International Journal of Project Management
Volume 21, Issue 6, August 2003, Pages 419-424
Selected papers from the Fifth Biennial Conference of the International Rearch Network for Organizing by Projects. Held in Renes, Seeland, The Netherlands, 28-31 May 2002.
doi:10.1016/S0263-7863(02)00082-0 | How to Cite or Link Using DOI Copyright © 2003 Elvier Ltd and IPMA. All rights rerved. |
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第二大经济体Construction contracts: the cost of mistrust
Ramy Zaghloul, and Francis Hartman
Project Management Specialization, Department of Civil Engineering, University of Calgary, 2500 University Dr. NW, Calgary, Alberta, Canada, T2N 1N4
Received 12 February 2002;
revid 20 September 2002;
accepted 19 November 2002. ;
Available online 3 April 2003.
Abstract
Current contractual relationships are mainly bad on confrontational situations that reflect the level of trust (or mistrust) in the 微波炉可以烤蛋挞吗contract documents. This can be the driver to increa the total cost of a specific project and affect the overall relationship between the contracting parties. This has been tested in the construction industry in Canada, and appears to be generalizable across North America. Bad on two independent surveys (including the one prented in this paper) of Owners, Consultants and Contractors across Canada, the assd premium associated with the five most commonly ud exculpatory claus in construction is between 8 and 20% in a ller's market. It should b
e obvious that trust and contracting methods are related and that this relationship is of vital importance to effective project management and contract刘骏 administration. To date, little work has been done to explore the advantages of this relationship. This paper prents some of the results of a survey conducted across the Canadian construction industry that identifies some opportunities for better risk allocation mechanism and contracting strategies that are bad on a trust relationship between the contracting parties. The opportunities are bad on a trust relationship that can be the root cau for a significant saving in the annual bill for construction.
Author Keywords: Risk allocation; Trust relationships; Transaction costs; Contracting strategies
教师节作文Article Outline
1. Introduction
2. Construction contracts and risk allocation
3. Risk allocation through disclaimer claus
4. Why trust
5. The colour of trust model
6. The industry survey
7. Results and discussion
8. Trust, risk behaviour, and cost reduction
9. Conclusion and recommendations
References
1. Introduction
The construction industry in both Canada and the United States is the single largest non-governmental employer. In 1997, the industry was estimated in Canada to have a value o绍兴游玩攻略
f about $90 billion, reprenting 15% of the gross domestic product and employing more than 872,386 workers directly [1]. However, within the last 20 years considerable cost wastage has been identified by the Construction Industry Institute [2]. A significant portion of this cost wastage may be attributed to inappropriate risk allocation in contracts,as cited in various examples analysing risk allocation in the construction industry and the underlying caus of disputes conducted in Canada and the United States [3, 4 and 30].
Meanwhile, 极目楚天舒construction risks are a major element that can significantly affects the final cost of any project. Specifically, how the risks are allocated has a direct bearing on the final total cost. The cost of the risks is carried by the owner, contractor, or both, as determined by the type of the construction contract一坐一忘 [5]. Risk allocation always occurs in any situation where more than one party (owner, contractor, consultant, etc.) is responsible for the execution of a project. Making sure that as many risks as possible are recognid and managed is good practice in any project. This activity is an important step in that this allocation can significantly influence the behaviour of the project participants and hence impact both project performance and final cost.
2. Construction contracts and risk allocation
Construction contracts are the written agreements signed by the contracting parties (mainly an owner and a contractor), which bind them, defining relationships and obligations [6]. In any certain project, the owner's goal can best be achieved by lecting the contract type that will most effectively motivate the contractor to the desired end. This step is also dependent on completeness of information for the bidder(s) at tender time and the extent that the owner wishes to take specific risk. In this context, contractrisk can be divided into performance risks and cost risks [泽菊5].
Regarding risk allocation, the concept of “limitation of liability” dates back more than three hundred years, when the British Parliament declared, as part of Maritime Law, that a ship's owner should not bear greater liability than the value of the ship's hull [7]. In this context, every contract allocates risk. Not all contractsallocate risk equitably or such that the power and authority to manage the risk is allocated along with the risk itlf. Given the opportunity, an owner should favour efficient allocation of risk between parties to a pr
oject that simultaneously reduces risk and improves project performance. This appropriate risk allocation is a significant contributor to low transaction cost of any specific project and vital issue in the success of the contracting process. However, in an owner–contractor relationship at least, a common aim of owners appears to be to avoid risk as far as possible by allocating as many risks as it can to the contractor [8].
