The use of Game Theory to solve conflicts in the project management and construction industry

Abstract

A typical construction project involves a wide range of disparate professionals, in many cases geographically distributed, working together for a relatively short period of time on the design and construction of a facility. Since organizations are becoming flatter, culturally rich, geographically diverse and intensely competitive, the possibilities for conflict in such environments are greater. Negotiation is an important aspect of a project and plays an important role in resolving claims, preventing disputes, and keeping a harmonious relationship between project participants. Part of any project manager’s role as a leader is to recognize conflict, understand the sources of conflict and manage it, and to do this a project manager must be able to understand the basics of negotiation theory and have sufficient competencies to lead in such situations. To address the complex technical and human issues in negotiation, different negotiation theories and models are available which mainly include game theory, economic theory, and behavior theory. Since Game Theory provides, by its very nature, the appropriate tools for the analysis and eventual solution of conflicts of any kind, this paper uses a model based on Game Theory in order to identify the activities that are responsible for the delays in a project and divide the costs among them.