Root Causes of Recurring Contractual Conflicts in International Construction Projects: Five Case Studies from Vietnam

Early on in studies of the challenges associated with international construction projects, several researchers focused on either categorizing construction risks unique to international projects or proposing complex cause-and-effect relationships among identified risks. A commonly identified risk for international construction projects is a host country’s political uncertainty. Prior to the 1980s, political risk studies carried out were primarily targeted at manufacturing or heavy-industrial firms (Green and Korth 1974; Haendel 1979; Root 1972; Zink 1973). Ashley and Bonner (1987) published one of the first studies to focus on political risks in international construction projects. Nine political risk factors (firm characteristics; relationship with government; local power relationships; local business interests; regional factors; influence of independent groups; nationalist attitudes; project desirability; and government policy) were used to construct models that explained the indirect impact on labor costs, material costs, overhead costs, and revenue. However, as their study aimed to produce a quantitative estimate of the impact of political risks, these risks were assumed as inherent rather than as issues that could be addressed or solved directly. Nonetheless, the work by Ashley and Bonner laid a foundation for scholars to develop decision support tools based on the notion that internal and external project risks are in fact interrelated. For example, Hastak and Shaked’s (2000) International Construction Risk Assessment Model (ICRAM-1) and Wang et al.’s (2004) qualitative risk mitigation framework both categorized risks into three levels: the country, market, and project levels. Han et al. (2007) included contractual conditions within a hierarchical framework to investigate their effect on profit. These models have all been developed as tools to diagnose, evaluate, and/or mitigate inherent risks rather than identifying or addressing root causes.

While the current study focuses on the Vietnamese context, a number of studies have investigated the causes of construction delays at project sites in developing countries. The majority of these studies rely on questionnaire surveys with agencies, contractors, or engineering consultants to explain delays through an understanding of the challenges faced by each stakeholder. For example, various issues regarding owner behavior have been observed in Middle-Eastern countries such as Jordan (Odeh and Battaineh 2002), Saudi Arabia (Assaf and Al-Hejji 2006), and the United Arab Emirates (Faridi and El-Sayegh 2006); for example, owner interference, slow decision-making processes, and payment delays. Studies on the Turkish market have also emphasized the importance of political cooperation and capacity within public agencies (Arditi et al. 1985; Birgonul and Dikmen 2001). Studies of African countries such as Nigeria have touched upon the need and challenges associated with securing adequate funds before implementation (Mansfield et al. 1994), whereas in Asia, a study by Toor and Ogunlana (2008) on a specific project identified a total of 75 problems causing delays such as a lack of resources, design delays, planning and scheduling deficiencies, processing change orders, and contract management; while Zhang and Huo (2015) found that interpersonal conflicts and political skills have significant influence on project performance in China.

Two separate studies on Vietnam have identified issues of excessive change orders or design changes, and inadequate or poor project management practices independently of one another (Long et al. 2004; Le-Hoai et al. 2008). Within the literature, some argue that the patterns of problems and delays are identical across countries (Toor and Ogunlana 2008) and that problems within the industry are in fact human and managerial in nature rather than technical (Long et al. 2004; Mansfield et al. 1994). While the perspectives and research scopes of project delays can vary widely, existing literature has examined the role of contracts directly (Lim and Mohamed 2000) and often suggests improvements to the contractual process or mentions it as a key issue.

As can be seen in the existing body of literature, a variety of approaches constitutes studies of challenges in international construction projects. However, much of the existing literature has focused mainly on producing general recommendations and risk mitigation strategies in consistency with formulated frameworks. Whereas such studies have clearly made valuable contributions in raising the awareness of the complexity of risks in construction and engineering, the fact remains that project delays stemming from contractual issues are still a common feature of projects in developing and newly industrialized countries. This requires researchers to question the practical impact these studies have had in truly minimizing the causes of such issues in practice. As Al Sehaimi et al. (2013) have argued, suggestions and measures for improvement offered in descriptive and explanatory studies are often impractical, too general, or at worst absent. Understanding the root causes of contractual conflicts can contribute to preventative solutions that are often not a part of risk mitigation or dispute resolution mechanisms. Whereas such insights can help to effectively manage common project issues, identifying and addressing root causes could provide fundamental improvements and decrease the need to develop or utilize such tools overall. The primary motivation of this study is therefore to conduct a root cause analysis that can contribute to and provide examples of such preventative strategies for contractual conflicts rather than reactive or diagnostic tools for project management.

