Research On The Influencing Mechanism Of Project Managers' Moral Hazard On Project Success

The anti-corruption practice after the 18th indicated that the industry of construction is one of the hardest hit areas of corruption. The corruption problems cause project failure and endanger people's lives and national interest. In general, the issue of corruption can be categorized to the area of moral hazard. The investigation of the mechanism on how moral hazard affects the success of a construct project is thus an important task. A construction project manager is the direct implementer of a project. His/her behaviors influence the quality and safety of the project directly. In the literature, quantitative analyses on the mechanism of project managers'moral hazard affecting project success are sparse. This study is designed to (1) explore theoretical basis on the mechanism; (2) provide practical guidance for government and relevant enterprises for effective intervention to prevent moral hazard of project managers. This thesis integrated the theories from economics, management, engineering management and systems engineering, mainly address the following aspects:Firstly, this study systematically analyzes the moral hazard problem of project managers by integrating related theories of moral hazard, project success, project governance, project performance evaluation and project manager's responsibilities, conceptual structure of project managers'moral hazard was established. Five dimensions of project managers'moral hazard were formed, i.e., project governance, project management, project manager's quality, project risk allocation and project environment. The assumption on how project managers'moral hazard is related to the project success was also conceptualized and examined using the data from qualitative and quantitative data.Secondly, a questionnaire is designed to conceptualize the moral hazard of construction project managers. The reliability and validity of the project managers'moral hazard scale and project success scale are examined by exploratory factor analysis and confirmatory factor analysis. The results show that project managers'moral hazard scale and project success scale could validly and reliably measure the relevant concepts. Twenty factors which represent different dimensions of the project managers'moral hazard are extracted by exploratory factor analysis using SPSS20 software. This empirical data provide strong evidence of the applicability to quantify the moral hazard of project managers.Thirdly, based on the conceptual model of project managers'moral hazard and its effects on project success in combination with reality of Chinese construction industry, the internal and external associations of project managers'moral hazard with project success are systematically analyzed using SmartPLS2.0 (a software for conducting structural equation modeling). The empirical analysis revealed that Chinese project managers are low in the knowledge level of the importance of relevant state institutions and government regulation in the construction industry.In conclusion, this work made the following significant contributions to the field. Firstly, this study established dimensions of project managers'moral hazard and established a theoretical model on how project managers'moral hazard influence project success. Secondly, the theoretical models were tested using the empirical data and main factors representing dimensions of project managers'moral hazard behaviors are identified. This makes it possible to establish a relatively universal evaluation index system. Thirdly, the relationship between project managers'moral hazard and project success is examined and the main factors of project managers'moral hazard that has a significant effect onto project success are identified.The recognition of the importance of project managers'moral hazard is relatively low in China. According to the whole life cycle theory, the implementation phase of a construction project can be divided into three phases:pre-implementation, implementation and post-implementation. This paper proposed countermeasures for each phase to minimize negative consequences of the moral hazard problem from project governance perspective. Particularly, this study demonstrated quantitatively how to utilize risk guarantee and performance assessment system to restrain project managers'moral hazard. Overall, this study provided empirical data for governmental organizations and relevant enterprises on recognition of the moral hazard problem of project managers and how to effectively address this issue and avoid negative consequences caused by it.