TY - JOUR
T1 - Incentive mechanism of prefabrication in mega projects with reputational concerns
AU - Shi, Qianqian
AU - Zhu, Jianbo
AU - Hertogh, Marcel
AU - Sheng, Zhaohan
PY - 2018/4/19
Y1 - 2018/4/19
N2 - As one of the most important sustainability project management practices, prefabrication has been drawing increasing attention to project construction practitioners. However, due to the needs of high technology and large capital investment, there is a great challenge for suppliers to adopt prefabrication in mega project construction. Therefore, designing an adequate incentive mechanism has become a daunting task for the project owner, which aims to ensure a socially and environmentally friendly project delivery. In this study, an incentive model with reputational concerns from the perspective of the project owner was established and how this incentive affects supplier's effort and project owner's profit was investigated. By contrasting to the incentive model without reputational concerns, when the reputation incentive is considered in the incentive contract, both supplier's effort and project owner's profit increase. In addition, adding reputation incentive implies more expenses, thus the project owner may not want to take this strategy due to the potential expense increase. Therefore, the study also considered an incentive mechanism with constant total incentive intensity. By comparison, the result shows that this strategy is also useful which can improve supplier's effort and project owner's profit.
AB - As one of the most important sustainability project management practices, prefabrication has been drawing increasing attention to project construction practitioners. However, due to the needs of high technology and large capital investment, there is a great challenge for suppliers to adopt prefabrication in mega project construction. Therefore, designing an adequate incentive mechanism has become a daunting task for the project owner, which aims to ensure a socially and environmentally friendly project delivery. In this study, an incentive model with reputational concerns from the perspective of the project owner was established and how this incentive affects supplier's effort and project owner's profit was investigated. By contrasting to the incentive model without reputational concerns, when the reputation incentive is considered in the incentive contract, both supplier's effort and project owner's profit increase. In addition, adding reputation incentive implies more expenses, thus the project owner may not want to take this strategy due to the potential expense increase. Therefore, the study also considered an incentive mechanism with constant total incentive intensity. By comparison, the result shows that this strategy is also useful which can improve supplier's effort and project owner's profit.
KW - Incentive mechanism
KW - Prefabricated construction
KW - Reputation
KW - Sustainability management practice
UR - http://www.scopus.com/inward/record.url?scp=85045612281&partnerID=8YFLogxK
UR - http://resolver.tudelft.nl/uuid:67701ac2-8d85-47a4-bcc6-37140230a9ab
U2 - 10.3390/su10041260
DO - 10.3390/su10041260
M3 - Article
AN - SCOPUS:85045612281
SN - 2071-1050
VL - 10
JO - Sustainability
JF - Sustainability
IS - 4
M1 - 1260
ER -