| Sažetak (engleski) | EXTENDED SUMMARY
This doctoral thesis explores the risks associated with the lack of information exchange among key stakeholders in construction projects. In previous research, these risks have been identified as significant for construction projects and yet not adequately managed. Information asymmetry is the asymmetry in possessing information crucial for achieving project objectives. It represents a situation where participants in such relationships do not share information with other parties. The concept of information asymmetry stems from the principal-agent theory, which describes a relationship in which one party, the principal, engages another party, the agent, to perform a task on its behalf. According to the simplest model of principal-agent theory in construction, the client is the principal, and the contractor is the agent tasked with constructing a specific building for the client. Likewise, the contractor can be the principal, and subcontractors are their agents. Such an agency relationship is characterized by information asymmetry between the principal and the agent, differing risk preferences, and a desire to maximize self-interest. This type of relationship often results in opportunistic behaviour by project participants.
The goal of this doctoral thesis is to identify and classify risks caused by information asymmetry in construction projects and to propose mitigation measures. The value of research is manifested in the improvement of the risk management process in construction projects, both in a scientific and practical sense, in order to enable the achievement of project goals.
In line with the recognized shortcomings of previous research on information asymmetry in construction projects, the objectives of this doctoral thesis are:
1. Identify risks caused by information asymmetry in construction projects.
2. Classify the identified risks according to categories of information asymmetry and define key risks.
3. Define a framework for managing risks caused by information asymmetry, verify and validate the proposed framework in construction projects.
The hypothesis of this research is:
Identification and classification of key risks caused by information asymmetry and proposing mitigation measures will significantly enhance risk management in construction projects, thereby enabling successful achievement of project objectives.
The research methodology can be divided into four main phases. The first phase of the research consists of a literature review. Familiarization with the research topic begins with a review of risk management areas. In this part, the terminology related to the risk management process was explored. Various methods that can be used for risk analysis were also investigated, with particular attention given to multi-criteria methods that enable prioritization of risks. Reviewing multiple methods allowed the selection of the most applicable one for further research steps. The second part of the literature review includes a systematic literature review analysing previous research on information asymmetry in construction projects. The method of content analysis was applied to the collected scientific publications. In the second phase of the research, semi-structured interviews were conducted with experts who possess notable experience in large and complex construction projects. In the third phase of the research, a framework for managing risks caused by information asymmetry in construction projects was defined. The framework was further complemented by a survey, the results of which were processed using a multi-criteria method. In the fourth phase of the research, the proposed framework for managing risks caused by information asymmetry in construction projects was verified, and its application in practice was validated. Verification was carried through a questionnaire. The opinions of experts with relevant experience in construction were examined. Validation was enabled by applying the framework for managing risks caused by information asymmetry in two large infrastructure projects as two case studies. After analysing the application of the framework, conclusions and further recommendations were made for its use in managing risks caused by information asymmetry and reducing their negative impact on the goals of the construction project.
The literature review on risk management described the terminology underlying the concept of risk. It was found that various interpretations of terms related to risk are available from different sources, and even the concept of risk itself has different interpretations. Therefore, this thesis presents various interpretations of risk and other related terms. Based on this, conclusions were drawn regarding the main elements of risk, i.e., the elements that need to be understood in order to manage risks. Additionally, the risk management process in construction projects was described. The evolution of this process with advancements in scientific understanding of decision-making under uncertainty was explored. Furthermore, an overview of existing methods and tools for risk identification and analysis was provided. The methods most commonly mentioned in construction research were described and analysed from the simplest to the most complex. The choice of the most applicable method for risk analysis depends on various factors such as project size, data and resource availability, analyst knowledge and skills, and the required representation of results. Therefore, practitioners who may use these methods in construction projects are given the choice to select the most applicable one for their specific case.
Moreover, the application of the risk management process in construction projects was investigated. Various perspectives on risk categories in construction projects were discussed, and the need for further research into risks arising from the lack of information among participants in construction projects was identified.
Furthermore, this thesis explored the theoretical background of risks associated with the lack of information among participants in construction projects. The scientific development of information asymmetry was described, and the scientists who first addressed it and received the Nobel Prize for their work in the field of behavioural economics were highlighted. The main three categories of risks caused by information asymmetry were described and classified according to the possible timing of occurrence (before and after the signing of a contract between two contractual parties). Information asymmetry was then contextualized in the context of construction projects. The implications of information asymmetry on the relationship between clients and contractors, as key participants in the construction phase, were emphasized. The first step towards identifying risks caused by information asymmetry between clients and contractors in construction projects involved a systematic review of existing scientific literature on this topic. The results of this research are presented in the thesis in the form of a list of identified risks caused by information asymmetry between clients and contractors, their consequences, and mitigation measures. In addition to risk identification, these risks were also classified into three categories of information asymmetry.