The causal diagram (Fig. 1) can be used to examine case studies and observe the development of contractual conflicts in Vietnamese international construction projects. In consistency with experiences and testimonies of construction industry practitioners, links can be observed between the listed causal factors, and the sequential progression of a contractual conflict can be drawn in specific project cases. Possible root causes can then be identified by backtracking the logical progression between causal factors in a process analogous to backward induction.

Notable contractual conflicts observed in this highway project (Table 3) were price adjustment payment delays, inspection approval delays, interim payment delays, and excessive documentation required by the employer. Delays in price adjustment payments stemmed from parties disagreeing on the calculation method for price adjustments stipulated in the contract.

Root causes have been identified by backtracking the causal factors while ensuring consistency with interview testimonies and case studies. By identifying the factors in the causal diagram (Fig. 2) that initiate causality chains, the case studies are able to identify possible root causes to contractual conflicts observed in Vietnamese international construction projects.

Despite the large contract amount, this project is essentially a local development project with the Ho Chi Minh City People’s Committee (HCMC-PC) acting as the executing authority. Ministry-level offices are not directly responsible for the execution of such projects, and consequently the projects are seldom considered a top priority. Nevertheless, this project was designated as a significant project by the prime minister, and a State Inspection Committee (SIC) was established to inspect and control the quality of construction throughout the construction phase. The position of SIC chairman is held by the Minister of Construction (MOC), essentially making the MOC the supervising authority of this project. Unfortunately, the involvement of the SIC was perceived by the international participants as a third-party interference to the inspection approval process that contributed to contractual conflicts among project parties, rather than a positive political supporting mechanism.

Although the HCMC-PC was executing authority, the committee still required ministry-level government offices to produce final reviews and authorize the release of payments. Project decisions made by the HCMC-PC were therefore carefully monitored by state government officials who were often unfamiliar with the details of locally executed projects. A communication gap would form between the committee-level and ministry-level departments, which slowed down the overall approval process. A site manager for this project commented on the fact that project administrators often appeared to lack motivation for making approval decisions, due to what could be perceived as an overwhelming responsibility to persuasively and legally justify approval decisions to ministry-level officials.

The international participants of this project described the administrative staff of the Project Management Unit (PMU) of HCMC as significantly lacking in international project experience. Interviewees claimed that this project was likely the first international project for many of the PMU staff, who were perceived as very young and unfamiliar with basic international contract procedures. PMU staff lacked clear procedural definitions for international participants to follow, and often insisted on following local procedures even if they were inconsistent with international procedures. In fact, the employer in this case relied heavily on verbal instructions rather than referring to written documents, which contributed to frequent miscommunication among parties. The employer and its supporting staff not only lacked knowledge in international contractual procedures but also lacked reliable internal procedures that could be followed to make confident approval decisions.

During the project development phase, this project became the subject of a major scandal that caught the attention of international media. Three managers from a Japanese engineering consultancy were accused of bribing a member of the project employer organization in order to secure this project (Thanh Nien News 2012). The project was eventually allowed to continue after disciplinary actions were taken by both Vietnamese and Japanese governments. However, the project was subject to continuous scrutiny by the media. As a result, international participants in this project were particularly sensitive about avoiding any locally practiced relational and informal approaches that could be interpreted as suspect or illegal by the media.

