EVALUATING MODUS OPERANDI OF CONSTRUCTION SUPPLY CHAIN ... · Unlike manufacturing supply chain the...

INTERNATIONAL JOURNAL OF CONSTRUCTION SUPPLY CHAIN MANAGEMENT,

Volume xxxNo.xxx Year xxx

Author1,Author2(year) ,Evaluating the modus operandi of Construction supply chain using

Organization Control Theory, International Journal of Construction Supply Chain

Management,Vol.xxx,No.xxx,

EVALUATING MODUS OPERANDI OF CONSTRUCTION

SUPPLY CHAIN USING ORGANIZATION CONTROL

THEORY

Author1,xxxxx

Author2,xxxxx

ABSTRACT

Unlike manufacturing supply chain the modus operandi of construction supply chain is not up

to date. It might be attributed to the context of construction projects and the structure of

construction industry. The formal and informal control mechanisms are well established in

retail and manufacturing supply chain and it reflects in product performance. However, this is

not evident in case of construction supply chain and project performance is often chaotic. In

case of large and complex construction projects, the client-contractor dyad needs to

appropriately seek input control, behaviour control and output control for successful project

delivery. In light of Organization control theory and review of literature on construction

supply chain, this study evaluated the three control mechanism-input control (project risk and

reward power, intra-project communication), behaviour control (opportunism) and output

control (project performance) using structural equation model. The survey data is collected

from the 258 construction professionals working in construction projects in India. It is

revealed that input control in terms of project risk and reward power, intra-project

communication largely influences behaviour control in terms of opportunism. However

behaviour control does not substantiate output control in terms of project performance as

expected, rather the direct effect of input control mechanism on output control is revealed.

Keywords: Intra-project communication, Opportunism, Project performance, Project risk,

Reward power






INTRODUCTION

Construction industry is a peculiar project based industry in the world. Because of its

temporary and fragmented nature, it is predominantly classified as unorganized sector. It is

well known for its adversarial and corrupt practices. More often these are referred as the

congenital issues of construction industry. Negotiations, litigations, disputes are common

place causing delays in project delivery and poor project performance. The problems are

confronted over the project life cycle and it largely impacts the client and contractor‗s project

business and profitability. Skewed supply over demand makes it tougher for the contractor to

be competitive and still earn the reasonable profit. The continuity of workload is crucial for

the contractors and subcontractors to stay in the construction business. On the other hand,

client seeks to attain the project goals in reasonable cost and time, unaware of contractor‘s

preparedness for the project. Client organizations rely on contract framework to control the

project and contractor. Eventually, both client and contractor cut corners to optimize their

gains. Such kinds of confrontations are quite common in construction project business and

generally modelled as game theory problem. However, in real life construction business the

outcome is not as straight forward as, where one gains and other looses. Rather, it affects the

project performance and retards the growth of the industry.

For instance corruption in Indian construction Industry is significant and is a barrier to India‘s

growth potential and therefore, opportunism in client-contractor dyad in construction project

procurement need to be controlled. The corruption and bribery is a impends project business

in India as many organizations in India ponder cash to win and retain business and, for

instance promoters and builders misstate their financial performance more than average (12th

Global Fraud Survey). Due to unreliable information, client organizations often need to

conduct due diligence of the contractors and subcontractors and yields higher transaction

costs. Further, corruption causes lack of trust and eventually attracts less capable and

inefficient organization to execute the project work (KPMG Survey). More categorically,

cause of GDP loss of India in terms of awarding projects, execution and securing financial

closure amounts to an opportunity cost 45 billion USD to contractors and 155 billion USD to

owners (McKinsey & Company, 2009). How do project stakeholders understand project,

construction procurement and change their behaviour in project life cycle, eventually what

happens to project performance. These research questions demands attention of researcher to

seek answer.

