Principal Components of Final Accounts Closing Disputes in the Malaysian Construction Industry

Abstract

Disputes in the closing of the final accounts have long been an issue in the Malaysian construction industry, leading to negative impacts on the reputation of construction projects and financial strains on contracting parties. This study aims to identify the critical factors that establish the principal component for disputes in closing final accounts. A comprehensive literature review identified various related factors contributing to disputes in the closing of the final accounts. Consequently, quantitative data were collected through a questionnaire survey to include the perspectives of construction industry professionals on the identified factors. A total of 257 responses were collected. Subsequently, Exploratory Factor Analysis (EFA) was utilised for dimension reduction, and five principal components were revealed and discussed. These components include the evaluation process, contractual management, project team incompetencies, professional ethics, and unforeseen events. Notably, identifying these critical factors and principal components provides valuable insights for construction stakeholders to understand the root causes of disputes and take proactive measures to prevent them before disputes occur. This study’s findings contribute to the existing knowledge on final accounts closing disputes in the Malaysian construction industry. They can serve as a reference for stakeholders to improve the closing process of final accounts and to reduce disputes.