Rethinking Trust in Construction Contract Formation: Dispute Resolution Method Selection

Abstract

Low trust negatively affects the efficiency, schedule performance, and administrative cost functions of construction project team. However, trust is seldom taken into consideration during contract formation; in particular, in the dispute resolution method (DRM) clauses. The objective of this paper is to investigate how trust influences contract terms and conditions related to the DRM clauses. Data from 27 construction projects were collected and 11 DRM experts participated in the study. The results show that although experts recommend the choice of DRMs based on the trust level between parties, the DRM actually used on construction projects is not affected by the trust level between partners. Negotiation was the most recommended DRM for high-trust projects, but was the least used DRM in practice on such projects. The conclusion of this research is an incremental step to rethink social factors that are overlooked in construction management and that proved influential on how contracts are drafted.