Partnering Analysis Based On The Transaction Cost Theory In General Contracting Projects

Partnering is a engineering project management delivery systems gradually used and energetically popularized by project supervisors in construction industry these years, especially by the managers overseas in construction industry, American, Australian, England for instance. It's gradually applied to construction project in Hongkong from the middle of 1990s. Based on two important branches from the new institutional economics- transaction cost theory and principle-agency theory, this thesis aims to research the feasibility of partnership and explain the operation of the project, cost saving and time saving from economics perspective. First the transaction activities are analyzed, which concludes 38 transaction cost items. These items can be divided into 3 categories, transaction cost beyond the contract amount undertook by the employer, transaction cost obtained in the contract amount undertook by the prime contractor and transaction cost beyond the contract amount undertook by the prime contractor. This thesis introduces two categories of the system design, formal constraint and informal constraint. On the one hand, it introduces the features of the partnering, for example, sharing culture, friendly attitude, equity, trust, good relationship ,commitment and dispute avoid ,these belong to the informal constraint. On the other hand, it introduces the process of the partnering, for example, common goal, fair allocation of risks, smooth communication, effective conflict resolution, cooperation and core group, these belong to the formal constraint. The transaction cost can be found to cut down in the partnering delivery systems compared to the general contracting delivery systems. This thesis proposes a resources utility maximization model by comprehensively considering other benefit brought by partnering.