Hosseinian, S M and Jaberi, A (2025) Optimizing the distribution of outcomes across multiple levels of subcontracting in construction projects. Engineering, Construction and Architectural Management, 32(2), pp. 1278-1302. ISSN 0969-9988
Abstract
Purpose: Although outcome sharing in construction is a well-established concept in the literature, there is still an ongoing debate on the most effective approach for distributing project outcomes between an owner and downstream contracting parties (DCPs). To address this issue, this paper aims to investigate an optimal framework for distributing project outcomes among various levels of subcontracting in construction projects. The framework includes contractors, subcontractors, sub-subcontractors and other related parties. Design/methodology/approach: To formulate the optimization problem, the principal–agent model is utilized. The theoretical development is validated through an experiment conducted with employees from road construction companies. Findings: When distributing outcomes among various levels of subcontracting, the sharing should be determined by their contribution to the outcome, effort costs, level of outcome uncertainty and risk preference. Originality/value: This paper expands on the existing principal–agent theory by incorporating multiple levels of agents, transforming the conventional view of outcome sharing among downstream subcontracting levels into testable hypotheses and well-defined concepts. The paper has practical implications for industry practitioners seeking to effectively allocate benefits and costs throughout a project's subcontracting chain.
| Item Type: | Article |
|---|---|
| Uncontrolled Keywords: | multiple subcontracting levels; outcome sharing; principal–agent theory |
| Index terms: | effort cost, experiment, agent, preference, subcontractor, methodology, construction project, practitioner, owner, subcontracting, contracting party, project outcome, road construction |
| Subjects: | project completion, organization, practitioner, research methods, decision-making and reasoning, production management, data collection methods, financial and cost management, civil engineering, sociology |
| Topics: | Roles and Professions, Stakeholder Management, Cost Management, Research Practice, Engineering Principles, Project Management, Supply Chain Management |
| Descriptive scope: | 4 PCTE |
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