Research On Profit Distribution Theory And Its Application In General Contracting Method Of Consortium

At present, most of engineering enterprises in china only have respective singlecapability of design, construction or procurement, therefore, consortium is widelyused in large and medium-sized projects to carry out general contracting. However, itis difficult to reach consensus on profit distribution among all members of theconsortium. Unreasonable profit distribution would dampen participating enterprise’senthusiasm, thus preventing general contracting from playing its role of decreasingconstruction cost and shortening construction period and even leading to the failure ofcooperation. The research is the analysis and investigation conducted on profitdistribution of consortium general contracting method by use of applying game theoryand drawing lessons from research approaches of profit distribution in the field of thesupply chain and alliance.First of all, the paper analyses the brief background characteristics of majorgeneral contracting, emphasizing on legal characteristics, organizational forms,takeholders’rights and responsibilities, and major methods of general contractingconsortium. Besides, the advantages and practical problems of general contractingmode of consortium are elaborated, followed by proposing the necessity of researchon profit distribution.Secondly, profit distribution theory, principles, influence factors, compositionand forms of general contracting of consortium are studied. Basic principles and mainfactors that affect profit distribution are analyzed; the composition and source of totalproject profit is discussed; the distribution form that the industry average income plusa certain percentage of optimal profit of the general contracting project is put forwardto implement effective motivation to members of the consortium. On theaforementioned basis, two modes are established; the first distribution modes is basedon the capability of all the enterprises and another is based on their ability to provideoptimized contribution. After that the operating process of profit distribution ofgeneral contracting method of consortium is constructed.Finally, problems on profit distribution of three kinds of common generalcontracting method of consortium are discussed, and corresponding profit distributionmodes are set up to determine the distribution of profit among organizer and memberof the consortium. At the same time, the game theory is applied in discussing the optimal profit of the general contracting project, the reasonable distribution ratio ofthe optimal profit of the general contracting project within the consortium and theoptimal effort paid by members is worked out from the perspective of maximizingcollective profit, and the outcomes are examed by data. Regarding possible individualrational behavior during the implement of project, this paper carries on thecomparative analysis of profit distribution under the optimal strategies ofmaximizing individual and collective profit, by which factors that influence theoptimal profit of the general contracting project are summarized, and constraintmechanism which ensure the realization of the optimization-design goal is studied.A case study is used in this paper to demonstrate the application of profitdistribution mode, namely members of consortium can gain considerable profitdistribution under the reasonable distribution, thus will be actively involved inoptimizing the project design. In this way, the probability of realizing optimizedprofit in general contracting is higher. Therefore, this profit distribution mode canprovide guidance for profit distribution of the general contracting project ofconsortium in practice.