Cost-Trust Relationship

The optimum or least project cost point on the cost-trust curve is defined as “rational” trust. It represents the highest level of mutually verifiable trust between the parties. Beyond the point of rational trust the relationship enters into the "blind trust" area.

The level of mutual trust that exists between two contracting parties can be measured through Trust Indicators. These represent areas of activity in the contracting process where a trusting behavior between the parties can be observed and is important in achieving project objectives.

The research has identified a total of 15 major trust indicators that can be observed at different stages of the engineering, procurement, and construction of a project. The level of trust observed for each trust indicator is evaluated independently of the others. The aggregate of trust observed in all trust indicators determined the overall level of mutual trust for the project. A sampling of the Trust Indicators are listed here. Refer to RS24-1 for a complete list.

The cost and trust of two hundred and sixty-two projects were analyzed. The resulting curve statistically documents the intuitive notion of the relationship between cost and trust. The shape of the curve indicates that within the range of trust level observed in the projects obtained from the survey, an increased level of trust between parties leads to project cost benefits.

The research lists 18 cost factors affected by the level of project trust. A sampling are listed here. Refer to RS24-1 for the complete listing:

• Project Team Efficiency
• Timing of Decisions
• Timing of Approvals
• Amount of Rework
• Administrative Costs
• Field Supervision