A Decision Model Assessing the Owner and Contractor’s Conflict Behaviors in Construction Projects

Abstract

Considering the effects of the contractor’s conflict behaviors on the project benefit, a decision model between the owner and contractor’s conflict behaviors in construction projects was constructed using the principal-agent theory and game theory. The model was analyzed under nonconflicting and conflicting conditions, and a numerical simulation and example analysis were proposed to verify the constructed model’s conclusion. The results showed that the effort levels of the owner and contractor not only relate to benefit-sharing coefficient and effort outcome coefficient but also depend on the contractor’s ability of converting the conflict into benefit and the loss caused by conflict behaviors. A higher ability of converting conflicts into benefits and lower levels of the loss caused by conflict behaviors for the contractor lead to lower levels of the net benefit of the owner, conversely higher levels of the net benefit of the contractor. Balancing the contractor’s ability of converting conflicts into benefits and the loss caused by conflict behaviors lead to a more reasonable risk allocation between the owner and contractor, improving the effort level and net benefit. To add value to the construction project, the owner should establish an impartial and reasonable benefit-sharing mechanism, optimize the owner and contractor’s resource arrangement, maximize the positive effect of conflict on project benefits, and avoid the negative effect of conflict. Few studies to date have investigated the effects of conflict behaviors on project benefits in terms of modeling and simulation in construction projects. As such, this study bridges this gap and contributes significant theoretical and practical insights about managing conflict behaviors in an interorganizational context, thus enhancing performance in construction projects.