The research continued with interviewing experts who have significant experience in construction projects. The results include expert comments on the identified lists of risks, consequences, and mitigation measures that emerged from the literature review. Based on the interview results, final lists of key risks caused by information asymmetry in construction projects were defined. These defined risks were divided into three categories of information asymmetry. In addition to risks, based on the interview results, a final list of key consequences, as well as a list of key mitigation measures, were defined.
Based on the systematic literature review and interviews with experts, the structure of the framework was defined. The framework consists of key risks, consequences, and mitigation measures. To determine which of these risks are most significant, a survey was conducted among experts with experience in the construction phase of construction projects. The purpose of the questionnaire was to enable group decision-making on the most significant risks and the most useful mitigation measures in construction projects. The results of the survey were presented in the form of priority lists of risks, consequences, and mitigation measures.
The main results of the survey research can be summarized as follows:
• Before the signing of contract between the client and the contractor, the greatest risks are related to the poor/inadequate tender documentation, manipulative low bids, and the lack of information on financial stability of the contractor.
• After the signing of contract between the client and the contractor, the greatest risks arise due to the lack of information about subsequent changes in the project, lack of trust, lack of documentation at the construction site, delays in decision-making by the client, delays in payments, and lack of information about the contractor's real costs.
• The most significant consequences of risks caused by information asymmetry can impact the relationships and cause the termination of contract between the client and the contractor, as well as the exceeded budget and extended project deadline.
• The most useful mitigation measures for risks caused by information asymmetry include: building trust, regular supervision and monitoring of work, thorough vetting of bidders, and fair distribution of risks between the client and the contractor.
The discussion contextualizes the results of the survey within the reviewed literature on information asymmetry and the practical experience of experts who participated in interviews in the previous phase of the research. Furthermore, guidelines for managing risks caused by information asymmetry were provided. For this purpose, a template was created in Microsoft Excel. The template enables the application of the defined framework in construction projects and facilitates the identification, analysis, and mitigation of risks caused by information asymmetry.
Finally, verification and validation of the framework defined in this research were conducted. Verification and validation are important steps in verifying whether a product, service, or system meets its specifications and purpose. Therefore, the framework was verified by conducting an independent survey to determine whether the specified requirements for its design were met. Validation, on the other hand, confirms that the framework meets user needs and that its application in practice is enabled. This was tested in two large infrastructure projects.
The scientific contribution of this research is recognised through the following three key points:
1. Identification of risks caused by information asymmetry in construction projects.
2. Classification of risks according to categories of information asymmetry, defined by principal-agent theory.
3. Development of a framework for managing risks caused by information asymmetry in construction projects.
Through a systematic review of global scientific literature and interviews with experienced construction professionals, 20 key risks caused by information asymmetry between clients and contractors in construction projects were successfully identified. The use of scientific methods for identifying these risks enabled comprehensive recognition and description of these 20 key risks, as well as the contexts in which they occur. Identifying these risks represents an enhancement of the risk management field in construction projects, as it brings a new dimension to risks associated with the lack of information among construction stakeholders. Such risks have previously been classified as communication and/or human-related, but research describing their nature, context of occurrence, and mitigation measures has been lacking.
Furthermore, the identified risks were contextualized within principal-agent theory and classified into three theoretical categories of information asymmetry. This research step demonstrated that all recognized risks are linked to theoretical assumptions. Additionally, it enabled the classification of risks based on the timing of their occurrence (before or after the signing of contract between clients and contractors), enhancing understanding of their nature and context of occurrence.
Another contribution of this research is the development of a framework for managing these risks in construction projects. The framework encompasses all essential elements for understanding risks and their mitigation: the 20 identified key risks, their 7 key consequences, and 15 possible mitigation measures. Survey research also identified connexions between risks and their consequences, as well as the most useful mitigation measures for each risk
group. An important conclusion of this research is that it is not possible to determine a definitive list of risk priorities, consequences, and measures for any type of project and for all stakeholders. Therefore, survey research identified risk priorities, consequences, and mitigation measures in four separate groups: public project clients, public project contractors, private project clients, and private project contractors. The defined priority lists also represent an important contribution, both scientifically and practically.
In conclusion, this research has established a framework that can be used to improve the risk management process in construction projects and thereby achieve project goals more effectively. The results of this research will enhance risk management practices in projects because communication risks, or risks caused by information asymmetry, can be identified in the early stages of the project, thereby increasing the possibility of influencing these risks and mitigating them. |
