Modelling contractor's and subcontractor's trust : a system dynamics approach

A general mistrust within the contactor and subcontractor companies has identified one of the significant barriers to derive benefits from true downstream supply chain integration. Using the general theory of trust in inter-organizational relations and conducting interviews, this research discusses factors that influence development of trust and cooperation in contractor– subcontractor relationships in construction projects. System dynamics is the simulation method is selected in this theory-building effort, based on qualitative data collected from two projects of a construction company in Thailand. Performance, permeability and system based trust are found to make significant contributions toward parties’ trust level. Three strategic policies such as best value contracting, management of subcontractors as internal team and semi project partnering approach are recommended to stimulate the trust factors as well as cooperative long term relationship.