Abstract
Engineering-Procurement-Construction (EPC) method has increasingly been applied in international markets. In this research, the causes of contractors’ claims in international EPC projects are modeled and empirically tested with industry survey, structural equation modeling and case studies from the perspective of Chinese contractors. The established model outlines the causes of contractors’ claims as: external risk (sociopolitical risks, economic risks, and natural hazards), clients’ organizational behavior (untimely payment, change orders, and inefficient processing), and project definition in contract (unclear scope of works, and unclear technical specification). The structural equation modelling validates that these causes have direct influences on claim respectively. Besides, clients’ organizational behavior acts as a partial mediation between external risk and claim, demonstrating that external risk can also exert influence on claim through affecting clients’ organizational behavior. Seven case studies further confirmed and interpreted the substantive meaning of these relationships. This study establishes interdisciplinary linkages among knowledge areas of contracting, risk management, organizational behavior, and international EPC project delivery, which has important primary contributions in both theory and practice. Understanding how the fundamental factors interactively lead to claims can help contracting parties to develop effective claim strategies, proactively mitigate project risks, and ultimately improve EPC project performance.
Highlights
EPC method has increasingly gained acceptance in international markets (Guo et al 2010)
Existing studies have identified wide-range causes of claims, which are related to industrial, financial, social, political, organizational behavior, contractual, environmental, and project-related factors (Cheung, Pang 2013; Fawzy, El-adaway 2012; Love et al 2011; Abd El-Razek et al 2008; Sambasivan, Soon 2007; Yates, Epstein 2006; Harmon 2003; Odeh, Battaineh 2002)
This is supported by the results of Structural equation modeling (SEM), in which the external risk has the highest correlations with claim among the three factors in the model
Summary
EPC method has increasingly gained acceptance in international markets (Guo et al 2010). As a fast-track project delivery strategy, EPC method can lever a contractor to fulfill the design, procurement, and construction tasks simultaneously in achieving early builder involvement, cost savings, and reduced duration (Hale et al 2009). Allocating the occurred risks between the client and the contractor in the construction process largely involve claims (LaBarre, El-adaway 2013). It is agreed that as an indispensable part of contract systems, claims have negative impacts on projects and become an inevitable burdens to the construction industry (El-adaway, Kandil 2009; Ho, Liu 2004; Vidogah, Ndekugri 1998). Management of claims is one of the biggest challenges in current changing international construction industry (Kululanga et al 2001)
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