Interplay of Contractual Governance and Trust in Improving Construction Project Performance: Dynamic Perspective

Abstract

Although contractual governance and trust have been regarded as critical factors for explaining construction project performance, their interplay at different stages of project development is still lacking. From a dynamic perspective, the authors decompose contractual governance as contract completeness (term specificity and adaptability) and contract enforcement, while differentiating trust as ex ante trust and ex post trust. This study aims to investigate how each of the two facets of contractual governance and trust intertwine when managing construction projects and their impacts on performance. A questionnaire survey was conducted to collect data. The results show that ex ante trust positively affects contract completeness, contract enforcement, and ex post trust. Performance is positively influenced by term specificity, contract enforcement, and ex post trust, but negatively influenced by term adaptability. Regarding the interaction effects, contract completeness and ex post trust play complementary roles, while contract enforcement and ex post trust are substitutes. This study not only adds insights into project governance research but also provides implications for construction practitioners in deploying resources regarding governance mechanisms.