Research On Project Management Contracting Based On The Transaction Cost Economics

Project Management Contracting (PMC) is a new construction project management model, which is already used in some large-scaled construction projects and is also expanded in China. In order to make PMC to be understood more deeply and used more reasonably, the economic principle of PMC is necessary to be researched.PMC is researched based on incomplete contract theory and transaction cost economics in the paper. The effect of PMC on transaction cost in construction project is analysed and a basic rule of weher to adopt PMC are given. In practice, the method and situation of PMC model are argued.First, the characteristics of construction project's contract are analysed. An incomplete contract model is set up, which helps to analyse the effect of incomplete contract on the customer's investment. With the analysis of transaction cost and asset specificity in construction project, the governance structure and the kind of contract which are suitable for construction project is argued. Second, the reason of PMC emergence is analysed. The effect of PMC on transaction cost is analysed and a basic rule of whether to adopt PMC is given. Third, an incomplete contract game theory analysis model is set up and the method and situation of PMC model is argued. The situation of combining PMC and EPC is primarily introduced. Considering the practice of China, the motivation and problems of PMC model are raised and some advice is given. Finally, the research results are summarized and the further research direction is pointed out.