Abstract
Although the trade-off between the cost and the quality in public construction works should be optimized, the open and competitive bidding procedure could give us the lower quality as well as the lower price. This paper proposes an optimal contract mechanism to cope with the above issue. The mechanism is designed to give us the maximum total utilities by having contractors select a payment system out of three choices that are cost plus fee with fixed percentage contract, quantity based contract, and fixed price contract. The contractors can consider their own cost and quality incentives through selecting a payment system. The significance of the mechanism is the idea to maximize the total utilities of the projects through the contractors' discretion.
Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Schedule a callMore From: Journal of Architecture and Planning (Transactions of AIJ)
Disclaimer: All third-party content on this website/platform is and will remain the property of their respective owners and is provided on "as is" basis without any warranties, express or implied. Use of third-party content does not indicate any affiliation, sponsorship with or endorsement by them. Any references to third-party content is to identify the corresponding services and shall be considered fair use under The CopyrightLaw.
