Study On Contractors’ Group Incentive Mechanism Of Construction Quality Management

Security incidents caused by the completed construction projects’ premature deterioration have occurred frequently in our country, which brought huge losses and harm to the people’s safety of property and lives. The construction quality level is increasingly becoming the core issues that the construction builders concern.Construction projects are often completed by construction project team composed of multi-contractors. There exists asymmetric information about the quality effort level that the contractors paid in the project between the owner and the contractors. The contractors may use private information superiority to seek to maximize their own interests, which will lead to opportunistic behavior of free-riding among contractors and affect the overall quality optimization of the construction. To effectively prevent free-riding opportunistic behavior among contractors, it has greatly practical significance to research contractors’ team incentives mechanism design.This thesis has an in-depth study which focused on the quality group incentive mechanism design of construction project to prevent opportunistic behavior of free-riding among the contractors.Firstly, this thesis used game theory methodology to analyze and prove the existence of free-riding opportunistic behavior and the way it exists under the widely used fixed-price incentive contract among the contractors. By considering the risk-neutral owner and risk aversion contractors, this thesis analyzed the project owner’s and contractors’ revenue of project quality and established objective function to maximize their own income. On this basis, this thesis built a generalized team motivation model of project quality. Then this thesis designed a linear incentive contract constituted of a fixed salary and incentive part, and built an optimal incentive model between the owner and contractors under symmetric information situation and a group incentive principal-agent model under the dissymmetric information situation. This thesis got the Nash equilibrium and Pareto Optimality of the model at the same time and analyzed the best project quality effort level of the contractors and the best incentive intensity of the owner. This thesis made analysis about the influence of risk aversion coefficient, construction quality evaluation weights, ability cost coefficient and external factors on incentive intensity and construction quality effort level, which can provide basis for owner’s incentive intensity setting and contractor’s decision of construction quality effort level. Then it can effectively encourage contractors and prevent the presence of free-riding opportunistic behavior. Further, quality group incentive model of construction project was developed according to the characteristics of quality cost constitution in the construction quality management. With a specific example, Particle Swarm Optimization(PSO) algorithm is used to solve the equilibrium solution of group incentive model under combinations of different parts’ project quality evaluation weights and different risk aversion. The results showed that the owners can reasonably set the incentive intensity to effectively motivate the contractors towards their own desired quality effort level of project according to project quality evaluation weights and risk aversion.