Purpose of conducting this research is to identify the critical factors of contractual bargaining in the context of construction industry of Pakistan. The design of current study comprises of the review of literature, data collection and analysis. Data collection involves systematic review of the literature, discussion with experts who are well versed with the domain of the study. ISM is applied to recognize, arrange and develop interrelationships among the critical factors of contractual bargaining. In order to validate the findings of ISM, MICMAC is used which verified the ISM findings. MICMAC groups variables in one of four categories; independent, dependent, linkage or autonomous. According to hierarchy imposed through ISM, factors 1, 4, 7, 8, 9 and 13 occupy first level. Factors 10, 11, 12, 17, 19 and 20 occupy second level. Factors 5, 14, 15 and 18 occupy third level. Factors 2 and 6 occupy fourth level. Factor 3 (political risk) and 16 (lack of management control) occupy fifth and sixth level respectively. MICMAC analysis revealed that factors of 2, 3, 6 and 18 are independent variables. Factors 5, 10, 11, 12, 14, 15, 16, 17, 19 and 20 are linkage variables. Factors 1, 4, 7, 8, 9 and 13 are dependent variables and no factor found to be autonomous. Factor 16 (lack of management control) is the most critical factor. The study deals with critical factors of contractual bargaining that are necessary to consider at the time of contract design & negotiation. It intends to create fruitful insights for a wide variety of audience including contractors, project owners, project managers, volunteers, donors, society and economy at large. It distinguishes itself, as there is no such work available in literature that addresses the need of identifying elements necessary to be considered during contracts’ initial design, bargaining, execution, completion and enforcement. Further, it extends to build a structural model of identified factors and develops relationship in order to provide readers understanding about the cause-&-effect relationships among the factors. The results have implications for all the aforementioned stakeholders in construction projects and construction industry.
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