Structural equation modelling of construction bond administration

Abstract

Purpose The purpose of this paper is to examine construction bonds, which is a risk management tool for ensuring that projects are delivered successfully, with emphasis on the influence of stakeholders, project characteristics and bonding decision factors. Design/methodology/approach Using case study of completed public building projects, questionnaires were administered on stakeholders that participated in the projects to solicit information on identified issues. Structural equation modelling (SEM) was used to examine relationship among identified factors, and various model selection and validation tests were carried out to arrive at the best-fit model. Findings The final model revealed that type of bond, stakeholders’ influence, project characteristics, risks of bonded projects and bonding decision factors have significant effect on success of bonded construction projects. Of the stakeholders, guarantors and contractors have greater influence on effective administration of bonds. Research limitations/implications The study was limited to Lagos and Ondo states, Nigeria. Data were gathered from clients of public projects, banks and insurance companies (guarantors), as well as contracting, quantity surveying and architectural firms registered with the state governments. This is because of the fact that only such firms can be engaged on projects emanating from the governments. Practical implications To enhance project success, there is a need to adopt construction bond for both public and private projects as against the current practice where it is only mandated for public projects. Originality/value Using SEM, this research examined administration of construction bonds with a view to ascertaining their effects on projects success, thereby providing relevant empirical information for stakeholders for effective administration of construction bond.

Structural determinants of graduate employability: impact of university and industry collaborations

“…The usage of SEM has gained ground across several disciplines (Hui and Zheng, 2010) to analyze variables and underlying theoretical constructs (Hwang et al , 2010). Oke and Ogunsemi (2016) suggest three SEM approaches that are dependent on the adapted softwares. They are covariance-based modeling (CB-SEM), variance-based modeling (partial least squares) and generalized structured component analysis.…”

“…They are covariance-based modeling (CB-SEM), variance-based modeling (partial least squares) and generalized structured component analysis. Some of the reasons for adopting CB-SEM include: suitability for non-experimental research; questionnaire-based social science research studies that are ordinal in nature; and avoidance of excessive multicollinearity which may be present in other statistical techniques Oke and Ogunsemi (2016). …”

“…avoidance of excessive multicollinearity which may be present in other statistical techniques Oke and Ogunsemi (2016).…”

Influence of organizational commitment on work–life balance and organizational performance of female construction professionals

“…For indicator reliability, the square of factor loadings of each individual indicator was examined and it was observed that almost all the indicators had values nearer to the acceptable minimum value of 0.7 (Oke and Ogunsemi, 2016); however the values, as shown in Table IV, were larger than 0.4, which was considered as the minimum threshold for exploratory research of this nature (Hulland, 1999). The model showed that all the individual constructs had internal consistency higher than the acceptable 0.70; the composite reliability values ranged from 0.83 to 0.95 for the latent constructs.…”

Assessment of bonds utilisation in the Nigerian construction industry

“…Hassan and Adnan (2018) assessed the problems and abuse of performance bond in the construction Industry of Malaysia and found that the lack of uniformity and inconsistency in the contents of guarantee/bond forms results from the one-sided interpretations found in the contracts. Oke and Ogunsemi (2016) carried out a study aimed at examining the effect of stakeholders, project characteristics and bonding decision factors on the administration of construction bonding using structural equation modelling within Lagos and Ondo states; and found that these variables have an effect on the success of bonded construction projects.…”