THEORETICAL BACKGROUND

Products and services provided by the companies in a construction supply chain typically

account for about 80% of the cost of the project. The contribution of subcontractors to the

total construction project accounts for as much as 90 percent of the total value of a

construction project (Nobbs, 1993).The way in which those products and services are

procured and managed has a profound effect on the outcome of the project - not only in terms






of profitability for all parties, but also the way in which the completed facility meets the

client‘s justifiable expectations of cost, quality and functionality (constructing

excellence).The trends in a changing construction industry point out that the procurement

model is changing from a demand-driven and fragmented process towards a supply-driven

and integrated process. However there is little attention to the nature supply chain in

construction industry considering the context in which the industry operates. The key issue in

delivering complex product system in built environment is the integration of project and

business processes within the firm (Gann and Salter, 2000). Davies and Brady (2000)

reported that in complex product and systems integrative supplier capabilities and

organization learning can be useful to achieve the economies of repetitions in projects from

one-off project. In a construction supply chain, the players are from diverse background and

profession and differ in professional and ethical values and lack the common goals and

values. The major focus in the construction supply chain should be on value creation for the

client and (Feller et.al.2006) construction supply chain can be posited as value chain. Unlike

manufacturing supply chain, CSC for construction project adds value to the project at each

discrete stage of project life cycle and therefore value proposition matters more than the

material flow in the discrete environment.

However, the value proposition is diluted in the construction supply chain on account of the

intrinsic attributes of the project, procurement processes, and people. The scope of this

research is confined to client and contractor, which is the major stakeholder of construction

supply chain. Construction projects are unique and complex with competitive construction

environment, engaged by familiar or unfamiliar client-contractor dyad. The magnitude of

outsourcing, accompanied by competitive procurement makes the construction supply chain

more prone to opportunism and downgrading the project performance. Therefore, how do the

contracts arrangement in place control the people, procurement process and project

performance, demands attention.

The essence of contracts is manifested into the mediated power mechanisms employed by

client-contractor to avoid conflicts, confrontations, curb opportunism and control project

performance. More the magnitude of outsourcing in project more is the risk experienced by

the key dyad members.

We intend to test the most pertinent scenarios in construction supply chain in light of

organization control theory. The control theory seeks to utilize single control or multiple

control mechanisms as a modus operandi in buyer-supplier relationships. Control theory

focus on input control, output control and behaviour control to assess dyadic performance

(Long et.al.2002; Jaworski et.al.1993). We believe the control theory could throw light upon

the operations of construction supply chain and how it impacts the performance of the

construction projects.






Organization control theory (Cardinal et.al.2004; Eisenhardt, 1985; Ouchi, 1977; Rustagi

et.al., 2008) postulates that how organizations seek to influence to achieve its objectives. In

this regard, Ouchi‘s (1979) framework is often used in empirical studies on organization

control. The frameworks measure the task programmability (ability to specify the tasks to be

followed) and outcome measurability. In the client-contractor dyad of construction projects,

the outcome measurability is somewhat explicit if project performance is measured as per the

dyad‘s project objectives. However, the input control manifested in project risk and power

mechanism available through contracts arrangement in place on projects, how it affect the

intermediate behaviour control and output control demands further research. In construction

supply chain, the strongest link is the client-contractor dyad, which effectively controls the

project performance. However, there is research paucity in the domain of construction supply

chain management to explore how client-contractor relationship influences the three control

mechanisms in project setting. Therefore, this research aims to clarify the relationships

between the three controls along with the interaction effects of the three controls. Moreover,

it also seek to identify how the behaviour control mediates the input control and output

control from the perspectives of client and contractor.

Input control in construction supply chain

Reward Power

The concept of power is well known and still needs attention as it often comes across in

buyer-supplier relationship. Asymmetric dependence causes the power imbalance the dyad.

However, it is revealed that partnerships are flourished in the dyad, particularly in the

presence of buyer dominance over supplier (Ramsay, 1996). Notion of power is different in

the Indian construction Industry. In relational contracts, Eriksson and Villeval (2013)

revealed that the long term relationships are generally initiated with symbolic rewards. The

use of mediated power is reflected at the project award stage and also during the execution of

the project to accommodate client‘s new requests. The client reverts to the use of reward

power due to the supply side risks and complexity involved in construction projects. In Indian

context reward power of the client is more decisive in business, unlike Chinese construction

Industry, where Government client resort to coercive power to manage construction projects.

So, for democratic nation like India, use of reward power is common place.

