Effects of Contract Strategy on Interpersonal Relations and Project Outcomes of Public-Sector Construction Contracts in Australia

Abstract

Hitherto, it is not known if the integration of relationship concepts into traditional public-sector construction contracts would improve project performance. This study hence examines the effects of contract strategies on project outcomes and relationship quality in the context of public-sector construction projects in Sydney, Australia. It also identifies the relational contracting (RC) practices that are in place when certain contract strategies are adopted. Using a two-pronged research design, data were first collected from public owners and private contractors and consultants through a questionnaire survey. The data were analyzed and the results were then validated by interviews. Correlation analysis shows that cost performance, client satisfaction, and relationship quality among contracting parties are significantly correlated with contract strategies. The findings indicate the important role that contract strategies play in project outcomes and interpersonal relationship. Among the 20 RC practices that are significantly correlated with contract strategies, 16 of them are related to clients and consultants, suggesting their important role in setting the tone of the relationship in a project.