Title: Optimum sharing in project delivery methods

Authors: S. Mahdi Hosseinian; David G. Carmichael

Addresses: Faculty of Engineering, Civil Engineering Department, Bu-Ali Sina University, Hamedan 6517838695, Iran ' School of Civil and Environmental Engineering, University of New South Wales, Sydney 2052, Australia

Abstract: 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 methods; risk aversion; contractors; design consultant; cooperative contracting; traditional delivery; contractor delivery management; project delivery.

DOI: 10.1504/IJEME.2014.066586

International Journal of Engineering Management and Economics, 2014 Vol.4 No.2, pp.151 - 175

Received: 04 Oct 2013
Accepted: 02 Jun 2014
Published online: 03 Mar 2015 *

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