Perceived project Risk

Risk management for the project based firm is often elusive, incomplete and remain focal

point of inter-organizational research. Risk is defined as the possibility of events, their

resulting impacts and dynamic interactions may turn out differently than anticipated (Ward






and Chapman, 2003; Miller and Lessard, 2001). Risk is complex and dynamic concept,

consequently calls for an integrated approach to demystify it. However, studying project risk

in isolation may not be worthwhile, since the concept of risk directly links to performance

outcome, favourable or unfavourable to project stakeholder. In temporary construction

project setting, the apprehensions of project outcome primarily affect the relational exchange

of client-contractor dyad. The risk perceived by the client-contractor dyad is process oriented,

longitudinal and dynamic. It is often manifested in client-contractor operational behaviour on

the project. Nevertheless, risk is perceived through the falling short of project performance of

cost, time, quality and the appropriateness of procurement mechanism, contracts arrangement

to deliver the project. Henceforth, analyzing the perceived project risk in light of relational

contracting is a sensible approach.

Risk in construction supply chain is embedded in social and behaviral aspects and a common

perception of risk allocation exists in the construction supply chain (Loosemore and

McCarthy, 2008).Risk taking attitude of contractor in project business helps contractor to

compete in dynamic construction market and attain project success (Hyung-Jin Kim et.al.,

2011).Construction project business is volatile and uncertain. Subsequently, client-contractor

dyad experiences uncertainty in project delivery. Uncertainty and perceived project risk are

inter-related. Uncertainty is the raw expression of project risk and latter originates from the

former (Perminova et.al.2008).Risk in projects refers to the uncertainty occurring in any form

during the completion of the project. Creedy,et.al. (2010) revealed that the cost-overrun in

highway project is due to the uncertainty rather than the risk. Risk is measured differently in

different context. For instance, product related risk or supply side risk or supplier risk

(Zsidisin, 2003).However, Zou et.al. (2007) revealed that risks in projects are related to

specific supply chain member and it affects the performance of the project in cost and time

frame. The supply risks is the major uncertainty in EPC sector affects the supply performance

(Micheli et.al.2010). We argue that risk is perceived from the uncertainty to fulfil

expectations of project performance for example, cost schedule, performance and safety

(Hughes et.al. 2004). The risk is perceived due to the project characteristics for example,

project complexity, and size and due to procurement mechanism and ambiguity of contracts

arrangements to mitigate dyadic risk.

Intra-project communication

Information is the crucial resource and strategic resource in construction supply chain

(Edum-Fotwe and McCaffer, 2001) and it affects the competitiveness of construction supply

chain. However, information is been looked at as an asset and therefore, coordination is

retarded in construction supply chain. Jha and Iyer (2007) revealed that the construction

project success cannot be assessed using an iron triangle alone and pointed out the necessity

of commitment, coordination and competence in further defining the project success. Supply

chain coordination refers to the pattern of interactions, decision-making and communication

that takes place amongst the organizations involved. Coordination may be internet enabled

coordination, or relational interdependence or pooled interdependence. Supply chain






coordination is the vital issue since the construction supply chain is executed as temporary

supply chain. Thus the coordination among the supply chain members depends on the intra-

project communication. Bankvall (2010) reported that in case of construction supply chain

reciprocal interdependence in the supply chain is more predominant than the sequential

interdependence. Therefore, coordination in the construction supply chain is initiated in the

presence of reciprocal interdependence in the parties and intra-project communication

significantly affects the information sharing.In reciprocal interdependence, information flows

several times in the dyad before arriving at final decision. Supply chain coordination is

dependent on the quality and availability of prompt and accurate information (Holweg M.,and

Pil F.2008). Client-contractor dyadic relationship exhibits high level of task interdependence

in the project (Crook and Comb, 2007) and therefore sharing timely, accurate, active

information sharing becomes legitimate.

Behaviour control in construction supply chain

Opportunism

Opportunism is defined as self-interest seeking with guile. The opportunistic behaviour

emanates with lone motive of own profit maximization and distort the dyadic trust. It is

evident in the dyadic behaviour marked by lying or stealing or cheating or holding or

distorting the information or failing to keep promises. In temporary construction project

business, contractor‘s apprehension at accommodating design changes or suspension of work

due to lack of incentives or delaying project execution or failure in dispute resolution and

negotiation demonstrates the tendency of opportunistic behaviour in the construction project.

