Conflicts in construction projects are closely associated with project delays. Inter-firm conflict can emerge at various stages, from tendering to project delivery. This study focuses on the early stages of project development and examines how inter-firm conflict contributes to project delay in Malaysian construction projects. Twenty semi-structured interviews with experienced industry practitioners were analyzed using Reflexive Thematic Analysis. This paper presents empirical findings on how low-price bidding triggers inter-firm conflict and subsequent project delay in construction projects. Transaction Cost Economics (TCE) was used to explain inter-firm conflict arising from low-price bidding and uses the UK Green Book’s principles as a policy reference. In Malaysia’s public construction project, procurement still relies mainly on low -price bidding, which is a market-based governance structure. Under conditions of bounded rationality and uncertainty, consultants, clients and contractors cannot anticipate all project risks, creating opportunities for opportunistic behavior such as underbidding and subsequent cost recovery through claims. In contrast to the UK Green Book’s approach, the Malaysian procurement system continues to prioritize low-price bidding, overlooking the long-term transaction costs that emerge during project delivery. In public construction projects, transactions are complex and not suitable for pure market governance. These effects generate high transaction costs associated with renegotiation, monitoring, and eroding trust between firms. These costs give rise to inter-firm conflict between contracted parties, which ultimately contributes to project delay.