Abstract
All significant construction projects involve the project owner and the contractor, as well as their project managers. Following upon recent research into the multiple principal-agent problem, which was applied to the minimization of communication risk in construction projects, the focus here is on communication issues between the four project parties. Recent research has shown that the relationship between the project owner and the contractor is paramount for risk minimization before the contract between them is signed. However, the relationship between project managers is dominant for risk minimization after the contract is signed. To further explore risk minimization at this stage of the project, the Delphi method was employed. A panel of highly-experienced project managers working for both project owners and contractors was asked several rounds of questions in an attempt to arrive to a consensus concerning the most important relationships between project parties in terms of risk minimization after the contract is signed. The relationship between the two project managers tops the ranking, thus focusing further research. As they are both agents, and as there is no contract between them, this offers a fresh challenge for the principal-agent theory.
Highlights
Good communication between key participants is essential for the success of every construction project (Zavadskas et al 2010)
Following upon recent research into the multiple principal-agent problem, which was applied to the minimization of communication risk in construction projects, the focus here is on communication issues between the four project parties
Recent research has shown that the relationship between the project owner and the contractor is paramount for risk minimization before the contract between them is signed
Summary
Good communication between key participants is essential for the success of every construction project (Zavadskas et al 2010). According to the principal-agent theory, this problem is characterized by three issues concerning the relationship between the principal and the agent: adverse selection, moral hazard, and hold-up These three issues will be discussed . The literature review shows that the application of the principal-agent problem in construction is extensive It covers all three issues of risk concerning the relationship between the principal and agent: adverse selection, moral hazard, and hold-up. The respondents were project managers with considerable experience and expertise in the field They were selected for this study because they play central roles in all construction projects. Their perceptions of communication risks are important. The paper closes with conclusions including ideas for future research
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