Opportunism in construction contracting: minefield and manifestation

Hoi Yan Pang, Sai On Cheung, Mei Ching Choi and Sin Yi Chu

International Journal of Project Organisation and Management, 2015, vol. 7, issue 1, 31-55

Abstract: Construction is a very competitive business in Hong Kong. Very often, no contingency is provided for the risks and uncertainties that may arise during the onsite production stage. It is therefore not uncommon to find contractors making use of the loopholes in the contract to raise claims and practise opportunistic acts to recoup loss due to excessive risk-taking. These phenomena can be found in transaction cost economics (TCE). The behavioural assumptions employed in TCE are bounded rationality and opportunism. Opportunism is of particular concern for transactions that involve asset specificity. Building on these conceptualisations, this study aims to enhance the understanding of opportunism in construction contracting through the identification of its minefield and manifestation as well as their occurrence likelihood. This study therefore posits that in construction contracting, incomplete contracts are minefield of opportunism and asset specificity informs opportunism manifestation.

Keywords: construction contracting; opportunism; fault tree; construction industry; fuzzy sets; Hong Kong; excessive risk taking; transaction cost economics; TCE; asset specificity; incomplete contracts. (search for similar items in EconPapers)
Date: 2015
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