Research Of Investment Hold-up Problem In Engineering Construction

At present, construction industry is developing rapidly in China. With the development of construction, the scale and complexity of engineering project investment is increasing, especially for some major investment projects. Investors who choose high income also face with high risk. During the engineering project investment, investors usually face the risk that is called the investment hold-up problem.This will make the investors in a dilemma, which can lead to serious economic loss. So the research of the theory has become very important for the investors to improve their investment income.There are lots of factors affecting the investment of projects,this paper chooses the hold-up problem to analysis, first of all, the paper elaborated the theory of project-related investment, and then describes the knowledge of hold-up problem and the reaches of the hold-up theory, combination of both hold-up problem and construction projects theory come to the hold-up problem in project construction investment.In this paper, the writer took SN city’s shantytowns renovation project as an example.By constructing a model,the writer studied the problem of investment analyzes the course of shantytowns project between the parties and the owner. Generally, in construction projects the builders often keep in a weak position, and they will not take the initiative to hold-up the owners. Only when the interests of builders was severely damage or loss,or the losses seriously beyond their expected capacity, the builders might hold-up the owners to reduce their losses to a minimum. This paper involved in the hold-up problem and incomplete contract theory analyzed the reasons of builders hold-up owners.The writer give a Game Model of hold-up problem and use model to analyze the behavior of the builders’selection of weather to hold-up the owners or not.Finally, based on the analysis of hold-up problems in engineering construction projects, the paper put forward reasonable advice to solve the problems. The advice could help the investors reduce the risk of investment effectively. It can also help them reduce the economic loss in the engineering project investment, at the same time, get greater profit space. The paper began it’s research at the point of hold-up problem in the investment of engineering construction projects. Lastly, the paper put forward some advice to solve those problems. Thus the paper has a great theoretical and realistic significance.