Wu, J; Kumaraswamy, M and Soo, G K L (2011) Dubious benefits from future exchange: An explanation of payment arrears from 'continuing clients' in mainland China. Construction Management and Economics, 29(1), pp. 15-23. ISSN 1466433X
Abstract
Clients and contractors are frequently advised to adopt a collaborative attitude and approach in construction projects in general, with 'continuing clients', i.e. clients with continuous large projects portfolios, expected to be in the forefront of such initiatives. Although such a governance approach has been argued to be beneficial in construction transactions, it is not uncommon to hear contractors complaining that clients do not fulfil their payment obligations. For example, in Mainland China, a large proportion of deliberate payment arrears are from 'continuing clients'. Gametric models are used in this research to show that three prerequisites are needed for inducing continuing clients to be cooperative. Empirical evidence from legislation and a questionnaire survey indicates that these preconditions are not fulfilled in Mainland China. Prevalent institutional arrangements, differentials in appreciation of the value of relationships, and opaque payment track records are found to contribute to continuing clients' deviation from the often advocated amicable approaches. Thus, transaction attributes seem to only suggest a theoretically optimal governance structure from the perspective of transaction costs, but other factors may also substantially influence parties' calculation and choice.
| Item Type: | Article |
|---|---|
| Uncontrolled Keywords: | collaboration; game theory; opportunism; payment arrears; transaction cost |
| Index terms: | questionnaire, evidence, construction project, collaboration, China, transaction cost, opportunism, legislation, survey, game theory, governance, deviation |
| Subjects: | legal systems, decision models, financial and cost management, evaluation and assessment methods, data collection methods, business, financial analysis, Geography, production management, management |
| Topics: | Legal Issues, Organizational Design, Project Management, Geographical Context, Research Practice, Cost Management, Governance |
| Descriptive scope: | 5 PCTEA |
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