Subcontractors
Project outsourcing can lead to delays, so it's important to negotiate contracts properly. The researchers looked at how companies can coordinate outsourced projects through negotiations. They found that different contract types and payment timing can impact project success. For single-task projects, fixed-price contracts work best when the subcontractor has more power. Cost-sharing contracts are good for single-task projects, but not for projects with parallel tasks. Serial task projects need specific bargaining power structures to be coordinated. Delaying payments can make things worse. Companies should choose contract forms and payment timing based on project and subcontractor characteristics to ensure successful outsourcing.