THE ROLE OF UMBRELLA AGREEMENTS IN ACHIEVING SUSTAINABILITY GOALS: ENERGY EFFICIENCY AT THE EMPIRE STATE BUILDING

Abstract

In this paper we investigate whether innovative and flexible contractual arrangements can support the process of achieving ambitious sustainability goals. We explore this question through an analysis of the role of umbrella agreements in driving energy savings in the building sector. Drawing on a case study of the iconic Empire State building, we examine the typical challenges faced by clients and contractors in devising suitable agreements that facilitate managing contractual and performance risks, as well as the sharing of responsibilities and cooperation between multiple project stakeholders. We find that the project arrangements appear to exhibit the adoption of the key characteristics commonly found in umbrella agreements which incorporate sustainability measures that maximize income through efficient delivery of outcomes. Specifically, this means that they need to enable stakeholders to manage repeated review cycles, complex perceptions and expectations, and different tacit assumptions and codes of behaviour, as well as managing and communicating in networks and obtaining agreement also from non-contractual parties. Moreover, we demonstrate that umbrella agreements can facilitate a network perspective of business relationships by emphasizing value co-creation and the embeddedness of firms within a network of interactions.