Incentive Mechanism for Performance-Based Payment of Infrastructure PPP Projects: Coupling of Reputation and Ratchet Effects

Li, Huimin; Su, Limin; Zuo, Jian; Zhao, Xianbo; Chang, Ruidong; Wang, Fuqiang

doi:10.3846/ijspm.2022.15969

Cited by 14 publications

(19 citation statements)

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“…The CPMs' risk cost is ρβ 2 t σ 2 =2, that is, the CPMs give up ρβ 2 t σ 2 =2 income in the expected return on work input in exchange for its certainty return. 40 Assumption 6: Assuming that the organization has rational expectations, the CPMs choose a level of effort e 1 ′ at the equilibrium state of stage 1 of project cooperation, and after stage 1, the organization estimates the CPMs' level of competence based on his or her output π 1 . Therefore, the organization judges the CPMs' level of effort and competency based on e 1 ′ and π 1 by post-Bayesian correction, that is, the CPMs' reputation level.…”

Section: Model Assumptionsmentioning

confidence: 99%

A Multi-stage Dynamic Incentive Model for Construction Project Managers From the Perspective of Work-Family Conflict

Lin

Sun

2023

J Occup Environ Med

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This study aims to design incentives for organizations to improve the work engagement of construction project managers (CPMs) when they experience work-family conflict. Methods: Based on principal-agent theory, a multistage dynamic incentive model for CPMs' work engagement under the perspective of work-family conflict is constructed by integrating contract and reputation effect incentive mechanisms. Then MATLAB software was used to simulate the theoretical model for the arithmetic example. Finally, 182 valid questionnaires were tested for the conclusions of the model. Results: In the two stages of the incentive model, work resources significantly positively influence CPMs' work engagement, and work-family conflict harms CPMs' work engagement. Including a reputation mechanism has two effects on the first stage of the incentive model. First, reputation has an incentive effect on CPMs' work engagement. Second, it reduces the negative impact of work-family conflict on work engagement. The combination of contract-and reputation-based incentives will improve CPMs' work engagement. Conclusions: The results suggest that incentives targeted at increasing the work engagement of CPMs may be necessary.

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Section: Model Assumptionsmentioning

confidence: 99%

A Multi-stage Dynamic Incentive Model for Construction Project Managers From the Perspective of Work-Family Conflict

Lin

Sun

2023

J Occup Environ Med

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“…During the operation and maintenance of WETPPPs, the payment from public sector in each period includes fixed payment and performance-based payment according to the terms of the contract (Li et al, 2022). Specifically, in order to make the private sector "profit without profiteering", the minimum payment from public sector should meet the minimum internal rate of return for the private sector, and the maximum payment is the total cost of performance (An et al, 2018;Li et al, 2022). Therefore, the fixed payment of each period should meet the minimum internal rate of return, and the sum of the fixed and performancebased payments in each period needs to achieve the highest rate of return of the private sector.…”

Section: Description Of Research Problemmentioning

confidence: 99%

“…In WETPPPs, the public sector will pay the private sector according to their performance output in the operation and maintenance period (An et al, 2018). Obviously, the higher the performance level of the private sector is, the greater its benefits are (Li et al, 2022). The higher performance level means that the private sector will pay more for the operation and maintenance of projects.…”

Section: Introductionmentioning

confidence: 99%

“…Shang and Abdel Aziz (2020) studied the different payments from the government based on the constructed Stackelberg game model and found that a suitable performance-based payment ratio will help achieve the overall performance of the projects. Third, research on the design of the payment contract of PPP projects in different fields has been carried out (An et al, 2018;Shi et al, 2020;Li et al, 2022;Shang and Abdel Aziz, 2020). Moreover, the performance-based payment mechanism with the apparent deficiency in current research is static (Yuan et al, 2019).…”

Section: Introductionmentioning

confidence: 99%

“…, 2018). Obviously, the higher the performance level of the private sector is, the greater its benefits are (Li et al. , 2022).…”

Section: Introductionmentioning

confidence: 99%

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Water environment treatment PPP projects optimal payment mechanism based on multi-stage dynamic programming model

