IMPACTS OF CONTRACTORS’ OPPORTUNISTIC BEHAVIOURS ON CONSTRUCTION PROJECT TRANSACTION COSTS IN LAGOS STATE, NIGERIA.

Abstract

Opportunistic tendencies portrayed by construction contractors brings about moral hazards that has the potential to disorient transaction cost in any contractual agreement, thereby leading to distortion of contractual obligations agreed upon ex-ante. The need for optimized transaction costs in construction projects cannot be overemphasized. The study investigated the impacts of contractors’ opportunistic behaviours on construction project transaction costs with a view to identifying mitigating measures to curb opportunistic behaviours portrayed by contractors in Lagos state, Nigeria. Primary data were collected through the administration of questionnaires to Architects, Quantity Surveyors, Builders and Engineers. A total of three hundred and thirty-seven (337) questionnaires were administered; two hundred and sixty-four (264) of them were returned and found suitable for analysis, representing a response rate of 78.3%. The data collected were analyzed using Percentiles, Mean Item Score, Analysis of Variance (ANOVA), Factor Analysis, Regression Analysis, Spearman Rank Correlation, Kruskal-Wallis Test and SNK Post-Hoc Test. The results showed that the level of awareness of construction contractors’ opportunistic behaviors is very high; and the level of its practices is high. Also, the study identified the major factors responsible for contractors’ opportunism as ‘No sanction for not reporting inconsistency of drawings’ and ‘No statement of resources in the work schedule’ with mean scores of 3.55 and 3.53 respectively. While the study further revealed that there is a significant difference in professionals’ perceived level of awareness of factors responsible for contractors’ opportunism. Based on findings from the study, factors responsible for contractors’ opportunism can be classified under Vagueness, Inadequacy, Incongruity and Impairment. The study revealed that the most important constituents of construction project transaction costs are Conflict Resolution with a mean score of 3.45, Project Preliminary Design with a mean score of 3.43 and Translation of Client’s Needs with a mean score of 3.38. While the factors that affect construction project transaction costs can be classified under Client’s behavioral traits, Contractor’s behavioral traits, Managerial skills and Project characteristics. Equally, the study showed that the factors that affect construction project transaction costs are Leadership, Quality of decision making and Competition between bidders with mean scores of 3.52, 3.51 and 3.49 respectively, while it was established that there is a significant difference in professionals’ perceived factors that affects construction project transaction costs. The study identified the mitigating measures to contractors’ opportunistic behaviors as ‘Clarity in contractual obligations and responsibilities of parties to the contract’, ‘Completeness of contract’ and ‘Fair allocation of risks’. Findings from the study further revealed that contractors’ opportunistic behaviors have significant effects on construction project transaction costs. Based on the findings, the study recommended that emphasis should be laid on acts that strengthen the working relationship between stakeholders of construction projects. Also, there is need for all stakeholders involved in construction projects to be fully acquainted with the probable grounds on which construction contractors would explore opportunistic windows. Finally, efforts should be made to ensure that issues like contract documentation should be well and appropriately carried out; roles and responsibilities of stakeholders should be well defined so as to fully keep abreast with all parties the expectations with their duties with respect to the project objectives.