Enforcement against contract violation in Chinese construction projects: impacts of trust and perceived intentionality

Abstract

Violations happen frequently in construction project due to opportunistic intentions and/or the lack of awareness of obligations and/or honest attempts to react to unforeseen circumstances. Dealing with contract violation plays an important role in managing projects.The aim of the research is to investigate the impact of trust, analyzed in terms of goodwillbased and competence-based trust, on both contract and social enforcement after contract violation. Questionnaire survey, partially based on semi-structured interviews, was used for data collection. All the data is from Chinese construction industry since it provides a fertile context to explore the research questions. The results show that: 1) reputation is used as social enforcement in practice and the severity of it is reflected by the scope of disclosure, 2) the two dimensions of trust have opposite influences on severity of contract and social enforcement via different mediating effects of perceived intentionality. Specifically, goodwill-based trust reduces severity of enforcement via decreasing perceived intentionality, while competencebased trust increases severity of enforcement by increasing perceived intentionality. A comprehensive and nuanced understanding for managing contract violation is generated in this research, which will help project managers to manage the contract violation and the interfirm relationships more effectively.

Contract Violations in the Construction Projects: How Contractual Obligations are Reached Affects Contractual and Reputational Enforcement

“…Some studies [8,20] have proposed that reputational enforcement is one of the most significant non-legal sanctions, which serves as an alternative to contractual enforcement.…”

“…Further, the authors made some modifications to the measurement of reputational enforcement based on the advices from the interviewees. Initially, the authors adopted and modified the measurement of Chen, et al [20]. and chooses all of these options.…”

“…Chen, et al [20] have focused on reputational enforcement in the construction industry and found that perceived intentionality leads to a higher possibility of blacklisting the violating party in the community. The findings of this study are consistent with their conclusions, which imply that letter violations and spirit violations #1 result in harsher reputational enforcement because they are more likely to be considered intentional and opportunistic.…”

Multidimensional drivers: exploring contractor rule violations in the construction industry

“…The fewer the number of competitors in a bid, the more likely they are to be familiar with each other and to be complicit (Lee et al, 2021). Moreover, during the construction execution phase, contractors typically know more about the project than its owners, which makes it difficult for owners to determine if work has been carried out as stipulated (Sichombo et al, 2009), a condition that Exploring contractor rule violations can offer contractors room to abuse contractual arrangements intentionally or opportunistic (Hosseini et al, 2020;Chen et al, 2021).…”

“…, 2009), a condition that can offer contractors room to abuse contractual arrangements intentionally or opportunistic (Hosseini et al. , 2020; Chen et al. , 2021).…”