Critical Factors Influencing Early Contract Termination in Public Design–Build Projects in Developing and Emerging Economies

Abstract

Public projects continually face multiple difficulties for their satisfactory completion. One of the most complex challenges is early contract termination (ECT), which delays social goods delivery and exhausts public resources. This study aimed to determine the root causes of the critical factors that lead to ECT in public building projects. We studied 20 kindergarten construction projects in Chile through a multi-case study. It addressed a pattern-matching analysis of symptoms associated with risks of design–build (DB) contracts and a five whys analysis to determine the root causes of the symptoms identified in the units of analysis. The results show that ECT projects’ most common symptoms are labor force shortage, materials shortage, and non-payment claims. In addition, the root-cause analysis exposed that the main causes of ECT’s symptoms were deficiencies in the bidding evaluation process, which led to an inadequate selection of the general contractor, lack of experience of the owner, and regulatory limitations of the legal framework for public projects. The construction projects faced ECT and cost and time overruns associated with poor risk management due to the owner’s and general contractor’s lack of experience in DB contracts.

Keywords

• early contract termination
• DB contracts
• risk management