Revenue Incentive Research Between Contractor And Subcontractor Based On Multi-task Principal-Agent Model

Construction projects are the main impetus and source for the development of our national economy to a higher level, which influence the quality and process of national economic development deeply. In the construction projects, problems of profits distribution and multitask coordination equilibrium between the general contractor and the subcontractor are the important factors affecting project running smoothly and efficiently. So it is really urgent and necessary to build an efficient and practical multitask incentive remuneration model to solve conflict of interest between the general contractor and the subcontractor on the construction supply chain.Based on the sort summary of the related literatures home and abroad, it is clear to know the cooperation and profits distribution between the general contractor and the subcontractor on the construction supply chain. Then, from the research view of coordination equilibrium and incentive compensation, using the multi-task theory and supply chain concept, a multi-task incentive remuneration model about project duration and quality between the general contractor and the subcontractor is built to solve the main current problems in China's construction industry.At last, by analyzing the outcome of the model, it is easy and clear to know that the optimal incentive contract between the general contractor and the subcontractor has close relationship with the factors below:task observation difficulty level, subcontractor's degree of risk aversion, the task's marginal cost rate and the marginal cost of replacement rate. After the contractor knows how the related factor influent the optimal incentive contract, they can design proper and optimum incentive intensity on the different task to make the subcontractor coordinate their efforts under this incentive level, so they can not only achieve equilibrium improvement, but also get the overall revenue maximization based on their own income maximization. The research result plays an important role from the theory and practice in guiding health coordinated development of our construction industry and construction companies.