Project alliances in the Australian construction industry - transaction attributes and costs

Previous alliancing research has largely neglected the contracting parties' relationship-specific investments on alliances, alliancing project characteristics, and their impacts on the costs of running alliances. Drawing upon the Transaction Cost Economics (TCE), this paper seeks to address this issue by directly measuring and examining the relationship between transaction attributes and transaction costs in project alliances. Survey results based on 88 alliancing projects in Australia show that uncertainty, project value and asset specificity increase the costs and efforts associated with establishing and managing project alliances. Uncertainty also increases the costs and efforts associated with dealing with problems that might arise during alliance relationship. The results also indicate that transaction costs in project alliances are moderate. The findings provide empirical evidence in support of the TCE's prediction regarding the influence of transaction attributes on transaction costs with reference to the Australian construction industry.