Joint Contract–Function Effects on BIM-Enabled EPC Project Performance
Publication: Journal of Construction Engineering and Management
Volume 146, Issue 3
Abstract
Engineering, procurement, and construction (EPC) contracting does not promote collaboration and thus may not be suitable for building information modeling (BIM) projects. Joint-contract functions that combine contractual control, coordination, and contingency adaptability may positively influence the performance of these BIM-enabled projects. This study hypothesized that perceived fairness, calculative trust, relational trust, and positive outcomes of distrust influence the relationship between joint-contract functions and BIM-enabled project performance. A total of 252 observations were collected from industry practitioners in EPC oil and gas projects and analyzed using partial least-squares structural equation modeling (PLS-SEM). The results show no direct effect of joint-contract functions on BIM-enabled EPC project performance but do show significant total and indirect relationship effects that are influenced by perceived fairness and relational trust. The findings contribute to construction contracting research by empirically showing how formal contracts focusing on joint-contract functions can influence BIM-enabled EPC project performance. The current findings also shed light on appropriate contract framing for BIM-enabled EPC project stakeholders, an area not explored in the previous literature.
Get full access to this article
View all available purchase options and get full access to this article.
Data Availability Statement
All data generated or analyzed during the study are included in the published article.
Acknowledgments
This work was supported by the Australian Research Council (ARC) Linkage Project (LP140100873) and Discovery Project (DP170104612); and the National Natural Science Foundation of China (71571098).
References
Adams, J. S. 1965. “Inequity in social exchange.” In Vol. 2 of Advances in experimental social psychology, edited by L. Berkowitz. New York: Academic Press.
Benaroch, M., Y. Lichtenstein, and L. Fink. 2016. “Contract design choices and the balance of ex-ante and ex-post transaction costs in software development outsourcing.” MIS Q. 40 (1): 57–82. https://doi.org/10.25300/MISQ/2016/40.1.03.
Benítez-Ávila, C., A. Hartmann, G. Dewulf, and J. Henseler. 2018. “Interplay of relational and contractual governance in public-private partnerships: The mediating role of relational norms, trust and partners’ contribution.” Int. J. Project Manage. 36 (3): 429–443. https://doi.org/10.1016/j.ijproman.2017.12.005.
Berends, K. 2007. “Engineering and construction projects for oil and gas processing facilities: Contracting, uncertainty and the economics of information.” Energy Policy 35 (8): 4260–4270. https://doi.org/10.1016/j.enpol.2007.02.027.
Bradach, J., and R. Eccles. 1989. “Price, authority, and trust: From ideal types to plural forms.” Ann. Rev. Sociology 15 (1): 97–118. https://doi.org/10.1146/annurev.so.15.080189.000525.
Chen, H. L., and Y. L. Lin. 2018. “Goal orientations, leader-leader exchange, trust, and the outcomes of project performance.” Int. J. Project Manage. 36 (5): 716–729. https://doi.org/10.1016/j.ijproman.2018.03.009.
Cheung, S. O., W. K. Wong, T. W. Yiu, and H. Y. Pang. 2013. “Interweaving trust and communication for project performance.” J. Constr. Eng. Manage. 139 (8): 941–950. https://doi.org/10.1061/(ASCE)CO.1943-7862.0000681.
Cheung, S. O., T. W. Yiu, and O. K. Chiu. 2009. “The aggressive–cooperative drivers of construction contracting.” Int. J. Project Manage. 27 (7): 727–735. https://doi.org/10.1016/j.ijproman.2008.09.001.
Cohen, J. 1988. Statistical power analysis for the behavioral sciences. 2nd ed. Hillsdale, NJ: Lawrence Erlbaum Associates.
Collet, B. A. 2008. “Confronting the insider-outsider polemic in conducting research with diasporic communities: Towards a community-based approach.” Refuge 25 (1): 77–83.