Opportunistic behaviour in project business emanates from the lack of trust in the project

partners. Opportunistic behaviour is induced in dyadic relationship of client-contractor

relation by the virtue of misalignment of rewards, incompetence, and lack of appreciation for

system and integrity of failure (Lau 2011).The prominent opportunistic behaviour in client-

contractor relationship includes suspension work by contractors, delaying payment to the

contractors, exploiting the contract conditions etc.

Output control in construction supply chain

Project performance

Project performance monitoring is the decisive control for the client and contractor dyad to

achieve the project objectives despite the failure to update input control. Project performance

measures might differ considerably but the classic measures in the form of iron triangle –

time, cost, quality are appropriate for the client-contractor dyad. Apart from cost and time,

safety, quality, environmental performance and functionality of projects are the key






performance indicators (Chan and Chan, 2004).Project success is subjective while project

performance is measurable objectively in trilogy of cost, time and quality (Wai et.al.2012).

However, numerous measures of project performance can be revealed in project management

literature. For instance, in a heterogeneous project environment, good performance

monitoring needs improved collaboration, integration, communication and coordination in

the dyad (Wickramatillake, et.al.2007). Butcher and Sheehan (2010) argued that

understanding client‘s business needs is key performance indicator past performance of

contractor on similar projects (Xiao, and Proverbs, 2003). More often the contractor

performance on cost depends on the client initiated design variations and the study

established that contractor‘s own performance on similar projects and commitment of

relationship towards in the downstream affects the contractor‘s performance on project (Xiao

and Proverb, 2003).The empirical study found that commitment, coordination and

competence can improve the performance of construction project on cost, quality, schedule,

dispute and safety (Jha and Iyer, 2007).The project manager‘s competence, coordination

among participants and owner‘s competence can positively influences cost performance (Iyer

and Jha, 2005).Contractors initiate good relationship with the client to respond to client‘s

need on project to enhance the project performance (Ahmed and Kangari, 1995).Andersen

et.al. (2006) reported that the strong project commitment, stakeholder‘s involvement, and

communication on project are the indicators of project success. Trust development in supply

chain is linked with performance capability and commitment of supply chain member (Jones

et.al.2010).

DEVELOPMENT OF HYPOTHESES

Perceived project risk and project performance

In the construction project business, the contractor often found difficulty in decision making

due to the unavailability of accurate and timely information sharing. The project complexity

in terms of size and novelty necessitates competitive procurement to enable the contractor to

deliver the project. Client‘s knowhow in project procurement is inadequate and often pass on

risks to the contractor. Contractor anticipates the project risk for instance ambiguity in

construction contracts, involvement of subcontractor and supplier at design stage, delay in

payments (Rahman et.al.2004).On the other hand, client is wary of opportunistic behaviour of

contractor in project execution may impend the risk project cost overrun and time overrun.

The higher the levels of project risk the client-contractor perceive more the likelihood of poor

project performance.

H1: Perceived project risk negatively influences the project performance.

Perceived project risk and opportunism

The lack of clarity on project deliverables, in appropriate construction contracts, unbalanced

risk allocation entice the client and contractor to resort to opportunistic practices.






Accordingly, it is often evident through the lack of sharing accurate and timely information,

withholding the payments or suspension of project work. Opportunism in the client-

contractor dyad is the plausible effect of perceived project risk. The impending uncertainty in

project delivery affects the accuracy and quality of information sharing. The lack risk

allocation purposively fails to comprehend the mechanism of loss sharing. Therefore, more

the perceived project risk more is the tendency of opportunistic practices.

H2: Perceived project risk positively influences opportunism.

Intra project communication and opportunism

Information sharing facilitates communication between the client and contractor in the

construction supply chain. Because of reciprocal interdependence in the dyad, the quality,

accuracy and timing of information sharing withheld vital project decisions. Lack information

sharing, information delaying causes lack of trust and builds suspicion in the dyad. Weak

communications between the dyad members divulge information in key construct contracts

and gives rise to disputes in the dyad. Timely and accurate information sharing regarding

project milestones and payment delivery inculcates dyadic confidence. The accurate and upto

date information reduces opportunistic behaviour. Information sharing acknowledges the

sensitivity of project risk and corrective actions could take. Communications directly deter

manipulation of records and curbs opportunistic practices. Therefore, higher the intra-project

communication lower will be the scope for opportunistic behaviour.

