Design And Modeling Of The Contractors'Incentive Mechanism Based On The Cost Control Of The Owners

Large and complex engineering projects is a complex giant system with large span, numerous project participants, complex nature, wide range of professional and huge quantity and variety of uncertainties in the implementation stage, which greatly increased the risk of project construction and manangement. In the process of construction, the importance of cost control is without doubt. Almost all owners want to "purchase at a low price", however, at the same time, almost all contractors want to "sell at high price". Therefore, the game relationship exists between the owners and contractors. The owner and the contractor often manage and control the project cost by signing the contract. The level of cost control continuously improves with the advancement of modern economic analysis and management science. The incentive mechanism is researched in this paper, based on large and complex projects and on the prospect of the owners, to motivate the design contractors, construction contractors and consulting contractors, with whom "benefit community" is formed in order to control project costs on the premise of the guarantee of project quality and duration target. The main contents are as follows.(1)This paper discusses the owners'cost control incentive significance for the contractors (including design contractors, construction contractors and consulting contractors) of the project in the construction process. Then it summarizes the incentive theory and the applied research achievement of domestic and foreign scholars and clears the research methods and the content of the paper. After that the paper expounds the corresponding research schemes and innovation.(2)Based on the expounding of the incentive basic theories and knowledge related to engineering cost control, this paper points out the formation mechanism and process control objectives of such cost; The paper also explores the concept of incentives, introduces historical development of incentive theory, discusses the content type and procedural type of incentive theory; In order to establish the theoretical foundation for the research, the paper gives three incentive theories in engineering cost control, including the expected utility theory, agency theory and game theory; Finally it concludes incentives mechanism design concept and basis in engineering cost control.(3)Based on the expected utility theory, the paper studies the design and modeling of incentive mechanism for design contractor during engineering cost control process of the owners. After expounding the cost control during the design phase of the construction, the paper gives the basis of incentive index selection and evaluation for the design contractors, and selects the design budget, design schedule, reliable technology and design services to assess the contractors' design work; According to these four incentive indicators, the paper uses the Taylor's scientific management methods to determine the reward or punishment amount of design contractors; In the light of Vroom's expectancy theory, this paper chooses the maximum point of the expected incentive strength as the reward basic point. Using such methods, this paper creates a cost plus incentive fee contract; then it builds a reward incentive model and gives the solving steps and analytic methods of the model.(4)After the analysis of the characteristics of cost control under the condition of asymmetric information and the studying of the modeling and design of incentive mechanism for the construction contractors, the selection and evaluation method of incentive index is demonstrated in the paper, which sets the project cost and the duration of the project as incentive indicators. A single factor incentive model is established with the project cost as the only incentive factor, based on principal-agent theory, and the solving steps and methods of analysis models of which are written in the paper.After using the linear and nonlinear function to describe the relationship between direct cost and time limit, the model of linear and nonlinear double factor for the construction contractors incentive model are established respectively on the premises of the guarantee of project equality and setting project cost and duration both as incentive indexes. Steps and methods of analysis are demonstrated in the paper based on the model of genetic algorithms. The explanation of model parameters and application methods are also written in the paper.(5)In order to ensure the effectiveness of incentive toconstruction contractors, the game relationship among the owners, construction contractors, consulting contractors with the knowledge of the game theory. No conspiracy game model and dynamic game model of anti-collusion is established,according to the cases of not hiring consultants, the rejection of collusion by contractors and collusion between construction contractors and consultants respectively. Procedures and analytical methods for solving model are demonstrated in the research. The effectiveness of cost containment of owners is improved accordingly.(6)Case study. The owner incentive mechanism for the design contractor, construction contractors and consulting contractors designing and modeling method is verified combined with the actual data of a large thermal power plant construction project. The related contract terms of incentive is designed based on the identified incentive indicators and the calculated parameters according to established incentive model.