Research On Incentive Contract And Restraint Mechanism Of Project Management Service Mode

In the recent years,construction industry has been developed rapidly, project scale increases quickly, and the requirements of project management are getting higher and higher, so using project management service mode to carry on comprehensive and entire management has been more and more recognized. With the National Construction Department issuing a series of guidance documents, PM mode has been widely used, which makes owners'management efficiency boosted up greatly. However, as a result of the existence of information asymmetry between the PM companies and owners after signing contract, there may be laxation and speculation in the compliance process of PM companies. Therefore how to motivate and constrain the PM company becomes a very important problem. The article stands in the side of the owner, expects to reduce the information asymmetry as well as conflicts between the owner and PM company and guide PM company to achieve the objectives of the owner through reasonable incentive contract and restraint mechanism.The concepts and characteristics of project management service mode and principal-agent theory are described. PM mode is compared with the other project management modes which are always confused in engineering practices, such as PMC mode, agent construction system, and engineering consulting. By analyzing the principal-agent relationship in project management service mode, the article emphasizes the importance of incentive contract and constraint mechanism.The incentive contract of PM mode has been analyzed, and the principal-agent relationship model under asymmetric information is established. The calculation results show that the optimal incentive coefficient is positive relevant with bidding rate ceiling and difficulty index of reducing the amount of investment. By comparing fixed charge plus incentive fee contract and fixed rate plus incentive fee, it turns out that the incentive effects of the two kinds of contracts on PM company are same, PM's expected utility and the owner's total investment are same too. Simultaneously, through the deeper research on incentive contract, the scope of budget investment and actual investment are defined, and a new charge mode based on multi objective incentive mechanism is put forward.The implementation approaches of PM mode restraint mechanism are proposed. In project management service mode, the incentive contract which is designed by reducing investment will bring risks to the owner, such as using function of the building is reduced, the realization of other objectives in the contract is affected, and the choice of bidding is unreasonable. The article analysis how to promote PM company work hard to achieve the owners' goals through the following methods. Firstly, establish supervision and restraint mechanism, give full play to the role of systems management functions. Secondly, establish program constraint mechanism, optimize the design of project management process. Thirdly, establish contract constraint mechanism, control the key terms of contract strictly. Fouthly, establish market discipline mechanism, improve the observability of PM's behavior. Finally, establish market restraint mechanism, play the effectiveness of market reputation.At last, an actual example in Nanjing which applys project management service mode is analyzed. Its incentive contract and constraint mechanism are evaluated, and targeting suggestions for improvement are proposed.