H3: Intra project communication negatively relates to the opportunism.

Reward Power and opportunism

Power is a mechanism to influence the behaviour of the counterpart in dyadic relationship.

The use of mediated power is often seen as a mechanism to control the project partner in

construction project business. Power is manifested through the formal contract agreement

between the parties. Power is also a kind of safeguard to control the opportunism in the

dyadic relationship. The two sources of mediated power; reward power and coercive power

are the two extreme polar choices of power. However, the exclusive use of either or both is

often found in literature to control the opportunism. The more the use of the mediated power

can seek better control over opportunism in dyadic relationship.

H4: Reward Power positively relates to the project performance.






Opportunism and Project performance

Opportunistic behaviour is a reactive behaviour in the anticipation of impending loss, often

noticed through the self interest behaviour of cheating, misstating behaviour, carelessness etc.

The commitments of the project partners towards project objectives are not realized.

Subsequently, project needs are rationalized and project performance fail to meet the

expected performance level. The project performance is deteriorates causing costoverrrn and

time overrun. The opportunism compromises the expected quality standards desirable for

project completion and the safety standards are overlooked.

H5: Opportunism negatively influences the project performance.

Intra-project communication and project performance

Communication realizes the project goals with clarity of information. Communication

between the dyad closely relates to the project, from the start of project planning, scheduling

till monitoring and control of the project. The client contractor dyad exhibits the reciprocal

interdependence and timely and accurate information sharing can keep track on cost and time

performance of the project. The client‘s needs on project quality measures and safety records

updates are dynamic activities and evolves over project life cycle. Consequently, realizing the

performance standards with up to date and accurate information reduces rework and

transaction costs. In order to reduce the disputes between the parties quality of information

facilitates prompt decision making and avoids the misunderstandings and opportunisc

behaviour.

H6: Intraproject communication positively relates to the project performance.

Reward Power and project performance

Mediated power in the form of reward power and coercive power is a useful governance

mechanism to attain the project objectives. Reward power in the form of gain sharing, profit

sharing offers incentives to meet the project goals. Reward powers instil commitment in the

relational competence to attain cost reduction and reduce project delays. Coercive power is a

polar extreme of reward power, to seek control with punitive action. It is evident in project

business with suspension of project work, with holding the payment. The problem solving

mechanism and conflict and dispute resolution can grossly work with the application of

mediated power.

H7: Reward Power positively influences the project performance.






The conceptual model is outlined as shown in figure1.

Figure1: Conceptual model

METHODOLOGY

It is difficult to evaluate the client-contractor relationships through single interactions, so the

survey responses gathered from the project participants working in tendering, bidding,

contracting, planning, execution etc. The survey focussed on the large construction projects

in the domain of real estate, infrastructure projects. Although literature suggests that case

study is mainly used to measure the control mode mechanisms, we instead conducted a

survey study to understand the consistency of control modes in array of construction projects.

Survey research method is employed as a research strategy over case study for this research.

Primary considerations include, first the need to capture attitudinal data (behaviral data) of

the construction professionals involved in variety of construction projects. Secondly, because

this research encompasses several latent constructs and manifest variables, which are

appropriately measured using behavioural data.

In order to test the hypotheses, survey study was carried out in three phases. The first phase

consisted of identifying the items for construct measurement. This is achieved, by using the

established scales from previous studies, while for the newly developed constructs; items are

devised through review of literature and checked for face validity using structured interviews.

The second phase of questionnaire development consisted of validating the questionnaire for

Project risk

Opportunism

Project

performance

Reward

power

H6

H5

H2

H1

H3

IPC

H4 H7






content validity (Nunnaly, 1978) and convergent validity (Campbell and Fiske, 1959) and

discriminant validity (Bagozzi et.al., 1991). During this phase few items are modified to gain

clarity and simplicity. Finally, the questionnaire is pilot tested using 50 participants. We

collected the primary data, because the behaviral data, needed for this study is not available

from public sources or archival data. Survey research approach is adopted to capture

attitudinal nature of variables and it can enhance the generalizability of the results (Kerlinger,

1973).

