Modeling relational transaction and relationship quality among team members in public projects in Hong Kong

• Theory of relational contracts was examined in the context of public projects.
• Parties in public project not found to be working in a truly arm's length manner.
• Relational contracting (RC) practices adopted relate to harmonization of conflicts.
• Other RC practices relate to preservation of relationships and fairness.
• Quantitative models to predict relationship quality were proposed.

Prior studies have found that relational contracting (RC) practices are helpful in nurturing good relationships among project team members. These empirical studies, however, did not differentiate by project type (i.e., public or private projects). In reality, the situation faced in public projects would be different from that of private projects since for example, some public sector participants may be indifferent to, concerned about or indeed opposed to, building close relationships with private sector counterparts. In the context of public construction projects, this study aims to develop models to explain the association between relationship quality and the extent to which RC practices are adopted. Data were collected via a questionnaire survey in Hong Kong, China. Using Multiple Linear Regression and Partial Least Square-Structural Equation Modeling (PLS-SEM), models for predicting the relationship quality among project team members were developed. The mathematical equations were validated by a case study. The models show that the relationship quality among project team members can be predicted by the extent to which these RC practices are implemented: (i) adoption of flexible strategies; (ii) readiness to compromise on unclear issues; (iii) willingness to commit on a long-term basis; (iv) attitude towards teamwork; (v) trust among team members; (vi) sharing of project information; (vii) understanding among team members; and (viii) alignment of the objectives of different parties. The models are recommended to public clients, consultants and contractors that aim to achieve good relationships in public projects.