Equity gap in construction contracting: identification and ramifications
Engineering, Construction and Architectural Management
ISSN: 0969-9988
Article publication date: 22 February 2021
Issue publication date: 10 February 2022
Abstract
Purpose
This study conceptualizes the equity gap (EG) in construction contracting and examines its impact on project performance.
Design/methodology/approach
The identification of EG was first summarized from a literature review. A conceptual framework that included EG elements of information, risks, expected return and power asymmetry was then proposed. A study of the Hong Kong–Zhuhai–Macau Bridge supported the existence of EG. The framework was further refined by incorporation of 21 EG identifications. To examine the reliability of the framework, data were collected from 106 senior project professionals to evaluate the extent to which EG identification occurred in their projects. A Partial Least Square–Structural Equation Modeling (PLS-SEM hereafter) analysis was conducted on the collected data.
Findings
The proposed framework was deemed statistically significant. Furthermore, no significant differences were detected between the developer and contractor. The concepts of asset and process specificities suggested that the unaddressed EG may be met with retaliatory behaviors, such as noncooperation, procrastination, opportunism and withdrawal, as the physical works proceed. These behaviors may also hamper project performance.
Practical implications
To address the EG ex post, it is suggested that relational incentives to balance the power differential be set, reallocation of risks and return and enhancing task programmability for ease of monitoring and performance evaluation.
Originality/value
This study investigates the downside of the EG between the contracting parties. The proposed EG framework informs the project management of critical EG elements and possible methods to narrow the gap ex post. Practical suggestions are also provided to manage construction contracts in general and in the use of incentive schemes to address EG.
Keywords
Acknowledgements
The work reported in this paper was fully supported by a CityU SRG (project no. 7005557).
Citation
Zhu, L. and Cheung, S.O. (2022), "Equity gap in construction contracting: identification and ramifications", Engineering, Construction and Architectural Management, Vol. 29 No. 1, pp. 262-286. https://doi.org/10.1108/ECAM-09-2020-0725
Publisher
:Emerald Publishing Limited
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