Enhancing infrastructure project outcomes through optimized contractual structures and long-term warranties

Abstract

Purpose This study delves into the influence of contractual frameworks on infrastructure project timelines and evaluates the role of long-term warranty agreements in maintenance efficacy. It underscores the correlation between construction contract structures and prevalent project delays, advocating for a revision in the allocation of responsibilities to mitigate such delays effectively. Design/methodology/approach While previous research has explored individual aspects of construction management, such as contractor incentives and risk allocation, our study uniquely integrates these elements to develop a comprehensive model that includes the effects of long-term warranty agreements and penalty clauses. Findings The findings advocate for contract revisions that entail clearly articulated responsibilities and thorough impact assessments, aimed at enhancing the efficiency of project execution and optimizing infrastructure investment returns. Concrete examples are provided from large-scale infrastructure and public works maintenance projects, illustrating the benefits of well-defined penalty clauses in curbing delays and ensuring sustained quality through long-term warranties. Our results demonstrate that optimized contractual structures can significantly reduce project delays and enhance maintenance effectiveness. Originality/value This study addresses significant gaps in understanding construction contract management dynamics, especially in transportation infrastructure. It rigorously analyzes how penalty clauses and long-term warranties impact contractor behavior and project outcomes. Key findings show that the benefits of long-term warranties, including social advantages, depend heavily on the strictness of penalty clauses. Innovatively, it employs a First-Price Sealed-Bid Auction framework with empirical data from various case studies, enhancing contract structure optimization for better stakeholder alignment and infrastructure integrity. These insights notably advance construction contract management methodologies.

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