The Analysis Of New Engineering And Construction Contract Based On Transaction Cost Theory

The application of the traditional Standard Form of Construction Contracts bringsmany problems, such as lots of disputes and dissensions, lacking of trust andcoordination, inefficient project management and turning out much transaction cost.According to these problems, The Institution of Civil Engineers prepared the NewEngineering Contract Conditions in order to resolve these problems.This thesis first introduces NEC and the transaction cost theory, then analyses thestandard forms of contracts commonly to discuss its influence on construction,besides, it points out that the traditional contracts need improving in order to cut thetransaction cost. At last, it compares NEC and FIDIC based on transaction cost theory,focusing on the transaction cost when carrying out the contract, through comparing inthe version of establish principle, the clarity, the control conditions, the risk allocation,the insurance, the claim and the dispute settlement, we can find that in NEC the wordsare easy to understand and the early warning urges the two parties in the contract tocommunicate more than the traditional contracts, as the result, many risk can beprevented and lots of disputes can be reduced, what's more, the risk allocation is morein reason, the compensation events are defined more precise, so many disputes aredecreased in event of less blur. Facing the disputes and claims, NEC ask theadjudicator to resolve who is independent, so these disputes can be solved more fairly,the uniform work process improves the work efficiency at the same time. This thesisalso points out the increased transaction cost impersonally by using NEC. In sum,compared with the traditional contracts, NEC can reduce more transaction cost andfulfil the need of construction.