Das, T. K., and B. S. Teng. 1996. “Risk types and inter-firm alliance structures.” J. Manage. Stud. 33 (6): 827–843. https://doi.org/10.1111/j.1467-6486.1996.tb00174.x.
DeVellis, R. F. 2016. Scale development: Theory and applications. 4th ed. Los Angeles: SAGE.
Dimoka, A. 2010. “What does the brain tell us about trust and distrust? Evidence from a functional neuroimaging study.” MIS Q. 34 (2): 373–396. https://doi.org/10.2307/20721433.
Dyer, J. H. 1997. “Effective interfirm collaboration: How firms minimize transaction costs and maximize transaction value.” Strategic Manage. J. 18 (7): 535–556. https://doi.org/10.1002/(SICI)1097-0266(199708)18:7%3C535::AID-SMJ885%3E3.0.CO;2-Z.
Eckhard, B., and T. Mellewigt. 2006. Contractual functions and contractual dynamics in inter-firm relationships: What we know and how to proceed. New York: Social Science Research Network.
Fakhimi, A., J. Majrouhi Sardrood, A. Mazroi, S. R. Ghoreishi, and S. Azhar. 2017. “Influences of building information modeling (BIM) on oil, gas, and petrochemical firms.” Sci. Tech. Built Environ. 23 (6): 1063–1077. https://doi.org/10.1080/23744731.2017.1338487.
Faulkner, D. 2000. “Trust and control: Opposing or complementary functions?” In Cooperative strategy: Economic, business and organizational issues, edited by D. Faulkner and M. De Rond. New York: Oxford University Press.
Ghoshal, S., and P. Moran. 1996. “Bad for practice: A critique of the transaction cost theory.” Acad. Manage. Rev. 21 (1): 13–47. https://doi.org/10.5465/amr.1996.9602161563.
Greenberg, J. 1987. “Reactions to procedural injustice in payment distributions: Do the ends justify the means.” J. Appl. Psychol. 72 (1): 55–61. https://doi.org/10.1037/0021-9010.72.1.55.
Hair, J. F., Jr., G. T. M. Hult, C. Ringle, and M. Sarstedt. 2014. A primer on partial least squares structural equation modeling (PLS-SEM). Los Angeles: SAGE.
Harman, H. H. 1976. Modern factor analysis. Chicago: University of Chicago Press.
Henseler, J., C. M. Ringle, and M. Sarstedt. 2015. “A new criterion for assessing discriminant validity in variance-based structural equation modeling.” J. Acad. Marketing Sci. 43 (1): 115–135. https://doi.org/10.1007/s11747-014-0403-8.
Huber, T. L., T. A. Fischer, J. Dibbern, and R. Hirschheim. 2014. “A process model of complementarity and substitution of contractual and relational governance in IS outsourcing.” J. Manage. Info. Sys. 30 (3): 81–114. https://doi.org/10.2753/MIS0742-1222300304.
Jiang, W., Y. Lu, and Y. Le. 2016. “Trust and project success: A twofold perspective between owners and contractors.” J. Manage. Eng. 32 (6): 04016022. https://doi.org/10.1061/(ASCE)ME.1943-5479.0000469.
Klein, B., and K. M. Murphy. 1988. “Vertical restraints as contract enforcement mechanisms.” J. Law Econ. 31 (2): 265–297. https://doi.org/10.1086/467157.
Kock, N. 2015. “Common method bias in PLS-SEM: A full collinearity assessment approach.” Int. J. e-Collaboration 11 (4): 1–10. https://doi.org/10.4018/ijec.2015100101.
Lau, E., and S. Rowlinson. 2009. “Interpersonal trust and inter-firm trust in construction projects.” Constr. Manage. Econ. 27 (6): 539–554. https://doi.org/10.1080/01446190903003886.
Lee, C. Y., H. Y. Chong, P. C. Liao, and X. Wang. 2018a. “Critical review of social network analysis applications in complex project management.” J. Manage. Eng. 34 (2): 04017061. https://doi.org/10.1061/(ASCE)ME.1943-5479.0000579.
