Identifying, analyzing, and managing challenges in administering construction contracts of large public projects in Bhutan

Abstract

Construction projects encompass three major phases: pre-construction, construction, and post-construction. Although various problems are inevitable in every phase, most of them occur during construction and can be mitigated by adopting a good construction contract for project management. A construction contract is a formal agreement between the project owner and the construction contractor. An important contract document is the conditions of contract (COC), which encompass the rules and regulations for administering the contract. In Bhutan, all public construction projects are mandated to follow the Bhutan Standard Bidding Documents for Procurement of Works 2019 and the form of General Conditions of Contract (GCC). Both documents are considered the nation’s standard form of construction contract. Although these documents are updated regularly, implementing them in construction projects is often faced with various challenges. This research identifies major challenges associated with contract administration in the public projects in Bhutan. To identify these challenges, we conducted an in-depth interview with a group of local procurement professionals, government engineers, and contractors. Among the 26 factors contributing to the challenges identified from the interview, it was found that 15 factors were associated with the challenges in contract administration of the large public projects in Bhutan. These factors were further analyzed to determine the priority level using a likelihood of occurrence and time/cost impact matrix. We then proposed the recommendations to address the challenges caused by these factors by considering the standard form of construction contract by the International Federation of Consulting Engineers (FIDIC) and the experts' opinions. The identified challenges and the proposed recommendations can help the relevant authorities make rational decisions and enhance the efficiency of the existing standard form of construction contract in Bhutan.