Cooperative game theory approach towards capital equipment procurement in construction projects: a concrete batch plant case study

Abstract

This study explores how contractors can benefit from joint resource procurement in construction projects, particularly in case with capital-intensive ones. Capital equipment is costly and has a long beneficial life compared to other resources; hence, minimizing its long-term costs is pivotal. Also, the lack of open dialogue under a legal structure in projects may deprive project participants from many beneficial partnering opportunities. Given this background, a comprehensive framework based on cooperative game theory is introduced to form a systematic partnership among contracting parties to share their capital equipment. Cooperative game theory is suggested as the basis for increase the gains to all parties and fair and efficient allocation of the incremental benefits of cooperation. The proposed flowchart is then applied to a real-world project and various coalitional cooperative game theory solutions for dividing gains equitably, from sharing a site-located concrete batch plant among three contractors are evaluated and the most stable cost allocation is identified. Results reveal that with the application of this cooperative procurement, the three contractors can achieve an average of twenty three percent considerable savings through practical alliance that deliver vast improvements in project productivity and performance.