The Study of Incentive Coefficient of Owner to Design Contractor Based on Prospect Theory

Abstract

The project cost control is an important goal for project control of owner under guaranteeing project quality. As the key stage for project implementation, project cost control plays a vital role. Therefore, establishing a good incentive mechanism will be helpful to promote design contractor to optimize design and reduce the owner's investment. At present, the incentive for design contractors has been extend from design phase to construction phase, but there seems no ideal way to determine incentive coefficient. Based on the theory of incentive contract design, introducing the prospect theory of behavioral psychology, this paper builds the incentive coefficient model which determines the incentive coefficient, and provides the basis for the incentive of owner to design contractors.