When asked about the contract negotiations for this project, the project manager (PM) of the contractor used the phrase contractors always lose to describe his perception of how contractors typically find themselves in an unfair bargaining position even before the contract is signed. According to this PM, the employer of this project tried to maximize the contract value during precontract negotiations by greatly reducing the contract price and simultaneously increasing the contractor’s work scope. The contractor felt that the employer was forcing the acceptance of unfair changes to an agreement at the threat of losing negotiation rights to the next lowest bidder. In this manner, fair negotiations were claimed to be difficult due to an excessive power asymmetry to the advantage of the employer in precontract negotiations. In addition, subjects claimed that when the contractor requested confirmations of specific contractual procedures to be applied in the project, the employer provided reasonable answers at precontract meetings yet behaved differently during the implementation phase. For example, when the contractor attempted to confirm interim payment procedures with the employer during precontract negotiations, the employer stated that the general conditions of the International Federation of Consulting Engineers (FIDIC) would be strictly followed, implying that payment would be approved within 28 days with the engineer’s authority. Unfortunately, the verbal agreements made by the employer were not adequately documented to have a meaningful impact when the employer’s behavior deviated from such agreements during implementation. During construction, the engineers were pressured by the employers to reject resubmitted payment statements with minor errors and were not able to make adjustments and exercise authority to approve payments.

Notable contractual conflicts observed in this highway project package (Table 4) were: interim payment delays, variation approval delays, and delays in site handover. The development of a conflict over interim payment procedures began at the initial stages of the project due to differences in interpretation between the employer and contractor over (1) the interim payment approval process, as well as (2) documentation requirements. The engineer’s decision regarding the issuance of interim payment certificates was often overruled by the employer and forced the contractor to revise payment statements, as well as resubmit documents as per the employer’s request.

Despite being a national construction project supervised by the Ministry of Transport (MOT), this project received relatively low levels of support from the state government. Some possible reasons are that this project lacked the scale of impact compared to other megascale multibillion USD projects. According to the project participants, personnel from the Vietnam Expressway Corporation (VEC) attended monthly project meetings while the MOT personnel only attended quarterly meetings. This contrasts stories of other major projects (such as Case E), in which the MOT reportedly visited the project site on a monthly basis. Nonetheless, the fact that the VEC is an organization directly linked to the MOT enabled this project to attain a tight communication network with higher government authorities in comparison to locally executed projects such as that of Case A.

The VEC was founded in 2004 by the MOT in order to supervise the implementation of national highways throughout Vietnam. The VEC is known among industry stakeholders to be highly motivated to prove their relevance and value of worth to the MOT. However, despite having executed a number of major highway projects for more than a decade, evaluations of the VEC’s management ability were mixed. While some interviewees mentioned the presence of a number of experienced and highly educated personnel within the VEC, it was claimed that they still lacked the establishment of sound project administration protocols.

International participants of this project reported that the project employer, the Expressway Project Management Unit (EPMU), did not have any established project documentation forms and templates, which resulted in conflicts over which documentation form was to be used for interim payments. In addition, the EPMU’s organization and communication channels were perceived as overly complex. Based on a synthesis of collected data, despite having prior project management experiences, VEC and EPMU are still perceived as relatively new and appear to lack solid internal protocols for managing international projects.

This project included three packages carried out concurrently by contractors based in different countries, which provided a unique opportunity to hear stories of different management approaches utilized by various contractors. While the package in focus was implemented by a Korean contractor, the other two packages were implemented by Chinese and Vietnamese contractors. The PM of the Korean contractor felt that the contractors based in China and Vietnam were able to avoid many contractual conflicts with the employer through their frequent use of relational approaches. As a state-owned enterprise, the Vietnamese contractor was naturally familiar with local practices and maintained a strong network with the MOT. Many executives of the Vietnamese contractor were in fact known to hold formal affiliations with the MOT. The Chinese contractor’s PM was known among industry stakeholders to have flexible spending power within his project budget. This allowed the Chinese contractor to satisfy informal incentives to the employer staff or local authorities, which could effectively expedite project approval decisions or resolve contractual conflicts very quickly.

The Korean contractor, on the other hand, possessed relatively little informal relationships with the project employer and also could not allow flexible spending of the project budget for informal purposes. As a result, the Korean contractor did not utilize informal relational approaches and was forced to rely on formal approaches. Without informal dispute resolution tools at their disposal, the current package executed by the Korean contractor issued more claims than those of the two other packages combined.

