A Framework for managing conflicts in joint venture contracts in infrastructure projects in Sri Lanka

Abstract

Construction Joint Venture (CJV) is one of the most commonly used mechanism in Sri Lankan construction industry, as a solution to bridge the gap created due to lack of technical, financial and managerial capacity of local contractors. CJVs are formed with various partners, whose processes, behavioural practices, goals and intentions are varied amongst themselves. Therefore, conflicts among the partners could occur, if not properly managed the CJVs. Hence, this aims to develop a framework for managing conflicts in Joint Venture Contracts in infrastructure projects in Sri Lanka through exploring the causes, root causes, and effects of conflicts of CJVs and proposing an approach for managing conflicts. Study on those causes and approaches were derived using four case studies, in which interviews were conducted using semi structured interview guideline with the participant from each partner of the CJV entity. CJV agreements were reviewed to study the management and operational procedure of the CJV entity. The collected data were analysed using cross case analysis, content analysis and root cause analysis techniques. According to research findings, it was revealed that the probability of occurring conflicts at the beginning stage is minimal due to less interaction between partners. In the formation stage, conflicts are frequently occurred due to disagreements on terms of CJV contracts, disagreements within CJV management structure and disagreements on division of profit and loss. In the operational stage, when the interactions between parties are high, there is a high possibility to occur conflicts. Deficiency on contract terms; and disagreement on working culture, performance and providing resources; are the common causes for occurring conflicts at operation stage. Selecting an appropriate partner and; understanding and aligning objectives of all partners at the beginning stage are important for proper execution of CJV entity. Enter into proper agreement and, proper design of CJV administration structure is important proactive management approaches to practice at formation stage. Having progress meetings and open discussions are the most productive conflict management measures to practice in operation stage. Negotiation is the most common reactive conflict management approach parties practiced on formation and operation stage. The study finally developed a framework to manage conflicts in CJVs, indicating the causes for conflicts and; reactive and proactive conflict management approaches to be followed in beginning, formation and operation stage of CJV life cycle. The proposed framework would be helpful for industry practitioners to identify causes, root causes, and select suitable approach for managing conflicts in future CJV projects in Sri Lanka.