Oke, A E and Ogunsemi, D R (2016) Structural equation modelling of construction bond administration. Journal of Financial Management of Property and Construction, 21(3), pp. 192-211. ISSN 1366-4387
Abstract
Purpose The purpose of this paper is to examine construction bonds, which is a risk management tool for ensuring that projects are delivered successfully, with emphasis on the influence of stakeholders, project characteristics and bonding decision factors. Design/methodology/approach Using case study of completed public building projects, questionnaires were administered on stakeholders that participated in the projects to solicit information on identified issues. Structural equation modelling (SEM) was used to examine relationship among identified factors, and various model selection and validation tests were carried out to arrive at the best-fit model. Findings The final model revealed that type of bond, stakeholders' influence, project characteristics, risks of bonded projects and bonding decision factors have significant effect on success of bonded construction projects. Of the stakeholders, guarantors and contractors have greater influence on effective administration of bonds. Research limitations/implications The study was limited to Lagos and Ondo states, Nigeria. Data were gathered from clients of public projects, banks and insurance companies (guarantors), as well as contracting, quantity surveying and architectural firms registered with the state governments. This is because of the fact that only such firms can be engaged on projects emanating from the governments. Practical implications To enhance project success, there is a need to adopt construction bond for both public and private projects as against the current practice where it is only mandated for public projects. Originality/value Using SEM, this research examined administration of construction bonds with a view to ascertaining their effects on projects success, thereby providing relevant empirical information for stakeholders for effective administration of construction bond.
| Item Type: | Article |
|---|---|
| Uncontrolled Keywords: | structural equation modelling; project stakeholders; bond; guarantee; risk management |
| Index terms: | case study, project success, architectural firm, Nigeria, insurance, Lagos, risk management, risk management tool, surveying, guarantee, structural equation modelling, methodology, public project, construction project, project stakeholder, validation, questionnaire, public building |
| Subjects: | Geography, production management, infrastructure engineering, project management theory and practice, financial risk, professional development, contract structure, research methods, statistical analysis, sociology, risk assessment, construction type, data collection methods, business, health monitoring assessment and metrics, economic analysis |
| Topics: | Risk Management, Stakeholder Management, Construction Technology, Procurement, Business Strategy, Cost Management, Health and Safety, Research Practice, Geographical Context, Project Management, Information Management, Engineering Principles |
| Descriptive scope: | 5 PCTEA |
N.B. Descriptive scope is a count of how many of the five facets of empirical research are indicated by the words used in title, abstract and keywords. It is not intended as a judgement on the research; merely a count of the kind of word we would expect to indicate Phenomenon, Concepts, Theoretical framing, Empirical techniques, Analytical techniques. If all five are present, then a code of “5 PCTEA” will indicate this. If you feel the coding for this record is questionable, we welcome discussion around the terms we matched or the way we categorized them. The facet you would expect may not be coded, or a facet may be coded inappropriately. This can also bear on a larger question, of which facets should be treated as defining in construction management research. Please get in touch, and we will look at it. More details here