According to the interviewees that participated in this package, the official precontract negotiation was finalized in a half-day meeting. Negotiation topics mainly focused on confirming the construction schedule and international bank accounts to be used for payments. Specific matters such as interim payment procedures, variations of approval procedures, and the calculation of liquidated damages caused by the employer were not thoroughly discussed during the precontract negotiation meeting, which proved to be problematic in subsequent stages of the project.

Root causes for both Cases A and B therefore replicate themselves in a consistent [a literal replication as defined by Yin (2011)] manner when applying the causal diagram to both cases (Table 5). The paper will now describe contrasting theoretical replications (Yin 2011) that have been observed in three project cases that successfully avoided contractual conflicts.

The perceived risk surrounding this rail transit project (Table 6) was initially so high that the first bidding process was unable to gather any qualified contractors. As the first modern rail project in Vietnam, the employer had no experience handling a project of this nature. Furthermore, interviewees claimed that the HCMC-PC had gained notoriety during recent years from international contractors due to their poor management of international projects. A number of international contractors who had participated in HCMC-PC executed projects experienced contractual conflicts such as payment and inspection delays as well as excessive supporting documentation requirements. Tsuno Motonori, the chief representative of the Japan International Cooperation Agency in Vietnam at the time stated publicly: “We’ve received many complaints from contractors about delayed payments due to troublesome procedures” (Viet Nam News 2012).

In addition to these existing issues, it can be inferred that the employer likely hoped to allocate more risk to the contractor by adopting the Engineering Procurement Construction contract for the civil engineering portion of this project. Compared to the FIDIC Red Book, the FIDIC Silver Book contract requires the contractor to commit to more specific and fixed final prices as well as completion times. Consequently, the initial bidding procedures ended unsuccessfully with no qualified contractors showing real interest in taking on the project.

With the project idling in the bidding phase for more than two years, the employer and consultant decided to propose an improved approach to attract international contractors to bid for the project. The engineer believed that the main reason for inspection and payment delays in international projects in Vietnam was due to the employer’s heavy involvement in the approval process. To allow the employer to manage legal liabilities, construction-related laws and regulations in Vietnam require the employer’s deep involvement in the inspection, takeover, and payment approval procedures. However, this often led to differences in expectations of inspection and payment procedures between the employer and the contractor. General contract conditions and specifications typically used in international construction projects were not specific enough to align the expectations between the Vietnamese employer and participating international contractors.

The employer and engineers made several attempts to make the contract more appealing to prospective contractors, but interviewees shared one particularly innovative approach. A 9000-item inspection and testing plan (ITP) checklist covering all components of the project was prepared by the consultant and agreed to by the employer at the project planning phase. The ITP checklist utilized Vietnamese standards as well as ASTM standards for civil works covering all aspects such as safety, quality assurance, environmental, testing, and commissioning. Initially, this approach was met with skepticism and reluctance from the employer. However, after many discussions and a consideration of the project’s extended idling, the employer agreed to apply the concept.

The ITP checklist follows any activity and method statement submission to cover all construction work items, and acts as a reference document for employee representatives to use for issuing acceptance certificates for each completed work component. The procedures are designed to meet the local regulation requirements for checking and acceptance of construction parts or construction stages specified in Article 25 of Decree 209, and the corresponding certificates form part of the supporting documents required for a payment request statement. Readers should note how the characteristics of the ITP checklist highlights valuable information about the Vietnamese market context—9000 is perceived as an appropriate figure to address excessive documentation procedures.

The engineer in charge of developing and implementing the ITP checklist described the effectiveness of the checklist in comparison to his experiences in previous projects in the following manner:

Up to now, the ITP checklist approach has been successful. We have issued four interim payments so far and there has been no delay in payments. The contractor only needs to submit [a] cover letter, acceptance certificates, and ITP checklist as supporting documents, and the employer accepts because this is in compliance with Vietnam regulations. This approach can be applied to any other projects in Vietnam.