Lee, C. Y., H. Y. Chong, and X. Wang. 2018b. “Enhancing BIM performance in EPC projects through integrative trust-based functional contracting model.” J. Constr. Eng. Manage. 144 (7): 06018002. https://doi.org/10.1061/(ASCE)CO.1943-7862.0001521.
Leventhal, G. S. 1980. “What should be done with equity theory? New approaches to the study of fairness in social relationships.” In Social exchange, edited by K. Gergen, M. Greenberg, and R. Willis, 27–55. New York: Plenum.
Lewicki, R. J., D. J. McAllister, and R. J. Bies. 1998. “Trust and distrust: New relationships and realities.” Acad. Manage. Rev. 23 (3): 438–458. https://doi.org/10.5465/amr.1998.926620.
Li, Q., Z. Yin, H. Y. Chong, and Q. Shi. 2018. “Nexus of interorganizational trust, principled negotiation, and joint action for improved cost performance: Survey of Chinese megaprojects.” J. Manage. Eng. 34 (6): 04018036. https://doi.org/10.1061/(ASCE)ME.1943-5479.0000634.
Li, X., G. Q. Shen, P. Wu, and T. Yue. 2019. “Integrating building information modeling and prefabrication housing production.” Auto. Constr. 100 (Apr): 46–60. https://doi.org/10.1016/j.autcon.2018.12.024.
Lim, B. T., and M. Loosemore. 2017. “The effect of inter-organizational justice perceptions on organizational citizenship behaviors in construction projects.” Int. J. Project Manage. 35 (2): 95–106. https://doi.org/10.1016/j.ijproman.2016.10.016.
Lindner, J. R., T. H. Murphy, and G. E. Briers. 2001. “Handling nonresponse in social science research.” J. Agric. Edu. 42 (4): 43–53. https://doi.org/10.5032/jae.2001.04043.
Little, R. J. 1988. “A test of missing completely at random for multivariate data with missing values.” J. Am. Stat. Assoc. 83 (404): 1198–1202. https://doi.org/10.1080/01621459.1988.10478722.
Liu, Y., S. Van Nederveen, and M. Hertogh. 2017. “Understanding effects of BIM on collaborative design and construction: An empirical study in China.” Int. J. Project Manage. 35 (4): 686–698. https://doi.org/10.1016/j.ijproman.2016.06.007.
Lu, W., L. Zhang, and L. Zhang. 2016. “Effect of contract completeness on contractors’ opportunistic behavior and the moderating role of interdependence.” J. Constr. Eng. Manage. 142 (6): 04016004. https://doi.org/10.1061/(ASCE)CO.1943-7862.0001110.
Lumineau, F. 2017. “How contracts influence trust and distrust.” J. Manage. 43 (5): 1553–1577. https://doi.org/10.1177/0149206314556656.
Lumineau, F., and J. E. Henderson. 2012. “The influence of relational experience and contractual governance on the negotiation strategy in buyer–supplier disputes.” J. Oper. Manage. 30 (5): 382–395. https://doi.org/10.1016/j.jom.2012.03.005.
Luo, Y. 2002. “Contract, cooperation, and performance in international joint ventures.” Strategic Manage. J. 23 (10): 903–919. https://doi.org/10.1002/smj.261.
Malhotra, D., and F. Lumineau. 2011. “Trust and collaboration in the aftermath of conflict: The effects of contract structure.” Acad. Manage. J. 54 (5): 981–998. https://doi.org/10.5465/amj.2009.0683.
Malhotra, D., and J. K. Murnighan. 2002. “The effects of contracts on interpersonal trust.” Admin. Sci. Q. 47 (3): 534–559. https://doi.org/10.2307/3094850.
Mellewigt, T., A. Madhok, and A. Weibel. 2007. “Trust and formal contracts in interorganizational relationships—Substitutes and complements.” Manage. Dec. Econ. 28 (8): 833–847. https://doi.org/10.1002/mde.1321.
