Exploring the Influence of Contract Governance on Construction Dispute Negotiation

Abstract

The obligations and rights of the contracting parties are typically set out in the conditions of contract. The attempt to have a “water-proof” contract that caters to all eventualities has turned contracts into management manuals with detailed contractual procedures to deal with, inter alia, performance, changes, payment, approval, and dispute resolution. Contract disputes, therefore, have to be negotiated within the ambits of the contracts. This study revisits the assumption of free negotiation that underpins most conventional negotiation studies, i.e., negotiation is free with rational negotiators who can walk away from the negotiating table at will. Constraints imposed by a contract are collectively described as contract governance. With taxonomies developed through principal component factor analyses for contract governance (CG) and negotiating behaviors (NH), the influence of CG and NH is explored by a Pearson correlation analysis. In general, it was found that dominating and obliging behaviors are mostly influenced by CG while compromising behavior is the least influenced. It was further found that procedural requirements influence all types of negotiators under the Rahim organizational conflict inventory except integrators. This suggests that if negotiators are having concern for both themselves as well as their counterparts, amicable settlement is possible notwithstanding the complex procedural requirements.