Application of transaction cost economics within the facilities and construction industry to improve project outcomes: a case study approach

This thesis draws on industry experience and academic literature to highlight several problems facing the construction and facility management industries. These problems include issues with product delivery performance and financial failures that often lead firms to spend much more than anticipated, while obtaining much less of a product. Transaction-cost economics theory and literature are presented as a model for understanding, predicting, and preventing these problems. Transaction-cost economics suggests that specificity and uncertainty, two key characteristics of industry transactions, are improperly aligned with governance structures, leading to preventable failures. This thesis highlights several case studies in which these failures occur and argues that the correct application of this theory can mitigate many of these problems. A final case study illustrates how this alignment can make a difference in outcome without a compromise of quality.