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

Journal article

Yao, H. and Chen, Y. (2023). Contract Violations in the Construction Projects: How Contractual Obligations are Reached Affects Contractual and Reputational Enforcement. IEEE Transactions on Engineering Management. pp. 1-13. https://doi.org/10.1109/TEM.2023.3257883
AuthorsYao, H. and Chen, Y.
Abstract

Contract violations are frequent in construction projects due to the higher level of uncertainty and complexity in these projects. However, enforcement after a violation, including contractual and reputational enforcement, has received limited attention. This study distinguishes between three types of violations, i.e., violations of documented obligations (letter violations), violations of tacitly agreed obligations (spirit violations #1), and violations of unilaterally assumed obligations (spirit violations #2), based on the documentation and mutuality dimensions. Furthermore, this study compares the impacts of different types of violations on contractual and reputational enforcement and explores the mediating role of relational risk perception in the above impacts. By using the data collected from Chinese general contractors, this study concludes that compared with spirit violations #2, letter violations and spirit violations #1 will lead to more severe contractual enforcement and reputational enforcement while the latter two have no significant differences of their influence on the severity of enforcement. The mediating effects of relational risk perception are empirically supported. By doing this, this study contributes to the literature on contractual governance by exploring the effects of contract structure, especially the undocumented elements of contracts, on enforcement, and responds to the recent calls for the positive role of contract ambiguity. In addition, this study fills the gaps in the scarce literature on reputational enforcement and expands the studies on the antecedents of it. Project managers can benefit from this study by recognizing the employment of reputational enforcement and the making better alignment between different types of violations and enforcement.

KeywordsContract violations; Contractual enforcement; Reputational enforcement; Risk Perception
Year2023
JournalIEEE Transactions on Engineering Management
Journal citationpp. 1-13
PublisherInstitute of Electrical and Electronics Engineers (IEEE)
ISSN 1558-0040
Digital Object Identifier (DOI)https://doi.org/10.1109/TEM.2023.3257883
Publication dates
Print27 Mar 2023
Publication process dates
Accepted13 Mar 2023
Deposited30 Mar 2023
Accepted author manuscript
License
All rights reserved
File Access Level
Open
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