– Project Director of the engineering consultant

To simplify the interim payment procedures, the employer and the consultant decided to modify the FIDIC general conditions so that the requirements for supporting documentation in interim payment procedures was more reasonable. While Vietnamese regulations consistently mention that submissions of takeover test records are the basic payment requirement, FIDIC Sub-Clause 4.21 stipulates that submissions of progress reports are required for each interim payment procedure and lists numerous requirements including the submission of quality assurance documents, test results, and certificates of materials. Subjects described how project employers in Vietnam often lack the judgment capacity and the authority to consider situational flexibility when interpreting such contract requirements. Consequently, contract requirements are often followed in a rigid and absolute manner, resulting in project employers requiring the submission of thousands of individually hand-signed pages of supporting documentation to satisfy every requirement under Sub-Clause 4.21.

The employer and the consultant of this project decided to remove the condition referring to Sub-Clause 4.21 as a requirement for interim payment applications, and instead modified the condition to stipulate that supporting documents shall follow general requirements under applicable Vietnamese laws. With this modification, the ITP checklist and necessary acceptance certificates sufficiently satisfied both contractual and local regulation requirements for supporting documentation required for interim payments. The modification concept is shown in Fig. 4.

This wastewater infrastructure upgrade project (Table 7) placed a strong emphasis on participation by small local businesses. As a result, the participating contractors as well as the employer organization had minimal exposure to international construction projects. The participating international consultant engineer was in a position to not only manage the construction process, but also to train the local participants in international contract procedures. Interviews revealed that during the planning phase, the employer proposed to have a local consultant join the international consultant as a joint venture. However, both the donor and the main consultant rejected this proposal. The primary concern against forming a joint venture was the potential obfuscating effect on the role of the engineering consultant in the event that the employer tried to gain control over the local consultant. In other words, the proposal was rejected in order to protect the international consultant’s independence. At the early stage of each construction package, all participating local contractors struggled to prepare the necessary documents requested by the engineer for issuing interim payment certificates. As a result, many submission deadlines were missed and interim payments experienced minor delays early on. Delays were not all caused by contractors but also occurred due to the employer not responding to inquiries in a timely manner or neglecting engineer instructions. Payment decisions regarding variations were particularly slow due to the employer’s lack of confidence over such judgments. Since the local contractors were all small businesses, a small number of delayed payments resulted in serious cash-flow problems for many of their overall business operations—some companies were on the verge of defaulting.

The engineering consultant recognized several key issues that needed to be addressed in order to avoid contractual conflicts in this project. In consistency with Niraula and Kusayanagi (2011), the consultants acknowledged that fundamental differences existed between the international contract’s three-party (Employer-Engineer-Contractor) approach and Vietnam’s two-party (Employer-Contractor) approach. It was also acknowledged that documentation needed to be strengthened to avoid confusion among inexperienced employers and local contractors. These issues were addressed by developing a project-specific operations manual during the precontract period. The operations manual outlined key information such as the contact information of the employer and engineer’s key personnel; detailed procedures for initiating meetings; procedures for processing contract variations; inspection procedures; and the management of payments and delays. In essence, negotiated procedures were thoroughly documented for the benefit of all participants to create a manual that could be referred to throughout the entire project implementation phase. Decision confidence was enhanced by providing consensus-based alternatives generated during the precontract phase. The contractor perceived great value in integrating the essential information from various documents into a single manual and claimed that the manual was particularly effective in addressing delays in interim payments and contract variation approvals. The operations manual specifies the following steps to take for addressing interim payment procedures:

Recognizing the fact that the interim payment procedures stipulated in the general conditions of FIDIC’s 2006 Red Book (Multilateral Development Bank Harmonized Edition) cannot be easily applied in Vietnam, this operations manual provides details and procedures that have also been accepted and agreed to by the employer. By providing such a level of specificity, participating international contractors can better anticipate how the overall procedure will take place and plan accordingly. In addition, by specifying the time period for the engineer to review the draft in #3, (i.e., two or three working days) the manual also suggests an appropriate time frame the employer should consider when reviewing the same draft. Although the actual time limits for the employer’s response to the drafts are not stated explicitly, in the current case, the engineer was able to enforce a 14-day turnaround period in consistency with Decree 48 for the overall interim payment procedure.

