Research On The Incentives Failure Of Flexible Contract Price In Construction Project

In the research field of construction project governance and management,it has been the key topic to improve the project management performance by motivating the contractors.And,the positive effect of flexible contract price in the improvement of contractor’s behavior has attracted wide attention and has been supported by lots of literatures.The mechanism is that,risk allocation and performance reward and punishment which inject flexibility into the contract price can guarantee the contractor to obtain reasonable economic returns and promote the incentive compatibility between the contracting parties.Therefore,it stabilizes the path of continuous improvement of project management performance.However,in practice,there is the prevalent phenomenon which is quite contradictory to the theory,shown as the incentives failure of flexible contract price.Not only the flexible contract price fails to win the contractor’s "reciprocate" in some projects,but also incurred by the contractor’s "treachery" negative reciprocity behavior.The gap between theory and practice implies the deficiency of existing research.To be specific,the most existing studies demonstrated the positive effect of flexible contract price with the underlying assumption of contract completeness,and ignored the adverse effect of the conflict of payment adjustment on the contractor’s behavior.The theory of contract reference point points out that a contract which does not anchor the transaction price would causes contract reference point effect of one contracting party,then the part of performance could be shaded.This theory provides a new theoretical perspective to explain the incentives failure of flexible contract price.However,to reveal the mechanism of incentive failure of flexible contract price and explore specific solutions,the existing researches need to be expanded from the following aspects.At first,the existing method of measurement for the flexible contract price should be improved to realize the quantitative description of this variable.Second,the research perspective should be further expanded,the positive and negative effects of flexible contract price should be integrated to find the differentiation conditions.At last,on the basis of clarifying the influence mechanism of the flexible contract price on the contractor’s behavior,specific factors to improve the efficiency of payment adjustment should be explored further.In accordance with the above research topics,the dissertation carried out the following research works:Research preparation: research design.Based on the structural equation model method,the research scheme adopted in this study was given.First,clarified the theoretical basis of this study and provided the theoretical support for the conversion from the research questions into the structural model.Second,in order to translate the research questions into a structural equation model which can be tested empirically,this study reviewed the related research literatures on the similar issues and clarified the basic model structure.Third,based on the basic model structure,further determined the types of independent,dependent,mediating,and moderating variables through the literature review and completed the transformation from research questions into the structural models.Fourth,based on the objective and scientific principle,and combining with the characteristic of the research questions,data collection scheme was designed.At last,according to the characteristic of the structural model abstracted from the research questions,the study selected the method of hypothesis testing model fitting.Research content 1: theoretical model construction.Based on the theoretical model structure given in the research design,this part abstracted the research questions into theoretical model to be tested empirically throuth the literature review and theoretical deduction.There were two main hypotheses in the theoretical model.First,from the functional perspective of flexible contract price and the implementation perspective of payment adjustment,the hypothesis of the price of flexible contract improving and worsening the contractor’s performance behavior were given.Second,based on project governance theory and literature on the governance mechanism of trust,the hypothesis of trust regulating the relationship between flexible contract price and contractor’s behavior were given.Research content 2: variable data collection.This section focused on two main topics.First,this study researched the theoretical basis of the trading prices interval of flexible contract price,and based on that,used grounded theory to abstract the factors which affecting the trading prices interval of the construction project.And then,learning from mathematical model researches in supply chain and other fields,the concrete measure method was given.Second,By referring to the items in the existing questionnaire in domestic and overseas and combining with the characteristic of this study,the questionnaire of dependent variables,mediating variables and moderating variables involved in the structural model are developed.Based on the data collection scheme given in the research design,213 valid sample data from construction projects are obtained.Research content 3: theoretical model test.Mplus7.4 was used to test the theoretical hypothesis model.First,this study used the methods which can be used to deal with competitive mediation to test the mechanism and distinguishing conditions which flexible contract price improves or worsens contractor’s behavior.Second,the latent moderate structural equations was used to test the moderating effect of the trust between the flexible contract price and contractor’s behavior.Test results indicated that there simultaneously are positive and negative paths between flexible contract price and contractor’s behavior,and the distinction condition is the mediating effect of payments adjustment conflict.In addition,trust negatively moderates the positive relationship between flexible contract price and payments adjustment conflict.And,trust negatively moderates the indirect effect of flexible contract price on contractor’s behavior via payments adjustment conflict.The contributions of this study lies in the following three aspects: First,the study expanded the research perspective of the relationship between flexible contract price and contractor’s behavior.Different from previous studies,this study relaxed the underlying assumptions of complete contract,by integrating the paradigm of principal-agent and contract reference point and using trading prices interval as the independent variable to describe the flexible contract price.Meanwhile,introduced payment adjustment conflicts to reflect the implementation of the payments adjustment and the precondition triggering the contractor contract reference point effect.And built a competitive mediation model in which the direct and indirect effects are quiet opposite between flexible contract price and contractor’s behavior in order to reveal the effect of flexible contract price on contractor’s behavior from a more dialectical perspective.At the same time,this study provided enlightenment for solving the similar problem of double-edged sword effect.Second,the relationship between trust and flexible contract price was further revealed.This study explored the moderating effect of trust between flexible contract price and contractor’s behavior under the assumption of contract incompleteness.On one side,it further verified the importance of trust in the decision-making process of flexible contract price by the employer.On the other side,this study explained the cracking effect of the trust in the incentives failure of flexible contract price.Finally,based on the above findings,this study proposed enlightenment for developing proper flexible contract price,improving the payment adjustment clause and scientifically setting up the evaluation index of contractor’s trustworthy degree.It is expected to realize the incentive function of flexible contract price and promote the efficiency and uncertainty of construction project.