Kim, Y W and Rhee, B D (2026) An incentive scheme in GMP contracts using a game theory approach. Journal of Construction Engineering and Management, 152(4): 04026016, ISSN 0733-9364
Abstract
The paper investigates the conventional guaranteed maximum price (GMP) contract's ability to align the contractor's behavior with the project owner's objectives. Our findings reveal that the default form of the GMP contract fails to sufficiently incentivize contractors to take on the risk of innovative technology adoption because contractors naturally seek to minimize risk by adhering to conventional methods. To address this shortfall, we developed an incentive scheme within the GMP framework, motivating the contractor to use their expertise to incorporate advanced technologies. We tested the proposed incentive scheme through a hypothetical case study. By employing a game theory approach, the study accounts for the decision-making behaviors of owners and contractors, both acting to maximize their respective payoffs.
| Item Type: | Article |
|---|---|
| Uncontrolled Keywords: | compensation structure; game theory; guaranteed maximum price; incentive scheme; interest alignment; technology adoption |
| Index terms: | decision-making, owner, technology adoption, game theory, case study, compensation, default |
| Subjects: | innovation and technology management, decision models, dispute resolution, data collection methods, sociology, decision analysis |
| Topics: | Research Practice, Legal Issues, Engineering Principles, Risk Management, Stakeholder Management |
| 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