Multi layer Profit Distribution and Stimulation Model Among Contractors in Construction Project

Abstract:

This paper develops a multi layer stimulation and collaboration model based on the multi phase game theory, where a client, contractors and subcontractors in a typical construction project form a multi echelon and multi party management system, and profits are shared among those participants by distribution functions. The assumptions are that all contractors in this model are risk neutral and they are willing to pay efforts in order to earn more profits, and the constraint conditions are the profits of general contractors and sub contractors, who will become cooperative partnership. It is revealed that contractors’ collaborative effort is related to collaborative cost, but irrelated to her fixed cost, and the profit distribution function depends not only on her collaborative efficiency but also on reciprocal collaborative efforts, which contributes to the improvement of the project management overall performance by avoiding the opportunistic participants.

Key words:contractors; profit distribution functions; multi layer; game theory