Development of Contract Management Strategy to Control Late Payment in Building Projects

Irwan Yunianto, Ayomi Dita Rarasati

Abstract


Building projects with private ownerss have high level of payment issues (late payment, underpayment, or non-payment). The purpose of this study is to develop a risk-based contract management strategy to avoid late payment from private ownerss to contractors. The research data consisted of literature reviews, questionnaires, and qualitative risk data analyses. The risk analyses identified 10 highest risks as the dominant risk factors from 37 risk variables. The risk response to dominant risk variables was used as a strategy for developing a contract management system. Risks affecting late payment were largely due to contractual clause and contracting clients with less financial capacity due to lack of analysis in the pre-contract phase.

Full Text:

PDF

References


Abdulrahman, H., Kho, M., & Wang, C (2014). Late payment and non payment encountered by contracting firms in a fast developing economy. Journal of Professional Issues in Engineering and Practice, 140(2), 04013013

Acharya, N. K., Lee, Y. D., & Im, H. M. (2006). Conflicting factors in construction projects: Korean perspective. Journal of Engineering, Construction and Architectural Management, 13(6)

Andalib, R., Hoseini, A., & Gatmiri, B. (2018). A Stochastic model of cash flow forecasting considering delays in owners’ payment. Journal of Construction Management and Economic, 36(10), 545 -564.

Ansah, S. (2011). Causes and effects of delayed payments by clients on construction projects in Ghana. Journal of Construction Project Management and Innovation, 1(1), 27-45.

Azman, M. N. A., Dzulkalnine, N., Hamid, Z. A., & Bing, K. W. (2014). Payment issue in Malaysian construction industry: Contractors’ perspective. Jurnal Teknology (Science & Engineering), 70(1), 57-63.

Barrie, D. S., & Paulson, B. C. (1992). Professional construction management. New York: McGraw-Hill.

Hasmori, M., Ismail, I., & Said, I. (2012). Issues of late and non-payment among contractors in Malaysia. Proceedings of the 3rd International Conference on Business and Economic Research, Bandung-Indonesia, 2-13.

Heron, R., & Lie, E. (2002). Operating performance and the method of payment in takeovers Journal of Financial and Quantitative Analysis, 37(1), 37-155.

Hansen, S. (2005). Manajemen kontrak konstruksi: Pedoman praktis dalam mengelola kontrak konstruksi. Jakarta: Gramedia Pustaka Utama.

Hwee, N. G., & Tiong, R. L. (2002). Model on cash flow forecasting and risk analysis for contracting firms. International Journal of Project Management, 20(5), 351-363.

Liu, S. S., & Wang, C. J. (2008). Resource-constrained construction project scheduling model for profit maximation considering cash flow. Automation in Construction, 17(8), 966-974.

Mbachu, J. (2011). Sources of contractor’s payment risk and cash flow problem in the New Zealand construction industry: Project team perception of the risk and mitigation measures. Journal of Construction Management and Economic, 29(10), 1027-1041.

Mohamad, N., Suman, A. S., Harun, H., & Hashim, H. (2018). Mitigating delay and non payment in the Malaysian construction industry. Paper presented at the IOP Conference Series: Earth and Environmental Science, Volume 117, 3rd International Conference on Research Methodology for Built Environment and Engineering 2017 8–9 November 2017, Shah Alam, Selangor, Malaysia.

Park, S. H., & Kim, Y. S. (2017). An assesment of contract management capabilities for overseas construction project. KSCE Journal of Civil Engineering, 22(7), 2147-2158.

Peters, E., Subar, K., & Martin, H. (2019). Late payment and nonpayment within the construction industry: Causes, effect and solution. Journal of Legal Affairs and Dispute Resolution in Engineering and Construction, 11(3), 04519013.

Project Management Institute. (2017). A guide to the project management body of knowledge (PMBOK guide) (6th ed.). Pennsylvania: Project Management Institute, Inc.

Ramachandra, T., & Rotimi, J. O. (2015). Causes of payment problems in the New Zealand construction industry. Journal of Economic and Building, 15(1), 43-55.

Reeves, K. (2003). Pay up. JUBM Construction News and Views, 1(4), 4-6.

Wang. D., Hadavi, A., & Krizek, R. J. (2006). Chinese construction firms in reform. Journal Construction Management and Economics, 24(5), 509-519.

Wu, J., Kumaraswamy, M. M., & Soo, G. (2011). Regulative measures addressing payment problems in the construction industry: A calculative understanding of their potential outcomes based on gametric models. Journal of Construction Engineering and Management, 137(8), 566-573.

Van Weele, A (2013). International contracting: Contract management in complex construction project. London: Imperial College Press.




DOI: https://doi.org/10.32535/jicp.v3i4.1005

Refbacks

  • There are currently no refbacks.


Copyright (c) 2021 Irwan Yunianto, Ayomi Dita Rarasati

Creative Commons License
This work is licensed under a Creative Commons Attribution-NonCommercial-ShareAlike 4.0 International License.

Flag Counter

Published by:

AIBPM Publisher

Editorial Office:

JL. Kahuripan No. 9 Hotel Sahid Montana, Malang, Indonesia
Phone:+62 341 366222
Email: journal.jicp@gmail.com
Website:http://ejournal.aibpmjournals.com/index.php/JICP

Supported by: Association of International Business & Professional Management

If you are interested to get the journal subscription you can contact us at admin@aibpm.org.

ISSN 2622-0989 (Print)
ISSN 2621-993X (Online)

DOI:Prefix 10.32535 by CrossREF

Journal of International Conference Proceedings (JICP) INDEXED:

 

In Process


This work is licensed under a Creative Commons Attribution-NonCommercial-ShareAlike 4.0 International License.