Research On Incentive Mechanism For Supplier Quality Development In Construction

Industrialization practices are also widely applied in mega construction projects. Without the participation of suppliers, the project quality and production efficiency of industrialization can't increase so significantly. The short-term relationship will hinder the supplier to invest in the SD program since the supplier perhaps cannot gain enough return from the undertaken construction project to compensate his investment in the SD program. Therefore, it is more important for the owner to design incentive mechanism to motivate the supplier to invest in the SD program and improve performance.The incentive mechanisms for supplier development in a construction supply chain is investigated. Firstly, a construction supply chain that consists of single-owner and singlesupplier is considered to analyze the optimal(SD) incentive contract for the owner under symmetric information. Secondly, by building a principal-agent model the optimal(SD) incentive contract for the owner under asymmetric information is analyzed. Then the results under symmetric information is compared. Finally, based on the single supplier SD model, research on incentive mechanism for multi-supplier quality development are performed. The conclusions are as follows:(1) Under the symmetric information, the owner can use price incentive and cost sharing incentive to motivate supplier to improve quality level, and the effect of cost sharing incentive is more effective, the cost of supplier has and negative effect on SD project while the demand of future market-effect on SD project is positive.(2) Under asymmetric information, when the supplier's quality improve costcoefficient is private information, supplier with low quality improve cost-coefficient can obtain additional revenues through his own private information, and it can bring more benefits to the supply chain as a whole compared with the supplier with high quality improve cost coefficient.(3) Consider the participation of multiple suppliers in SD project, the owner should provide different cost sharing incentives for different suppliers based on their cost and market share parameters. and develop all suppliers to the same quality level which can bring him more benefits.The conclusion of this paper provides critical implication and reference for construction owners when designing incentive mechanism for supplier development practice.