Cooperative game theoretic framework for joint resource management in construction

Subcontractors have a significant role in the construction industry. Through involvement at different levels, subcontractors may undertake up to 90% of the total value of large construction projects. Due to the lack of systematic relationships and communication among different parties involved in construction projects, many beneficial opportunities such as short-term partnering may stay hidden and unknown during the course of projects. Although partnering is well documented in the literature, quantitative approaches have not been common for determining the value of partnering and developing practical methods for allocation of its benefits. In this study, we discuss how subcontractors can benefit considerably from joint resource management in construction projects. We present a short-term partnering case in which subcontractors form an alliance, agreeing to put all or some of their resources in a joint pool for a fixed duration of time and to allocate the group resources using a more cost-effective plan. Cooperative game theory is suggested as the basis for fair and efficient allocation of the incremental benefits of cooperation among the cooperating subcontractors. First, a resource-leveling model is used to build subcontractors' characteristic functions for all possible subcontractors' coalitions. Then, various cooperative game theoretic solution methods are applied for allocation of cooperative gains among the subcontractors. Finally, to ensure that the identified allocation rules are applicable and stable in practice, acceptable allocations are identified using various stability analysis methods. Results show that considerable savings can result from full cooperation among subcontractors based on group rationality as opposed to individual rationality.