Codifying Relationship Management for Outsourced Project Operations

In an era of accelerated global change, heightened stakeholder expectations, and increasing reliance on business process outsourcing (BPO), project management (PM) is frequently contracted to external providers (Lahiri et al., 2022). While BPO offers efficiency, flexibility, and access to specialist expertise, it also introduces significant relational risk, which is the impact of relationships on the opportunities and consequences of joint efforts (Staniec, 2021). Relationship breakdowns between clients and contractors can undermine collaboration, exacerbate conflict, and jeopardize project outcomes. Although the importance of effective relationship management in outsourced projects is increasingly recognized, guidance on how relational strategies translate into operational PM practices remains limited. Our study addresses this gap by developing a measurement instrument for managing relationships in outsourced projects, designed to support both diagnostic assessment and prescriptive intervention. Our research questions are: (1) How can relationship management in outsourced projects be codified? and (2) What is the impact of relationship management mechanisms on PM success? <br/><br/>Methodology<br/>We adopt a multi-stage, mixed-method research design grounded in established scale development procedures, see Figure 1 on p.2.<br/>Theoretical foundations are drawn from the CURED framework (Contract, Understanding, Resources, Education, Delegation) for relationship management in outsourced project contexts (Bryde et al., 2019). An initial item pool was generated through an extensive literature review and expert collaboration involving academics and senior PM practitioners, resulting in 40 reflective items across the five CURED dimensions and two items capturing PM success.<br/>Phase 1 involved an online survey administered across the UK, US, Canada, and Australia to practitioners with experience of outsourced PM in project-intensive sectors. From 288 responses, 195 usable cases were retained. Common method bias was assessed using principal component analysis and found not to be problematic. Confirmatory factor analysis (CFA) using AMOS tested unidimensionality, convergent validity, discriminant validity, and reliability. Poorly performing items were removed, resulting in a refined set of 19 items.<br/>Phase 2 tested the second-order formative model using a new sample of 146 respondents collected via the Prolific platform. The model specifies five first-order reflective constructs (Contract, Understanding, Resources, Education, Delegation) forming a second-order formative construct of PM Success. Model fit, construct reliability, average variance extracted (AVE), and discriminant validity were assessed. The hypothesised structure was confirmed through structural equation modelling, and criterion validity was tested by examining relationships with performance and relational conflict indicators.<br/><br/> <br/>Figure 1 – Model Development Process<br/><br/>Findings<br/>The results provide strong empirical support for the proposed measurement instrument and its underlying theoretical model. All five CURED dimensions demonstrated satisfactory psychometric properties, with high factor loadings, composite reliability, and Cronbach’s alpha coefficients exceeding recommended thresholds. The second-order formative model showed good overall fit. The list of final items, with standardised factor loadings, is shown in Table 1, p.4. <br/>Importantly, the findings demonstrate that relationship management mechanisms have a significant and positive impact on project outcomes, both in terms of performance effectiveness (time, cost, and specifications) and relational quality (reduced conflict and improved team experience). The results validate the conceptualisation of PM Success as a strategic, multidimensional construct rather than a narrow operational metric, consistent with prior research on project success frameworks. The study also provides empirical evidence that relational risk in outsourced projects is not merely a by-product of structural arrangements but can be actively managed through codified practices and mechanisms. <br/><br/><br/><br/><br/><br/><br/><br/><br/><br/>Table 1 – Final Items, with Standardised Factor Loadings <br/><br/> <br/>Relevance and Contribution<br/>Our study makes several important theoretical and practical contributions.<br/>Theoretically, it advances project management and outsourcing literature by operationalising relationship management in outsourced projects as a measurable, multidimensional construct. It extends the work of Bryde et al. (2019) by translating the CURED framework into a validated measurement instrument.<br/>Methodologically, the research contributes a rigorously developed and validated scale that can be used in future empirical studies to examine relational dynamics in outsourced project environments. The mixed-method, multi-phase design strengthens confidence in the instrument’s reliability, validity, and generalisability across sectors and national contexts.<br/>Practically, the instrument offers project sponsors, client organisations, and contractors a diagnostic tool to assess relational strengths and weaknesses and a prescriptive guide to target interventions in contract design, stakeholder understanding, resource alignment, education and training, and delegation practices. By codifying relational mechanisms, the study supports the translation of tacit relational knowledge into explicit, actionable PM practices, addressing a critical gap in current bodies of knowledge. This is particularly relevant given the increasing emphasis on “power skills” and collaboration highlighted in professional reports (PMI, 2024).<br/>Overall, our study demonstrates that effective relationship management is not a soft, peripheral concern but a central determinant of project success in outsourced contexts. By providing a validated measurement instrument, it lays the foundation for more systematic management of relational risk and for future research into the dynamics of client–contractor relationships in complex project environments <br/><br/>References <br/>Aaltonen, K. and Kujala, J. (2016), “Towards an improved understanding of stakeholder dynamics: A temporal perspective”, International Journal of Project Management, Vol. 34, No. 6, pp. 1082–1096.<br/>Bryde, D. J., Unterhitzenberger, C. and Joby, R. (2019), “Resolving agency issues in client–contractor relationships to deliver project success”, Production Planning &amp; Control, Vol. 30, No. 13, pp. 1049–1063.<br/>Goold, M., and Campbell, A. (2003), “Making matrix structures work: Creating clarity on unit roles and responsibility”, European Management Journal, Vol. 21, No. 3, pp. 351–363.<br/>Lahiri, S., Karna, A., Kalubandi, S.C. and Edacherian, S. (2022), “Performance implications of outsourcing: A meta-analysis”, Journal of Business Research, Vol. 139, pp. 1303-1316<br/>Lundin, R. A. and Söderholm, A. (1995), “A theory of the temporary organization”, Scandinavian Journal of Management, Vol. 11, No. 4, pp. 437–455.<br/>Silvius, G. and Schipper, R. (2014), “Sustainability in project management: A literature review and impact analysis”, Social Business, Vol. 4, No. 1, pp. 63–96.<br/>Staniec, I. (2021), “Managing Relational Risk in Turbulent Environments”, in Klimezak, K.M. and Shachmurove, Y. (Eds.), Organizational Change and Relational Resources, Routledge, New York.<br/>PMI (2024), Pulse of the Profession®. Project Management Institute, Newtown Square, PA.<br/><br/><br/>