Chapter 7: Psychological Contracts in Construction: Two Case Studies
A major contributing factor to the inefficiency in the construction industry is the adversarial relationships that exist within the industry. The strategic importance of relationship style contracting is hence getting recognized. Both public and private sector clients are stipulating more integrated and collaborative forms of procurement. The avoidance of traditional business-as-usual thinking and effective participation in relationship development have the potential to significantly enhance project outcomes. This chapter is limited to non-contractual agreement and behaviours, which are not defined in the contractual documents. Because contracting parties can practice to a different extent according to their will, non-contractual agreements and behaviours can better demonstrate the shared perceptions regarding practices that affect relationships in construction projects. This chapter adopts the concept of psychological contract (PC), which is defined as “individual beliefs in reciprocal obligations between employees and employers” and, refers to unwritten agreements and behaviours between a construction firm and its upstream or downstream procurement partners. This paper aims to investigate the impacts of contracting parties’ relationships arising from PC in two distinct procurement systems, including the upgrading project of Beijing Subway Lines 1 and 2 and the improvement project of Fuk Man Road Nullah in Sai Kung, Hong Kong. The Beijing project was procured traditionally while the Hong Kong project adopted the Engineering and Construction Contract (ECC) Option C of New Engineering Contract (i.e. a collaborative contracting approach). Regardless of the procurement methods, findings suggest PCs are present in construction delivery teams.