System Dynamics Model of Contractual Relationships between Owner and Contractor in Construction Projects

Abstract

This paper presents a model for a comprehensive and integrated way to manage owner–contractor (O/C) relationships in the construction stage using various contract management functions. A dynamic hypothesis was developed through interviews with field experts. Subsequently, a general simulation model of O/C relationships was formulated using system dynamics modeling. The model was quantitatively and qualitatively validated using a real construction project. The model can replicate the general behavior during the evolution of O/C relationships. Several individual policies and their different combinations were explored through extensive simulation to analyze their effects on the dynamics of O/C relationships. In general, policy combinations produced better results than individual policies. A critical policy comparison proved that the combined effect of preconstruction stage policies was more influential on relationships in the construction stage than the combined effect of construction stage policies. The best result was found when both policy combinations were implemented simultaneously.