Mir, F. A., and A. H. Pinnington. 2014. “Exploring the value of project management: Linking project management performance and project success.” Int. J. Project Manage. 32 (2): 202–217. https://doi.org/10.1016/j.ijproman.2013.05.012.
Palanski, M. E., S. S. Kahai, and F. J. Yammarino. 2011. “Team virtues and performance: An examination of transparency, behavioral integrity, and trust.” J. Bus. Ethics 99 (2): 201–216. https://doi.org/10.1007/s10551-010-0650-7.
Podsakoff, N. P. 2003. “Common method biases in behavioral research: A critical review of the literature and recommended remedies.” J. Appl. Psychol. 88 (5): 879–903. https://doi.org/10.1037/0021-9010.88.5.879.
Podsakoff, P. M., and D. W. Organ. 1986. “Self-reports in organizational research: Problems and prospects.” J. Manage. 12 (4): 531–544. https://doi.org/10.1177/014920638601200408.
Poppo, L., K. Z. Zhou, and J. J. Li. 2016. “When can you trust “trust”? Calculative trust, relational trust, and supplier performance.” Strategic Manage. J. 37 (4): 724–741. https://doi.org/10.1002/smj.2374.
Provan, K. G., and S. J. Skinner. 1989. “Interorganizational dependence and control as predictors of opportunism in dealer-supplier relations.” Acad. Manage. J. 32 (1): 202–212. https://doi.org/10.2307/256427.
Quanji, Z., S. Zhang, and Y. Wang. 2017. “Contractual governance effects on cooperation in construction projects: Multifunctional approach.” J. Prof. Issues Eng. Edu. Pract. 143 (3): 04016025. https://doi.org/10.1061/(ASCE)EI.1943-5541.0000320.
Reuer, J. J., and S. V. Devarakonda. 2016. “Mechanisms of hybrid governance: Administrative committees in non-equity alliances.” Acad. Manage. J. 59 (2): 510–533. https://doi.org/10.5465/amj.2012.0098.
Rigdon, E. E., M. Sarstedt, and C. M. Ringle. 2017. “On comparing results from CB-SEM and PLS-SEM: Five perspectives and five recommendations.” Marketing ZFP 39 (3): 4–16. https://doi.org/10.15358/0344-1369-2017-3-4.
Ringle, C. M., O. Götz, M. Wetzels, and B. Wilson. 2009. On the use of formative measurement specifications in structural equation modeling: A Monte Carlo simulation study to compare covariance-based and partial least squares model estimation methodologies. Maastricht, Netherlands: Maastricht Univ.
Rousseau, D. M., S. B. Sitkin, R. S. Burt, and C. Camerer. 1998. “Not so different after all: A cross-discipline view of trust.” Acad. Manage. Rev. 23 (3): 393–404. https://doi.org/10.5465/amr.1998.926617.
Schafer, J. L. 1999. “Multiple imputation: A primer.” Stat. Methods Med. Res. 8 (1): 3–15. https://doi.org/10.1177/096228029900800102.
Schaller, T. K., A. Patil, and N. K. Malhotra. 2015. “Alternative techniques for assessing common method variance: An analysis of the theory of planned behavior research.” Org. Res. Methods 18 (2): 177–206. https://doi.org/10.1177/1094428114554398.
Schepker, D. J., W. Y. Oh, A. Martynov, and L. Poppo. 2014. “The many futures of contracts: Moving beyond structure and safeguarding to coordination and adaptation.” J. Manage. 40 (1): 193–225. https://doi.org/10.1177/0149206313491289.
Shapiro, S. P. 1987. “The social control of impersonal trust.” Am. J. Sociology 93 (3): 623–658. https://doi.org/10.1086/228791.
Smyth, H., M. Gustafsson, and E. Ganskau. 2010. “The value of trust in project business.” Int. J. Project Manage. 28 (2): 117–129. https://doi.org/10.1016/j.ijproman.2009.11.007.
