Breakdown in Monitoring Project Performance to Reduce Transaction Cost in Public Sector Construction Projects: A Case Study from Pakistan

Abstract

The purpose of this research is to break down the monitoring process to explore the problems which impede cost efficiency in contract monitoring in a developing country, such as Pakistan. This research investigated the issues and challenges to the cost-efficient and effective implementation of project monitoring systems in public sector construction projects in Pakistan. This study uses the transaction cost economics (TCE) lens, to explore the project monitoring process of construction projects, 25 interviews with Engineers and Associate engineers were conducted from public sector construction projects. Qualitative research was performed, and thick qualitative data has been coded, categorized, analyzed, and concluded. The study concluded that in principle, project monitoring contributes to reduced transaction costs, depending on how efficiently governance arrangements are made. Hurdles related to weak governance in the organization significantly increase the post-contract transaction cost (TC). As a result of the analysis, multiple issues have been identified from the study such as Political realities, capacity building, resource constraints, administrative issues, mutual dependency, and department coordination has a direct influence on the TCs in construction projects. The result of this study provides a deeper understanding and clear roadmap of the ongoing monitoring practices and processes in the public sector construction projects. It identifies the problems and issues of the monitoring process in the construction industry of developing countries which potentially causes to increase in the total project cost.