Why Contracts Fail: Financial Risk Factors in Urban Pedestrian Bridge Construction in Indonesia

Contract termination in public infrastructure projects reflects a failure not only in performance but also in early risk management. This study investigates the dominant risk factors that led to the contract termination of two pedestrian bridge (JPO) construction projects in Jakarta, Indonesia: the North-East Jakarta bridges. Adopting a qualitative case study approach, the research applies the risk management framework of ISO 31000:2018, integrating Ishikawa diagrams and the Probability Impact Matrix (PIM) to identify, validate, and analyze critical risks. Data were collected through literature review, field interviews, and structured questionnaires with key stakeholders, including project owners, contractors, and consultants. A total of 60 risk variables were initially identified, of which 24 were validated by experts. The PIM analysis revealed that three risk factors—irregular payment for materials, poor financial management, and insufficient execution funds—fell within the high-risk zone. All three were categorized under financial risk, highlighting the central role of financial preparedness in project continuity. These findings are consistent with prior studies emphasizing finance as a recurrent cause of project underperformance. Response strategies were formulated through expert consultation and include strengthening contract clauses related to payment, improving contractors’ financial evaluation during tendering, and deploying financial management systems on-site. The study offers practical recommendations for public agencies and contractors to mitigate financial risks and reduce the likelihood of contract termination in future projects. It also contributes to the growing body of knowledge on risk management in public construction projects in emerging economies