Multidimensional drivers: exploring contractor rule violations in the construction industry

Abstract

PurposeThis research aims to build a three-tiered driver system that entices contractor rule violations and explores the importance and the relationships among these drivers, hence providing theoretical support for the contractor rule violations governance.Design/methodology/approachA literature review based on fraud diamond theory identified drivers from Pressure, Opportunity, Rationalization and Capability that drive contractor rule violations. In the Chinese context, through feedback, discussion and analysis of semistructured interviews with ten experts, an improved three-tiered driver system was drafted. Based on this system, a survey was conducted and scored with experts to provide the data for this research. The decision-making trial and evaluation laboratory (DEMATEL) method was used to determine relationships and influences between factors, and the DEMATEL-based analytic network process method was used to weigh these factors.FindingsThis paper systematically studied the drivers of contractor rule violations, specifically, the results showed that pressure had an important driving effect across the driver system, and those five factors – poor cultural atmosphere, weak internal control, prior experience, moral disengagement and information asymmetry – had the most influence on contractor rule violations. The results also indicated the strong effect pressure has on enticing rule violations and revealed that culture atmosphere and internal company governance played crucial roles in the occurrence of rule violations.Practical implicationsThis study provided construction practitioners with a robust tool to analyze the drivers of contractor rule violations. The rule violation drivers in the construction practice scenes identified in this study can provide more direct and effective violation-related guidance for contractors, regulators and the industry.Originality/valueBased on the new perspective of fraud diamond, this paper systematically bulit a three-tiered driver system combining theory with practice. This study contributed to understand the driver mechanism of contractor rule violations especially the importance of internal factors of contractors, which provided theory reference for compliance governance of construction industry.

Risks Caused by Information Asymmetry in Construction Projects: A Systematic Literature Review

“…The earliest research on information asymmetry in construction projects can be located in the Level II group (see [43,45,46,84]). The concept of information asymmetry was applied in research on the following: risk-sharing ratios between the client and contractor [85,86], affordability of new technologies and [10,45,46,87,88]; general contractor behavior in cases of subcontracting [84,89]; causes of cost overruns and low profitability [90][91][92][93]; inter-organizational trust asymmetry behavior in construction projects [94]; opportunistic behavior of agents in construction projects [95][96][97][98]; bid calculations for construction projects [99]; different types of contracts and incentive mechanisms [43,[100][101][102][103]; implementation of BIM in construction projects [104,105], procurement process [106]; supervision strategies of clients [107]; and effectiveness of safety monitoring in the construction industry [108].…”

“…In this group, the most commonly mentioned risk caused by information asymmetry in construction research is incomplete or flexible contracts. The risk refers to loosely defined rights and obligations of the principal and the agent, as well as the rewards and punishments for the agent [29,32,34,55,71,74,77,78,87,97,98,102,107]. If all the risk is assumed by the principal, the agent will not pay attention to their behavior and mistakes in the project because they feel "safe".…”

“…Sometimes, the risk arises from loosely defined communication protocols and reporting mechanisms [45][46][47]65,75,76,87,98], as well as the lack of visibility of participants' actions to the third party or court. If there is no evidence for their actions, opportunistic behavior is enabled [73,87,90,102,126].…”

“…The pressure can be in project cost, time and quality requirements, health, safety and environmental requirements, or in relationships with other participants. The agent hides their mistakes from the principal because of the pressure to finish the work they started and to fulfill the contractual obligations [56,98,124]. Moreover, if the agent is exposed to unpredictable events related to weather, environment, etc., this can affect their performance and cause them to exert less effort [29,80].…”

“…Finally, the agent can also engage in opportunistic behavior because of moral designment. They justify their own immoral or opportunistic behavior because (1) they are in an environment (company or market) that behaves in the same way or (2) individuals often try to reduce responsibility for their actions and transfer it to others (for example, the contractor claims that he did something for the benefit of the project and not for his own profit) [29,64,65,73,87,93,98,124].…”