A Study On Contract Incentives Of Construction Project Based On The Theory Of Principal-agent

In modern construction project, since the engineering information fails to be symmetry and switching cost as well as the incomplete tract, the owner and the client exist in principal-agent relationship, which means the market of the both parties to be different as well as the target, naturally which the conflicts cause. The issue that the owner and the client has been the hot dispute of the field, to solve the issue.In order to solve the principal-agent problem of construction project, the owner usually strengthen s in a supervision way, and hire supervision party to the contractor’s construction process supervision.In order to avoid the contractor in construction process to take speculation. Supervision party to a certain extent can be speculated by strengthening the supervision, to ensure that the cost, quality, and time limit for a project and the realization of the goal. However, hiring supervision will cause the owner and supervision party formed between the new principal-agent problem. Supervision unit in order to pursue interests by contractor And even if supervision party in comply with the code of ethics, skillfully, no rent-seeking conditions, according to the game theory model, and, in some cases, this kind of supervision and punishment mechanism is not necessarily effective.So it should change ideas in strengthening supervision and at the same time, more consideration should be taken into to solve the entrustment of the owner and the contractor, principal-agency problem.The research method of my paper is depended under the background of the current situation of our country constructed development, through the two theories of new institutional economics, the transaction cost and the principal-agent theory, combined with relevant incentive theory, analysed the incentive contract factors, and established the incentive contract mechanism to solve the construction project of the adverse selection and moral hazard.This first chapter explains and introduces the significance and value,domestic and foreign research of present situation, the research content and its range. The second chapter mainly to review the principal-agent related theory and between the owner and the contractor about principal-agent causes and the entrusted agency issues. The third chapter analyses the limitation of the principal-agent problem through strengthen supervision by setting up the game theory model. The fourth chapter mainly analyses the adverse selection phenomenon existed in contract stage. At this stage,through the governmental mandatory constraint, it uses the engineering value management to improve the evaluation methods, according to the incentive mechanism contract included the contractor’s to choose contract type method effectively resolve the phenomenon of adverse selection. The fifth chapter mainly analyzes the moral hazard in the contract performance stage. At this stage, through the design incentive contract, using Partnering management mode and interface payment methods to encourage the contractor reduce the moral hazard. The sixth chapter sums up and summarize the basic conclusion of this paper research. In this paper, the main conclusion is to solve the foundation of principal-agent,which is to change the opposite relationship between the owner and the contractor to improve their sincere cooperation, mutual communication, to make the owner and contractor’s interests function to the agreement, to form the community of interests and achieve a win-win situation.The innovation of paper,which using the principal-agent theory, transaction cost theory, incentive and cost theory in institutional economics and the basic theory of micro economics,depth and breadth to research between the owner and the contractor about adverse selection problem and moral hazard, and depends on this basis, puts forward some related methods and suggestions.