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Journal of Engineering, Project, and Production Management, 2020, 10(3), 162-169

 

Construction Contract Conversion: An Approach to Resolve Disputes

 

Ali Ali Shash1 and Salah Ibrahim Habash2

1Professor, Construction Engineering and Management Department, College of Environmental Design, King Fahd University of Petroleum & Minerals. Box 1627, Dhahran 31261, Saudi Arabia. E-mail: aashash@kfupm.eud.sa (corresponding author).
2
Research Assistant, Construction Engineering and Management Department, College of Environmental Design, King Fahd University of Petroleum & Minerals.

 

 

Project Management

 

Received December 12, 2019; received revision December 17, 2019; January 22, 2020; February 12, 2020; accepted February 27, 2020

 

Available online March 18, 2020

 

Abstract: A construction contract is a mechanism to bind a project owner and a contractor in a legal agreement to construct a project against a designated monitory consideration. However, projects are usually assembled over a long period with high uncertainty and complexity. Under such a dynamic business transaction, current static contracts fail to arrange for an appropriate and stable transaction. This paper reveals, through a questionnaire survey that was sent to all grade1 and 2 contractors and all owners in Riyadh-Saudi Arabia, the most common construction contracts in Saudi Arabia and the use, causes and benefits of contract conversion. The lump sum and the unit price are the most dominant type of contracts. Owners who select the former convert them during construction to unit price contracts leading to considerable benefits to contract parties including successful project completion with negligible disputes and better relationship. Owners are advised to include a clause in the construction contract to give them the privilege, not the obligation to convert the contract from one type to another.

 

Keywords: Contract, Saudi Arabia, conversion, construction, disputes.

Copyright © Association of Engineering, Project, and Production Management (EPPM-Association).

This work is licensed under a Creative Commons Attribution-NonCommercial-NoDerivs 3.0 Unported License.

Requests for reprints and permissions at eppm.journal@gmail.com.

Citation: Shash, A. A. and Habash, S. I. (2020). Construction Contract Conversion: An Approach to Resolve Disputes. Journal of Engineering, Project, and Production Management, 10(3), 162-169.

DOI: 10.2478/jeppm-2020-0018
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