Boosting Public Construction Project Outcomes through Relational Transactions

Abstract

Drawing upon relational contract (RC) theory and network embeddedness theory, this study investigates how relational transactions (i.e., RC norms and network strategies) affect relationship quality and outcomes of public construction projects. The results of a questionnaire survey of 104 public projects in Singapore show that relationship quality and relational transactions have a positive impact on public project outcomes (i.e., time, cost, quality performance, and client satisfaction). The empirical results show that effective information sharing gives rise to better relationship quality, and good relationships further enhance time performance, quality performance, and client satisfaction. The findings show that adoption of these RC norms affects outcomes in the following ways: (1) propriety of means contributes significantly to cost performance, (2) flexibility and contractual solidarity have a significant impact on time performance, and (3) harmonization within the social matrix and propriety of means allow for a significantly higher level of satisfaction. This study contributes to the body of knowledge by empirically showing that good relationship quality can contribute to better outcomes in public construction projects. It also identifies RC norms that have a positive effect on public project outcomes and relationship quality. Recommendations of relational transaction practices that could improve public project outcomes are offered.