Inderscience Publishers

Optimum sharing in project delivery methods


Establishing a gain/pain sharing arrangement tailored to a project's delivery method is regarded as being essential for achieving a project's goals. However, no guidelines exist in the literature on what the sharing arrangement should be for different delivery methods. The paper is a first in dealing with optimal sharing arrangements within project delivery methods. The paper shows for the delivery methods considered, assuming cooperative behaviour: the proportions of the optimal gain/pain sharing to the contractor and design consultant are affected by the owner, contractor, and design consultant levels of risk aversion; the choice of delivery method has no effect on the optimal sharing to the design consultant; however, the delivery method used affects the optimal sharing to the contractor. A designed exercise is used to validate the paper's propositions. For application purposes, in both delivery methods, recommended sharing proportions to contractors and design consultants are presented.

Keywords: optimal sharing, gain/pain, target cost, delivery method, risk, contractor, consultant, cooperative contracting, traditional delivery, managing contractor delivery.

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