Sampling and data collection

The data is collected from construction professionals involved in the execution or planning or

contract administration of construction project in India. Respondents were instructed to

complete the questionnaire only if i) they had relevant education and experience in the

construction field and ii) state the name of the construction party-client or contractor for

which they are working. In case, if respondent have already worked as client as well as

contractor on the projects. The respondents were told to recall their best experience either as

client and contractor before filling questionnaire and also mention their party as client or

contractor. The data was collected from various working construction project professionals,

located in five different metro cities of India, such as Delhi, Mumbai, Kolkata, Pune and

Hyderabad through a self administered questionnaire. A total of 600 questionnaires were

distributed. There were 258 usable responses, representing a 45% response rate. In the third

phase, the reliability of items is confirmed as satisfactory values of Chronbach alpha. Data

were collected through a questionnaire survey and using a purposive sampling. The sampling

frame of the study is the working executives in the leading construction firms in India. The

respondents were briefed on the purpose of study and given sufficient time to fill the

questionnaire on seven point likert scale with 7-strongly agree to 1-strongly disagree.

Measurement:

In order to measure the latent construct of the study, the established scales in the literature are

reviewed and modified after pilot study. The latent construct of the study are revealed

through literature review. Reward power, perceived project risk, intra-project communication

are the exogenous variables of the study, while project performance is the endogenous

variable of the study. The reward power scales are adopted from Benton and Maloni (2005,

2000). Intra project communication is specially measured using an abridged version of

Goldhaber and Rogers (1979) communication audit survey. However, the project risk and

project performance scales are designed using of review of literature and pilot study.






DATA ANALYSIS AND RESULTS

Exploratory factor analysis:

Exploratory factor analysis is employed particularly to check the uni- dimensionality of the

constructs as the objective of the study is to confirm the factors, not to explore the factors.

Exploratory factor analysis is an efficient technique to examine the factor structure of the

data. It has established the appropriateness of the data with KMO and Bartlett‘s test of

sphericity. Further, the analysis of data structure revealed the four factors which accounted

for of the total variance. The reliability and validity of the items is examined using

Chronbach‘s alpha, which is greater than cut-off value of 0.7.

Confirmatory factor analysis:

Confirmatory factor analysis is employed to confirm the factor structure of the items. The

confirmatory factor analysis of each of the five constructs yielded satisfactory fit to the data

as shown in table. The convergent validity of the latent construct is established using average

variance extracted and composite reliability. The cut-off values of average variance extracted

and composite reliability are revealed greater than 0.5 and 0.7 respectively. Further the CFA

of each construct has revealed the satisfactory goodness of fit. Subsequently, the goodness of

fit of the overall model is examined; The measurement model has revealed a satisfactory

goodness of fit with the fit indices of the baseline model (χ2 /DF=2.357; CFI=0.805,

TLI=0.0.78, GFI=0.77, AGFI=0.72, RMSEA=0.052).Table 1 shows the relevant CFA

statistics.

Table1: CFA Statistics

(Diagonal element indicates the values of AVE)

Latent construct IPC RP RSK PP OP

Intra-project

Communication (IPC)

0.50 0.39 0.35 0.56 -0.05

Reward

Power (RP)

0.50 0.14 0.34 0.16

Risk (RSK) 0.50 0.49 0.29

Project performance (PP) 0.50 0.23

Opportunism (OP) 0.50

Cronbach alpha 0.782 0.815 0.812 0.837 0.80

Composite reliability 0.831 0.749 0.855 0.831 0.83






Structural equation model:

Structural equation modelling is a flexible approach to identify the causal relationships of the

latent constructs of the research study (Bollen, 1989).Based on support from literature

review, the four causal relationships are shown as structural relationships by connected the

arrows on Structural model as shown in figure 2. The structural model had three exogenous

variables –Perceived project risk,reward power, and intra-project communication and two

endogenous variables- project performance and opportunism in the project dyad. The

structural model is tested using the data set of 258 samples. The fit indices of the baseline

model (χ2 /DF=2.357; CFI=0.80 TLI=0.78 GFI=0.77, AGFI=0.72, RMSEA=0.052). All

(hypotheses), structural relationships are supported. Figure 2 highlights the outcome of

structural relationships of the model.

Figure2: Structural relationships

The data analysis of structural model revealed that all seven hypotheses are supported.

