Optimal outcome sharing with downstream contracting parties

نوع: Type: thesis

مقطع: Segment: masters

عنوان: Title: Optimal outcome sharing with downstream contracting parties

ارائه دهنده: Provider: Amirhomayoun Jaberi

اساتید راهنما: Supervisors: Dr. S. Mahdi Hosseinian

اساتید مشاور: Advisory Professors:

اساتید ممتحن یا داور: Examining professors or referees: Dr. Ebrahim Ghyasvand and Dr. Javad Taherinejad

زمان و تاریخ ارائه: Time and date of presentation: 2/19/2023

مکان ارائه: Place of presentation: Seminar 1, Dep. Civil Engineering

چکیده: Abstract: Subcontractor incentive payments are usually made through the contractor, however, there may be exceptions. Their amount may be affected by the contractor's payment practices as well as the owner's upstream payment practices to the contractor. A similar procedure applies to sub-subcontractors, sub-sub-subcontractors, etc. The purpose of this paper is to develop an optimal outcome-sharing model in contracts with multiple contracting layers (contractor, subcontractors, sub-subcontractors, etc.); they may be either risk neutral or averse. The paper's theoretical development is based on existing utility and principal-agent models of outcome sharing with a single layer (a contractor). The owner's certainty equivalent is maximized subject to individual rationality and incentive compatibility constraints. The efforts of the downstream contracting parties are treated as the optimization variable, for which the optimal sharing ratios are evaluated. The outcome of each contracting layer is formulated as a stochastic variable affected by its effort and events beyond its control. A numerical study supports the validity of the proposed model and the paper propositions. The model may be used by those who write an incentive contract as to what is the best way to share project outcomes with the downstream parties. The contribution of the paper lies in making a linkage between optimum outcome sharing in upstream contracting layers to downstream ones. This modeling is original and there are no similar models in the literature.

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