Incentive Mechanism of Prefabrication in Mega Projects with Reputational Concerns

Qianqian Shi, Jianbo Zhu, Marcel Hertogh and Zhaohan Sheng
Additional contact information
Qianqian Shi: School of Management and Engineering, Nanjing University, Nanjing 210093, China
Jianbo Zhu: School of Management and Engineering, Nanjing University, Nanjing 210093, China
Marcel Hertogh: Faculty of Civil Engineering and Geosciences, Delft University of Technology, Stevinweg 1, 2628 CN Delft, The Netherlands
Zhaohan Sheng: School of Management and Engineering, Nanjing University, Nanjing 210093, China

Sustainability, 2018, vol. 10, issue 4, 1-16

Abstract: 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.

Keywords: prefabricated construction; incentive mechanism; reputation; sustainability management practice (search for similar items in EconPapers)
JEL-codes: O13 Q Q0 Q2 Q3 Q5 Q56 (search for similar items in EconPapers)
Date: 2018
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (5)

Downloads: (external link)
https://www.mdpi.com/2071-1050/10/4/1260/pdf (application/pdf)
https://www.mdpi.com/2071-1050/10/4/1260/ (text/html)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:gam:jsusta:v:10:y:2018:i:4:p:1260-:d:142133

Access Statistics for this article

Sustainability is currently edited by Ms. Alexandra Wu

More articles in Sustainability from MDPI
Bibliographic data for series maintained by MDPI Indexing Manager ().