The Depiction,Measurement And Governance Effects Of Contractual Complexity Of Construction Contracts:A Functional Perspective

The contract that has drawn considerable attention is an important governance mechanism in governing the transaction hazards in a construction project.However,researchers and practitioners still lack deep understanding about the nature and properties of the design features of construction contracts.Specifically,the shortage reflects in the structural understanding of contract design features,the knowledge of the divergence of the design features among different contracts,the instrument to measure the contract design feature and the understanding of the governance effect influenced by contract design features.This research uses the construct contractual complexity to depict the design feature of construction contracts.Adopting a functional approach identified from the contract theory,this research depicts and measures contractual complexity of construction contracts and investigates its governance effect on the transaction hazards brought by specific project characteristics.This research defines contractual complexity of a construction contract as “the design feature of the contractual agreements of a construction project that reflects the degree of explicitness and elaborateness of details specified for governing the relationship between the owner and the contractor”,and theoretically divides it into three dimensions,namely contractual control,coordination,and adaptation.Using human coders,this research codes the FIDIC series model contracts,1999 version,and finds out that the highest level of detailed lies in the coordination function,followed by control and adaptation.Construction project complexity has a positive influence on term specificity of three contractual functions,but not on issue inclusiveness.The complexity of contract control is barely influenced by PDSs in large complex construction projects;the complexity of contract coordination is influenced by PDSs of large complex construction projects,with EPC project’s contract coordination is less complex than those of DBB projects and DB projects.The complexity of Task Changes provisions is barely influenced by PDSs of construction projects,while the complexity of Environmental Changes provisions is influenced by PDS.After some interview and two rounds of questionnaire collection,a reflective measure containing 13 items is developed,which shows good reliability and validity.Further statistical analysis reveals that control,coordination,and adaptation are all important components of construction contracts,and treating contractual complexity of a construction contract as a three-dimensional construct has great explaining power over outcome variables than as a uni-dimensional construct.Finally,through a questionnaire survey,this research empirically investigates the governance effect of contractual complexity on project uncertainty.It is found out that environmental uncertainty and behavioral uncertainty are both significant sources of transaction hazards.The more complex the control and adaptation functions are,the less opportunistic behaviors environmental uncertainty induces,and the more complex the coordination function is,the less opportunist behavior behavioral uncertainty generates.The conclusions deepen the structural understanding of construction contracts;provide conceptual basis and instruments for future nuanced investigation into the antecedents and impacts of the design features of construction contracts;and offer suggestions and references for contract managers in designing and employing construction contracts.