THE IMPACT OF PROJECT GOVERNANCE ON CONTRACTOR’S OPPORTUNISM IN CONSTRUCTION PROJECT PROCUREMENT IN ONDO AND EKITI STATES, NIGERIA

Abstract

Construction procurement brings many actors together in the design, execution and management of construction projects. The divergence of interests causes some project actors to act opportunistically. Since opportunism (self interest seeking with guile) is detrimental to project success, projects are governed to minimize opportunism. This study focused on the governance of opportunism from one of the major project actors – the contractor. Sixty one TETFUND-sponsored building projects procured by seven institutions of higher learning in Ondo and Ekiti States were used as the empirical data setting. This study investigated the level of contractor’s opportunism on the focal projects, the level of usage of contractual control on the projects as well as the level of existence of relational contracting norms within the client–contractor relationships. Furthermore, the study assessed the effectiveness of contractual control and relational contracting norms in curbing contractor’s opportunism. The three research constructs were operationalized with multiitem scaling following a comprehensive literature review of prior studies related to the constructs. A project–based questionnaire that embodies the multi-item scales was the data collection instrument for the study’s three constructs. The indicators of the three latent variables were ranked with mean item scoring. The effects of contractual control and relational contracting norms on contractor’s opportunism were explored with a variance-based structural equation modelling technique– the Partial Least Square Structural Equation Modelling (PLSSEM) technique. The study showed that the mean contractor’s opportunism score is 2.29 on the 7-point Likert-type rating scale while the mean scores for contractual control and relational contracting norms are 3.80 and 4.92 respectively. The study thus showed that low level of contractor’s opportunism was associated with a moderately high level of contractual control and high level of relational contracting norms. The final model showed that the two exogenous governing mechanisms of contractual control and relational contracting norms explained 54.6% of the variance in contractor’s opportunism. The partial least structural equation model also revealed that the mitigating effect of contractual control (represented by a non significant path coefficient of 0.104) was very weak. On the other hand, relational contracting norms had a substantial mitigating effect (represented by a significant total effect of -0.734) on contractor’s opportunism. The non significant path coefficient between contractual control and contractor’s opportunism implies that relying solely on competitive selection of contractors, comprehensive legally binding conditions of contracts and monitoring by control actors is not enough to suppress opportunism from contractors. The moderately strong positive relationship between relational contracting norms and contractual control (represented by a path coefficient of 0.671) on contractor’s opportunism suggests that relational contracting norms complement contractual control; hence the two governance mechanisms can be used together. On the basis of the findings of the study and previous findings of the exchange governance literature, a coopetitive project governance toolbox that combines the joint deployment of contractual control and relational contracting norms was synthesized. The coopetitive project governance toolbox contains seven artefacts for crafting governance procurement strategies for managing contractor’s opportunism. The coopetitive toolbox is recommended for use by public clients and their advisors in construction procurement.