Hypothesis H1, relating project risk with project performance is supported with path

coefficient 0.26 significant at 0.01. This implies the mutual understanding of project risk by

the client and contractor can better control the project performance in cost and time frame.

The awareness of project risk between the two parties could seek proper control and

monitoring project performance. Perceived project risk get rid of complacent behaviour of the

dyad and explicit relevance of the risk is notified to control the project performance. The

likely disputes are settled and negotiated in light of direct communication.

Hypothesis H2, relating project risk with opportunism is also supported with path coefficient

0.34 significant at 0.001.The positive coefficient suggest that perceived project risk gives rise

the opportunistic behaviour in the supply chain dyad. The ambiguity in contracts, project

Project risk

Reward

Power

Opportunism

Project

Performance

o.26

o.34 0.21

0.60 IPC

-0.26

-0.19






complexity, apprehension of delay in payment, lack of fulfilment of project milestones makes

room for opportunistic behaviour. This finding is consistent with theoretical support of

literature review.

Hypothesis H3, relating intra project communication with opportunism is also supported with

coefficient -0.26 significant at 0.01.The negative coefficient implies that intra project

communication reduces the opportunistic behaviour. Rather the scope of corrupt and

opportunistic behaviour is reduced with the prudent and open communication between the

project partners. The projects needs are explicitly addressed with faster decisions. These

findings are consistent with theoretical deductions.

Hypothesis H4, relating reward power with opportunism is also supported with coefficient

0.27 significant at 0.01. Surprisingly, this relationship is in opposite direction to the

theoretical deductions and reveals the new insight into modus operandi of the client-

contractor dyad. The use of reward power might make the dyad member more vulnerable to

opportunistic behaviour by the counterpart. This might hint at the informal rewards in the

form of personal favour or gift from either side in the dyad, can reveal the immediate

dependence of the partner.

Hypothesis H5, relating opportunism and project performance, is supported with coefficient

0.21 significant at 0.01. However, the finding is surprising as it point out that opportunism

increases project performance. This might be due to the fact that in order to achieve the

stringent project performance in cost and time frame along with safety and quality could

make way for corrupt and opportunistic practices in the construction supply chain.

Hypothesis H6, relating intra project communication with project performance, is supported

with high value of path coefficient at a high level of significance 0.001.This suggest the

strong correspondence between intra-project communication and project performance in the

construction supply chain. It has pragmatic relevance for practicing project managers to

extend communication in the client and contractor to augment the project performance. More

importantly, the communication mechanism is the single input control alone, which

significantly influences the project performance (output control).

Hypothesis H7, relating reward power to project performance, is supported with path

coefficient of -0.19 significant at 0.05. This result is also against the theoretical deduction, as

it reveals that the use of reward power reduces the project performance. The provision of

unexpected incentives on current project might shift the focus of project partner on other

major project business opportunity or other challenging project assignment. However, this

result is hard to explain under the extant theories. Path coefficients and significance level of

the hypotheses are summarized in table 2.






Table 2: Results of the study

Hypo. Hypothesized Relationship Path

coefficient

Result

H1 Perceived project risk negatively influences the

project performance.

0.26

(p<0.01)

Supported

H2 Perceived project risk positively influences

opportunism.

0.34

(p<0.001)

Supported

H3 Intra project communication negatively relates to

opportunsim

-.0.26

(p>0.01)

Supported

H4 Reward power negatively relates to opportunism 0.27

(p<0.01)

Supported

H5 Opportunism negatively influences the project

performance.

0.21

(p<0.01)

Supported

H6 Intra project communication positively relates to

project performance

0.60

(p<0.001)

Supported

H7 Reward power positively relates to project

performance

-0.19

(p<0.05)

Supported

DISCUSSION AND CONCLUSIONS

The analysis of results in the light of Organization control theory presents significant

important findings for managerial practice. As far as the role of input control is concerned in

construction supply chain interesting lessons are revealed. Project risks and rewards do not

correlate (0.08) and hence need to be considered as the two independent input control

mechanism in construction supply chain. Risk as well as rewards can cause opportunistic

behaviour in the supply chain. The result reflect on the direct effect of risk on project

performance is consistent with theoretical deduction, while the direct effect of reward power

on the project performance is not consistent with theoretical deductions and however,






indirect effect, tested via opportunism as a mediating variable is also significant. These

suggest that project risk as input control with effect of behaviour control of opportunism as

mediator influencing project performance. This input-behavior-output control reveals

complimentary mediation effects, which suggest that all control mechanisms works in

sequential manner in construction supply chain. On the other hand, Opportunism also support

as mediator with reward power as input control to influence the project performance.