Spittler, J. R., and G. H. Jentzen. 1992. “Dispute resolution: Managing construction conflict with step negotiations.” AACE Trans. 1 (D9): 1–10.
Suliman, A. M. T. 2007. “Links between justice, satisfaction and performance in the workplace.” J. Manage. Dev. 26 (4): 294–311. https://doi.org/10.1108/02621710710740075.
Suprapto, M., H. L. Bakker, H. G. Mooi, and M. J. Hertogh. 2016. “How do contract types and incentives matter to project performance?” Int. J. Project Manage. 34 (6): 1071–1087. https://doi.org/10.1016/j.ijproman.2015.08.003.
Teng, Y., X. Li, P. Wu, and X. Wang. 2019. “Using cooperative game theory to determine profit distribution in IPD projects.” Int. J. Constr. Manage. 19 (1): 32–45. https://doi.org/10.1080/15623599.2017.1358075.
Thompson, R. L., H. J. Smith, and C. L. Iacovou. 2007. “The linkage between reporting quality and performance in IS projects.” Info. Manage. 44 (2): 196–205. https://doi.org/10.1016/j.im.2006.12.004.
Wang, Y., Y. Chen, Y. Fu, and W. Zhang. 2017. “Do prior interactions breed cooperation in construction projects? The mediating role of contracts.” Int. J. Project Manage. 35 (4): 633–646. https://doi.org/10.1016/j.ijproman.2017.02.019.
Williamson, O. E. 1985. “The economic institutions of capitalism. firms, markets, relational contracting.” In Das Summa Summarum des Management, 61–75. New York: Free Press.
Williamson, O. E. 1993. “Calculativeness, trust, and economic organization.” J. Law Econ. 36 (1, Part 2): 453–486. https://doi.org/10.1086/467284.
Williston, S., and C. M. Lewis. 1920. Vol. 1 of The law of contracts. New York: Baker, Voorhis and Co.
Wu, G., X. Zhao, and J. Zuo. 2017. “Relationship between project’s added value and the trust–conflict interaction among project teams.” J. Manage. Eng. 33 (4): 04017011. https://doi.org/10.1061/(ASCE)ME.1943-5479.0000525.
Wuyts, S., and I. Geyskens. 2005. “The formation of buyer–supplier relationships: Detailed contract drafting and close partner selection.” J. Marketing 69 (4): 103–117. https://doi.org/10.1509/jmkg.2005.69.4.103.
You, J., Y. Chen, W. Wang, and C. Shi. 2018. “Uncertainty, opportunistic behavior, and governance in construction projects: The efficacy of contracts.” Int. J. Project Manage. 36 (5): 795–807. https://doi.org/10.1016/j.ijproman.2018.03.002.
Zaheer, A., B. McEvily, and V. Perrone. 1998. “Does trust matter? Exploring the effects of interorganizational and interpersonal trust on performance.” Organ. Sci. 9 (2): 141–159. https://doi.org/10.1287/orsc.9.2.141.
Zheng, L., W. Lu, K. Chen, K. W. Chau, and Y. Niu. 2017. “Benefit sharing for BIM implementation: Tackling the moral hazard dilemma in inter-firm cooperation.” Int. J. Project Manage. 35 (3): 393–405. https://doi.org/10.1016/j.ijproman.2017.01.006.
Information & Authors
Information
Published In
Journal of Construction Engineering and Management
Volume 146 • Issue 3 • March 2020
Copyright
©2020 American Society of Civil Engineers.
History
Received: Aug 21, 2018
Accepted: Jul 12, 2019
Published online: Jan 10, 2020
Published in print: Mar 1, 2020
Discussion open until: Jun 10, 2020
Authors
Metrics & Citations
Metrics
Citations
Download citation
If you have the appropriate software installed, you can download article citation data to the citation manager of your choice. Simply select your manager software from the list below and click Download.