The benefit of stating the procedural steps lie explicitly in reducing possible misunderstandings and providing concrete options for stakeholders in the event of minor delays. The operations manual specifies that the engineer shall periodically report the progress of all work items, with comments and assessments of causes of delays. The engineer is then required to accumulate detailed records of sources that have caused delays, and the record can be shared with higher government authorities or the donor agency upon site inspections. This can also serve as an effective mechanism to motivate all project participants to meet deadlines and work in accordance with a schedule.

Keys to success: Active involvement of the engineer. The operations manual is a tool that clarifies how the project should be carried out, yet without proper enforcement it cannot play an effective role. Active involvement of the engineering consultant is a vital component to its success. The engineer claimed that it was difficult to use the operations manual early on but that he was determined to improve the project’s progress by actively enforcing the functions of the manual. Initially, the employer took the full 56 days (as stipulated in FIDIC General Conditions of Contract) to review and approve interim payments, but with the support of the manual, the engineer effectively convinced the employer to spend no more than the seven days specified in Decree 48 Article 10. Weekly assessments of the causes of delays were conducted and progress reports were used to warn the employer that they could be blamed for causing delays when donors or higher government authorities requested updates. In a similar manner, variation order procedures were improved by constantly engaging the employer to make decisions about additional costs that would not exceed the contingency limit (as specified in Decree 48 Article 37). Without active enforcement by the engineer, the potential of the operations manual would likely have remained latent, becoming a dormant tool with no user.

It should be noted that in both Cases C and D, attempts to exploit political support through informal approaches to avoid contractual conflicts were not observed. For example, despite Case C being a megascale project, there was no evidence that the project had received any special support from the state government. According to interview testimony, the level of the state’s support in Vietnamese construction projects appears to be dictated by whether or not the project employer organization is directly under the management of a state-level government body. In this project, the employer was directly under the management of the HCMC-PC (the municipal level), which may explain the lack of any special support from the state. Case D consisted of a number of small infrastructure upgrade projects and was likely too small in scale to be noticed by the state government. Informal incentives were also not observed to play any major role in avoiding contractual conflicts in both cases.

Cases C and D have revealed how contract clarifications agreed to and developed in the precontract phase can help projects avoid contractual conflicts during the implementation phase (Table 8). The next and final case illustrates a different approach to avoiding contractual conflicts by addressing factors other than precontract clarifications.

The international contractor involved in this project had previously suffered through a major accident in Vietnam as primary contractor, in a story that made domestic and international headlines (Rowson 2007). This airport terminal project (Table 9) therefore symbolized this contractor’s come back project in Vietnam, and the company was highly motivated to regain their image and rebuild their relationships with Vietnamese clients. Fig. 5 illustrates the avoidance mechanisms observed in Case E.

This large-scale and high-profile project received considerable attention from domestic and international media outlets. Such a high level of attention and scrutiny likely acted as a strong motivating factor for the state government in charge, in this case the MOT, to provide support to minimize contractual conflicts in order to complete the project on time. Two mechanisms of political support identified in this case were (1) assigning the vice director of the executing agency, the Airports Corporation of Vietnam (ACV), as the project director of the PMU, and (2) regular monthly personal visits to the project site by the MOT to resolve arising or major issues promptly.

The donor organization reportedly wielded significant influence by negotiating conditions to the advantage of the contractors. As the airport is located in Hanoi, the project was technically under the jurisdiction of the Hanoi Peoples’ Committee (HPC). Normally, the HPC would need to be involved directly in overseeing the project and would exercise authority in granting approvals for land acquisition, permits, licenses, variations, and inspections. However, as a number of subjects attested, the HPC-governed agencies were notorious as an inexperienced and ineffective bureaucracy among construction industry practitioners. Examples include the Nhat Tan Bridge package, delayed for more than two years due to land acquisition issues. In order to avoid similar conflicts with the HPC, the donor organization reportedly demanded minimal involvement of the HPC for the airport terminal project during financing negotiations.