However, this input-behavior-output control mechanism yield a competitive mediation as

direct effect of reward power on project performance is negative and via opportunism as

mediator as positive. Therefore project manager should carefully initiate reward power

mechanism in projects in the presence of likely opportunism.

Similarly, the effect of the third input control-Intra project communication via opportunism

as behaviour control on project performance revealed a competitive mediation. In competitive

mediation, one of the two paths (direct or indirect) is negative. Overall, it suggests that

opportunistic behaviour control is prominent in construction supply chain; however input

control of intra-project communication could strongly keep control on opportunism. Out of

three input control, only intra project communication strongly influences project

performance, while other input control mechanisms fall prey to opportunistic behaviour.

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APPENDIX:

Input control

Reward power

RW

P1

Our project partner offers incentives when we were

initially reluctant to cooperate with his new request

(new project).

0.79 4.64 1.63

RW

P2

We feel that going along with our project partner, we

will be favoured on other occasions.

0.74 4.76 1.53

RW

P3

Our project partners offer rewards so that we will go

along with their wishes.

0.81 4.28 1.77

Intra project communication

IPC

1

We are satisfied with the amount of information we

receive from our project partner.

0.61 4.93 1.36

IPC

2

We like the channels that we use to share information

from my project partners.

0.75 5.20 1.24






IPC

3

Informal communication amongst partners is usually

active

0.47 5.06 1.38

IPC

4

New information usually shared amongst project

partners in due time

0.72 5.14 1.29

IPC

5

We frequently communicate on the progress of our

project and project performance.

0.67 5.66 1.23

Sr.

No.

Project Risk Factor

loading

Mean Standard

deviation

RSK1. We perceive project complexity and ambiguity in

contract conditions as a risk in project business, with

a fear that our project partner can take advantage of

it.

0.56 4.77 1.46

RSK2. We perceive that Lack of clear communication and

understanding with project partner, will impend

more risk.

0.75 5.32 1.42

RSK3. We perceive that lack of transparency and

information sharing tendency by the project partner

as an impediment in faster project delivery.

0.66 5.09 1.48

RSK4. We perceive that lack of involvement of project

partner at early stage of our project, would carry the

risk of project getting delay.

0.66 5.27 1.39

RSK5. We perceive that Delay in claim processing and

payment in the event of project glitches, would

cause financial trouble to us.

0.77 5.36 1.32

RSK6 We perceive that the limited supplier support and

expertise in the later phase of the project (erection

and commissioning), would not help the cause of

faster project delivery.

0.57 5.10 1.40

Behavior Control






Sr.No. Opportunism Factor

loading

Mean Standard

deviation

O1 On occasion, this party lies about certain things in

order to protect their interest.

0.61 4.72 1.46

O2 This party sometimes promises to do things without

actually doing them latter

0.71 4.71 1.43

O3 This party sometimes tries to breach informal

agreements between our companies to maximize

their own benefit.

0.79 4.47 1.52

O4 This party will try to take advantages of holes in our

contracts to fulfil their own interests.

0.84 4.71 1.53

O5 This party sometimes uses unexpected events to

extract concessions from our firm

0.84 4.5 1.53

Output control

Sr.No. Project Performance Factor

loading

Mean Standard

deviation

PRF1 Due to our previous associations on earlier similar

projects, we are able to reduce the cost overrun.

0.82 5.36 1.34

PRF2 Due to our previous associations and understanding,

we are able to reduce the time overrun.

0.82 5.33 1.34

PRF3 Relationship Commitment of project partners helps

in meeting desired quality and safety standards in

our project.

0.68 5.61 1.19

PRF4 Good communication between project participants

helps to achieve the project goals.

0.64 5.99 1.17

PRF5 Relationship commitment of project partners helps

in meeting the expectations of the project.

0.53 5.5 1.32

PRF6 Frequency of disputes with project partners is

largely reduced due to the commitment of project

partners

0.60 5.6 1.21

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