Incentivizing Relationship Investment for Project Performance Improvement

Abstract

Collaboration between developers and contractors is pivotal to the efficient completion of construction projects. Relational contracting practice has been used to promote working partnerships. Construction incentivization can be a valuable contractual tool to build relationships. This study proposes that incentivization can serve as an instrumental means to forge interorganizational relationships and corresponding project performance improvements. With data collected from experienced construction professionals, the hypotheses are empirically supported by structural equation modeling. It is therefore concluded that in addition to its conventional uses, incentivization can be innovatively designed to develop and manage interorganizational relationships and engender project performance improvement.