Shang, L and Abdel Aziz, A M (2020) Stackelberg game theory-based optimization model for design of payment mechanism in performance-based PPPs. Journal of Construction Engineering and Management, 146(4): 04020029, ISSN 0733-9364
Abstract
Payment mechanisms lie at the heart of public-private partnership (PPP) contracts. A good design of the payment mechanism should consider the owner's goals in the project, allocate risks appropriately to stakeholders, and assure satisfactory performance by providing reasonable compensation to the private developer. This paper proposes a Stackelberg game theory-based model to assist public agencies in designing payment mechanisms for PPP transportation projects. The interests of both public and private sectors are considered and reflected by a bilevel objective function. The model aims to search for solutions that maximize a project's overall performance for the sake of social welfare while simultaneously maximizing return for the sake of private investment. A variable elimination method and genetic algorithm are used to solve the optimization model. A case study based on a real PPP project is discussed to validate the effectiveness of the proposed model. The solutions provided by the model reveal that the optimal payment mechanism structure could be established such that it would satisfy owners' requirements for overall project performance while optimizing project total payments to contractors.
| Item Type: | Article |
|---|---|
| Index terms: | genetic algorithm, transportation project, game theory, agency, performance-based, case study, owner, partnership, private sector, effectiveness, project performance, heart, compensation, payment mechanism, private investment |
| Subjects: | data collection methods, dispute resolution, economic analysis, decision models, performance management, algorithms, performance measurement, medical science and clinical practice, project management theory and practice, sociology, partnership management, industry analysis, infrastructure and transport systems |
| Topics: | Legal Issues, Digital Applications, Quality Management, Business Strategy, Health and Safety, Project Management, Research Practice, Engineering Principles, Stakeholder Management, Procurement |
| Descriptive scope: | 4 PCTE |
N.B. Descriptive scope is a count of how many of the five facets of empirical research are indicated by the words used in title, abstract and keywords. It is not intended as a judgement on the research; merely a count of the kind of word we would expect to indicate Phenomenon, Concepts, Theoretical framing, Empirical techniques, Analytical techniques. If all five are present, then a code of “5 PCTEA” will indicate this. If you feel the coding for this record is questionable, we welcome discussion around the terms we matched or the way we categorized them. The facet you would expect may not be coded, or a facet may be coded inappropriately. This can also bear on a larger question, of which facets should be treated as defining in construction management research. Please get in touch, and we will look at it. More details here