A Study Of Contract For Construction Project Incentive Mechanism Based On The Principal-agent Theory

The owner and the contractor is two main body of the construction of marketbehavior, it has principal-agent relationship between them decided by the contracts forconstruction projects; therefore, it was and continue to be the hot point of theoryhorizon, which may caused a series of problems in construction market. Thisdissertation considers that there has the way to solve the problem between owner andcontractor. It should strength the supervision of bidding procedure and the process ofengineering construction; at the meantime, it should give more attention on bring inIncentive Mechanism in construction contract.This dissertation will do a study standing in the perspective of the owner. Initially,using the principal agent theory to explain the relationship of owner and contractor andthe formation reasons of principal agent problem; in addition, analyzing severalsolutions to settle those principal agent problems and some existing flaws. Then, thisarticle put forward that the Drive Mechanism needs to be initiated by owners actively ifthey want to solve the problems. It could to be improved to remedy its defects anddeficiencies, to motivate the contractors more effectively, and to eliminate the"confrontational" between these two parts. After that, base on the Cost-Plus-FeeContracts, considering the project’s influence elements which is single factor’s costincentives and multifactor incentives include cost、construction period and quality. Andthen, establish the engineering contract drive mechanism for owner to contractor. Usingthis mode can made the owners reduce contract payment during the process of projectimplementation, and let the contractor obtain the best benefit after they pay out their best efforts. It realizes a win-win situation for owners and contractors. Finally, usingIncentive Mechanism model in the real engineering cases, the result proves that theeffectiveness of the model; in addition, using the results to improve the incentives termsof contracts for construction projects, and afford theory suggestions and references forowners to set incentive terms in reality.