Various external pressures affected the motivation of the contractor to minimize schedule delays and avoid contractual conflicts with the project employer. First, the contractor for this project had just suffered a massive loss from an international project in the Middle East and the company as a whole was on a mission to make up for this loss. Reportedly, the head office of the contractor gave strict orders to the project manager to achieve the schedule and to maximize the use of local resources and local approaches. This may have affected the decision to form a joint venture with a local contractor rather than the practice of using subcontractors exclusively—a typical practice in large-scale projects financed by Official Development Assistance.

Project employers on the other hand were not only formally pressured by higher government authorities, but also pressured by informal relationships to maintain the schedule. As state-owned enterprises, Vietnamese contractors often possess influential relationships in government, as well as with project employers. For large-scale international construction projects, local companies acting as subcontractors hired by the major Vietnamese contractors were at the receiving end of final payments for construction works performed. The major state-owned contractors therefore functioned as the redistributors of the public-sector economy, both informally and in practice. If delays in interim payments occurred, local subcontractors would suffer along with the international contractors. As the PMU was managed by government bodies, they were primarily concerned about the suffering of local subcontractors and were highly motivated to avoid payment delays.

The importance of relational ties was therefore reinforced by a strong motivation among all parties to meet schedule deadlines. The employer was not only motivated by the political support (or push) they received from top management but was also motivated to avoid interim payment-related conflicts by informal incentives they received from the local participating contractors. Approval delays for permits and licenses were avoided by the international contractor and consultant by exploiting local resources at their disposal through the formation of joint ventures. Local partners possessed the expert knowledge required to satisfy the requirements of local authorities for acquiring permits and licenses—procedures often unclear to the international companies. There was also in fact another airport construction project in future development (also to be structured as a Private-Public-Partnership) to which the employer, contractor, and engineering consultancy of this case had agreed to attempt bidding for as a joint venture. With another future partnership and project opportunity at stake, all three project parties actively collaborated with one another to provide support, documentation, and data for inspection procedures.

Possible negative effects. At the time of the interviews, the project was on schedule for completion in approximately six months. With no major scheduling delays, no detrimental contractual conflicts were observed. However, although the approach used by the project participants was effective in many respects, a potential compromise in project quality was observed. Investigation revealed that test data for the inspection of materials was backlogged for three months due to insufficient manpower among the engineers. As all parties were equally motivated to avoid any kind of schedule delay, the employer, contractor, and engineer agreed to bypass a portion of document checking procedures and increase their use of visual inspections.

In addition, early on in the project, the head office of the international contractor reportedly ordered the project team to aim for minimum specification requirements. It is possible that the participating contractors may have exploited the fact that the employer was under strong pressure from the state and donor organization to deliver the project on schedule and leveraged this focus on timely construction to loosen the pressure on construction quality.

Case E reveals how strong political support, decreased involvement of employers with low levels of international project management experience, and strong relational approaches can influence the motivation of contract administrators to make quicker decisions. Large-scale and high-profile projects such as this airport terminal construction project executed directly by ministry-level bodies receive stronger political support in comparison to projects executed by local authorities. This can be seen in top ministry-level officials actively and personally getting involved in the project and the assignment of a high-ranking official of the executing agency as the project director. Relational approaches were also utilized often and appeared to have effectively allowed parties to avoid contractual conflicts by motivating all major parties to complete the project on schedule. Parties were highly motivated through unofficial mechanisms such as informal incentives or the desire to strengthen future business partnership opportunities. In this manner, self-benefitting incentives were observed to be a strong motivating factor for the contract administrators to accelerate decision-making processes. However, this at times led to unjustified decisions that overlooked aspects of performance quality. Informal incentives resulted in a lack of transparent practice, which may have negatively affected project quality.

The contents of the proposed causality diagrams have been produced through a grounded theory approach, the findings are supported by existing literature, and an attempt has been made to test the explanatory power of the diagrams through case studies of authentic contractual conflicts. However, several limitations must be considered in interpreting the results, such as:

Although the explanatory power and persuasiveness of the analytical findings are therefore limited to Vietnam and the East Asian market context, further research should work to apply the framework to other market contexts to refine the diagrams, strengthen generalizability, and understand the relative effectiveness of conflict avoidance approaches in various regulatory contexts and institutional cultures.