The impact of principal-agent relationship and contract type on communication between project owner and manager

Communication structures between project owners and project managers are influenced by the principal-agent relationship between the parties and the contract type chosen. Empirical research results on project owner-manager communication practices are mapped against the contractual communication requirements in projects. This identifies possible risk factors for projects, based on a conflict between 'best' communication for a project and suggested communication through the chosen contract type. The paper provides recommendations for risk-minimizing owner-manager communication, as well as contributions to project theory by showing the differences of principal-agent theory and transaction costs economics in minimizing costs for governing projects.