Preventing Contract Termination Pitfalls in Construction Projects: Insights from the Ghanaian Construction Industry

<i>Purpose</i>: Premature termination of construction contracts is a recurring problem that causes financial losses, delays, and strained stakeholder relationships. However, there is limited research on the specific causes of contract termination, particularly in Ghana, and practical solutions to prevent it are often overlooked. This study aims to investigate the pitfalls of contract termination in the construction industry and to propose effective prevention strategies based on empirical data. <i>Design/Methodology/Approach</i>: A quantitative research approach was adopted, employing a combination of purposive and random sampling techniques to gather data from 315 participants representing diverse roles within the construction sector. A structured questionnaire based on contract termination pitfalls was used, and data analysis involved descriptive statistics, factor analysis, and structural equation modeling (SEM) techniques. <i>Findings</i>: The study identified several critical factors influencing contract termination, including prompt payment by clients, adherence to contractual terms, competent supervision, and effective dispute resolution mechanisms. Through factor analysis and SEM, two main constructs emerged: Proactive Contract Management Strategies (PCMS) and Contract Termination Risk Mitigation Measures (CTRMM), each comprising specific indicators crucial for preventing terminations. <i>Originality/value</i>: This research contributes to the existing literature by providing empirical evidence of contract termination pitfalls and effective prevention strategies within the construction industry. The study’s multidimensional analysis approach, integrating quantitative techniques with Structural Equation Modelling (SEM), enhances the understanding of complex contractual dynamics and risk management in construction projects. <i>Implications</i>: The findings have practical implications for construction stakeholders, project managers, and policymakers. Implementing proactive contract management strategies such as clear payment protocols, rigorous quality control, and effective communication channels can significantly reduce contract termination risks. The study underscores the importance of integrating legal frameworks, innovative techniques, and managerial approaches in contract portfolios to enhance contract performance and project success in the construction sector.