Study On The Incentive Mechanism For EPC Project Subcontractor Based On Fairness Preference

EPC engineering general contracting is a widely used project organization and management mode at home and abroad,and the principal-agent relationship between general contractor and subcontractor generally exists in this mode.In the process of project construction,the principal-agent problems often appear due to information asymmetry between the general contractor and subcontractor,and solving these problems not only need general contractor's prior inspection and interim supervision,but also need him to take corresponding incentives for subcontractor.Fairness preference,an important behavioral factor in economic activities,has great influence on participants' effort degree and benefit distribution.Therefore,basing on the principal-agent problems between general contractor and subcontractor,this paper introduced fair preference theory to study the incentive mechanism designed by general contractor for subcontractor,the main contents include:First of all,the research has got the incentive mechanism for EPC project subcontractor based on the condition that subcontractor is with fairness preference.In view of the incentive problems between general contractor and subcontractor,this part introduced subcontractor's fairness preference and established the principal-agent model.Research results show that: first,general contractor should give more production incentives to the subcontractor with great fairness preference degree,big contribution coefficient and small risk aversion degree;second,subcontractor's fairness preference,risk aversion and contribution coefficient simultaneously influences the output sharing coefficient and his own effort level;third,when subcontractor's risk aversion degree is relatively high,the general contractor with big contribution coefficient pays a high fixed price to subcontractor.The second,the research has got the incentive mechanism for EPC project subcontractor based on the condition that general contractor is with fairness preference.In view of the incentive problems between general contractor and subcontractor,this part introduced general contractor's fairness preference and established the principal-agent model.Research results show that: first,the general contractor with great fairness preference degree will give less production incentives to the subcontractor;second,general contractor's fair preference will reduce the subcontractor's effort level;third,general contractor's fairness preference will change the influence of subcontractor's risk aversion,contribution coefficient on the output sharing coefficient and subcontractor's effort level;fourth,the general contractor with big contribution coefficient pays a low fixed price to subcontractor.The last,the comparison between the above two cases shows that: when the degree of fair preference is equal,first,the output sharing coefficient will be greater when the subcontractor is with fairness preference,when the subcontractor's risk aversion is less than its contribution coefficient(no more than three times of its contribution coefficient),the subcontractor's effort level will also be greater based on this condition;second,when subcontractor's risk aversion degree is relatively high,on the condition that subcontractor is with fairness preference,the influence of subcontractor's fairness preference,effort contribution coefficient and risk aversion on the output sharing coefficient is more obvious,and the influence of subcontractor's risk aversion on its effort level will also be more obvious;third,when the subcontractor's risk aversion is significantly greater than its contribution coefficient(more than 36/7 times of its contribution coefficient),on the condition that subcontractor is with fairness preference,the influence of general contractor's effort contribution coefficient on fixed price is more obvious.