Cao

et al. 2022

ECAM

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PurposeThe optimal payment in the whole operation and maintenance period of water environment treatment PPP projects has become the main approach to realize sustainable development of projects. This study is aimed at constructing an effective payment model for the whole life period of projects to achieve win-win among all stakeholders, so as to provide a theoretical reference and managerial implications for the public sector in the whole operation and maintenance period.Design/methodology/approachIn the whole operation and maintenance period of water environment treatment PPP projects, this article investigates how the public sector optimizes the payment in the whole operation and maintenance period of projects. Firstly, the projects' whole operation and maintenance period is divided into several stages according to the performance appraisal period. And then, the multi-stage dynamic programming model is constructed to design the payment construct model for the public sector in each performance appraisal stage. The payment from the public sector is the decision variable, and the deduction from the private sector is a random variable.FindingsThe optimal payment model showed that the relatively less objective weight of public sector leaded to its relatively more total payment and vice versa. Therefore, the sustainable development of the projects can only be ensured when the objective weights both of them should be balanced. Additionally, the deduction from the performance appraisal of private sector plays an important role in the model construction. The larger deduction the private sector undertakes, the smaller profits private sector has. Since the deduction at each stage is a random variable, the deduction varies with the different probability distributions obeyed by the practical deduction in each stage.Research limitations/implicationsThe findings from this study have provided theoretical and application references, and some managerial implications are also given. First, the improvement of the pricing system of public sector should be accelerated. Second, the reasonable profit of the private sector must be guaranteed. While pursuing the maximization of social benefits, the public sector should make full use of the price sharing mechanism in the market and supervise the real income situation of the private sector. Third is increasing the public to participate in pricing. Additionally, it is a limitation that the deduction is assumed to conform to a uniform distribution in this study. Other probability distributions on deduction can be essentially further sought, so as to be more line with the actual situation of the projects.Originality/valueThe optimal payment in whole operation and maintenance period of the projects has become an important issue, which is a key to project success. This study constructs a multi-stage dynamic programming model to optimize payment in the whole period of projects. Additionally, this study adds its value through deeply developing the new theories of optimal payment to more suitable for the practical problems, so that to optimize the design of payment mechanism. Meanwhile, a valuable reference for public and private sectors is provided to ensure the sustainable development of the projects.

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Are public—private partnerships still an answer for social infrastructure? A systematic literature review

Zhu

et al. 2023

Front. Eng. Manag.

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Social infrastructure has become an important element for measuring national economic development and social benefits that are usually financed in the form of government grants, private investment, and public—private partnerships (PPPs). However, social infrastructure PPPs have attracted considerable public debate due to their low profitability and complex operational demands. This study aims to answer the question, “are PPPs still an answer for social infrastructure?”, from the perspectives of the body of knowledge, application status, and prospects. Initially, an iterative search and review procedure and a scientometric analysis were performed to systematically screen the literature and to structure the body of knowledge of the social infrastructure PPPs literature. Furthermore, the application status and trends were analyzed to further explore the studied countries/regions, application sectors, and research topics. Results show that PPPs still have valuable application potential for delivering social infrastructure despite their mixed results across different topics. Six main research themes and the corresponding research trends were also identified, namely, financing and economics viability, risk management, performance management, contract and relationship management, governance and regulation, and facilitating and hindering factors. These findings offer practitioners and researchers a comprehensive overview and constructive guidance on social infrastructure PPPs.

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Incentive Mechanism for Performance-Based Payment of Infrastructure PPP Projects: Coupling of Reputation and Ratchet Effects

Cited by 14 publications

References 50 publications

A Multi-stage Dynamic Incentive Model for Construction Project Managers From the Perspective of Work-Family Conflict

A Multi-stage Dynamic Incentive Model for Construction Project Managers From the Perspective of Work-Family Conflict

Water environment treatment PPP projects optimal payment mechanism based on multi-stage dynamic programming model

Are public—private partnerships still an answer for social infrastructure? A systematic literature review

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