Post-Contract Transaction Costs: A Waste Minimization Perspective of the Nigerian Construction Industry

Abstract

This paper examines and distinguishes the stem causes of post-contract TCs borne by both the parties in a project in the Nigerian construction industry. Questionnaires were administered to contractors in the construction industry. The factors that affect TCs were analyzed from the clients and contractor’s perspective. Statistical analyses were performed to identify the transaction expenses incurred in the course of the post-contract phases of a project relative to the public sector using Design-Build (D&B) project delivery systems. The findings indicate that the percentage rate of PTCs for D&B projects in Nigeria is 9%. Interestingly, change orders, contractor opportunistic behavior, quality of communication and material substitution were ranked high as the core roots of PTCs for D&B projects in Nigerian construction industry. The primary contribution of this paper is to explore waste from construction projects with the aim of minimizing them to optimize project performance in the Nigerian construction industry. The uncertainties for environment addressed in this study are not wholly explored. Hence, the need deeply explore the attribute of environmental uncertainties on TCs.

Keywords: Post-Contract Transaction Costs (PTCs), Benefits Maximization, Project Performance