Identifying and analyzing effects of interdependencies on construction contractor payment risks

Abstract

Literature suggests that interdependencies may expose construction contractors to payment risks. However, prior research has tended to assume a disconnected perspective, which ignores the interdependence effect. To bridge this gap, a network of incompatible practices was built using judgments from subject matter experts in payment dispute cases in Kenya. After that, social network analysis (SNA) techniques such as Eigenvector and Lambda partitioning were used to analyze it. Ten interdependencies that expose contractors to payment risk were identified. The interdependence between the payment upon verified performance and the failure to match the work done with the amounts paid initiates and transmits most of these risks. In line with the power-law principle, fewer than 20% initiate and transmit more than 80% of the risks. This study demonstrates how economizing strategies can influence the choice of practices, complement blockchain decentralization measures, and improve the analysis of payment dispute cases.