Analysis of information asymmetry between construction project owners and supervisors?

At present, China's project management system has basically formed four basic systems: project legal person system, bidding system, project supervision system and contract management system. Accordingly, the construction market has changed from the original dual structure to the ternary structure, that is, the project legal person (buyer), the design and construction contractor (seller) and the supervision unit (intermediary). Practice has proved that the project supervision system has played an important role in ensuring the quality of project construction, ensuring the timely completion of the project, improving the level of project construction and giving full play to the benefits of project investment. At the same time, there are many problems in the actual operation. At present, most engineering supervisors only play the role of a quality supervisor, which has little effect on progress and investment. Compared with the mature project management system in western developed countries, China's project supervision is still in its infancy. Based on the principal-agent theory of information asymmetry, this paper analyzes the problems existing in the project supervision system and discusses the perfection of the construction project supervision system.

1 Information Asymmetry Analysis of Supervision in Bidding Stage

1. 1 the risk of adverse selection in supervision bidding.

The principal-agent relationship comes into being with the development of socialized mass production. Extensive social division of labor and internal division of labor in enterprises have produced a large number of principal-agent relationships among economic entities. As long as the information held by both parties in the market is asymmetric before and after the contract is established or signed, this economic relationship can be considered as a principal-agent relationship. The so-called information asymmetry means that one party (agent) has certain information, while the other party (client) does not, and even the third party cannot verify it. In the construction market, the owner and supervisor belong to the principal-agent relationship, the owner is the principal and the supervisor is the agent. Akerlof's second-hand car market model published in 1970 initiated the theory of adverse selection. Adverse selection means that the economic agent conceals unfavorable information (even provides false information beneficial to himself) before signing the contract, which leads to unfavorable results for the client.

When the project owner selects the project management contractor (supervisor) through bidding, the owner is the buyer and accepts the quotation; As the seller, the supervision unit puts forward the tender offer. Under normal circumstances, the owner will choose the supervision enterprise with lower quotation as the winning bidder, and adverse selection will occur at this time. There are two reasons why the bidder with the lowest price can quote the lowest price: First, the bidder has strong strength and strong management ability, and the management cost function is lower than other bidders. However, this situation is difficult to appear in the supervision industry, because supervision belongs to an intellectual and technical service, mainly the cost of people, so it can not achieve profit through economies of scale like other production enterprises. Second, the bidder is not a powerful enterprise. Instead, it wants to bid at a low price by reducing labor costs and service quality. There is a risk of adverse selection at this time. The supervision enterprises with poor strength won the bid, and the enterprises with strong strength were eliminated because of the high quotation. Due to the implementation of the project, enterprises with poor strength can not meet the project management needs of the project owners, and ultimately harm the interests of the project owners. Both positive and negative aspects reflect the current situation of low supervision fees, insufficient people to eat and fierce competition in the construction market. In order to obtain supervision projects, supervision enterprises compete to lower prices, resulting in a vicious circle of construction supervision market.

1.2 Analysis of Information Asymmetry in Supervision Bidding

When the owner chooses a supervisor to manage the project through bidding, the advantage information of the supervision bidder relative to the owner is:

(1) Supervise the bidder's own qualification, reputation and financial status.

(2) Supervise the technical strength of bidders and related test instruments and equipment.

(3) The quantity and quality of employees in supervision enterprises.

(4) The supervision experience and performance of the bidder in recent years.

(5) the qualification and performance of the supervision engineer to be sent to the project subject to tender. This information is difficult for owners to grasp.

1.3 solution of adverse selection in bidding stage

The risk of adverse selection in the bidding stage of engineering supervision is mainly caused by the difference of information possessed by the owner and the supervisor, so one way to solve the risk of adverse selection is to reduce or reduce the degree of information asymmetry.

From the perspective of the government, it is necessary to strengthen the supervision and management of the government and maintain the openness, fairness and justice of the construction supervision market. First, the construction administrative department implements a strict market access system, including the qualification examination and management of supervision enterprises and supervision engineers. The second is to build self-regulatory organizations of administrative departments or trade associations and strengthen the disclosure system of relevant information (finance, reputation, etc.). ) enterprises or individuals engaged in supervision services. From the project owner's point of view, the owner invites relevant industry experts or entrusts a professional consulting company to strictly examine the bidding documents of the supervision enterprise. Supervision bidding's goal is "project management service", which is different from other goals in project construction. The supervisor does not undertake material production tasks, but only provides consulting management services for the project construction process entrusted by the project owner. In view of the particularity of supervision objectives, the basic principle for tenderers to select the winning bidder is "selecting the best". First of all, the bid evaluation committee should focus on the information of the project management ability of the supervision enterprise, including the qualifications of bidders, the quality of the main managers to be sent to the project, the performance and rewards and punishments of the supervision unit in recent years, the project management plan and task book of the project invested by the supervision unit, etc. Secondly, the bidding quotation of supervision enterprises, and the weight score of project management ability of supervision enterprises is greater than the bidding quotation.

2 Information asymmetry in the performance stage of project supervision contract

2. 1 Moral hazard and information asymmetry in the performance stage

Moral hazard in information economics refers to the behavior of economic agents that damages the effectiveness of principals or other agents while maximizing their own effectiveness. The root of moral hazard is the information asymmetry between the principal and the agent, and the agent is an economic actor who pursues the maximization of his own interests. At this time, the customer is faced with the problem of "how to make him not lazy". In the construction supervision market, when the owner signs a contract with the supervision enterprise, the advantages of the supervision enterprise relative to the project owner in contract performance mainly include:

(1) The number of supervision engineers sent by supervision enterprises to the project is not enough, which is difficult to meet the needs of the project.

(2) the supervision engineer's technical business ability and management ability are poor, and he is not competent for the work.

(3) the risk of supervision engineer's behavior responsibility. Including two aspects: first, the supervision engineer failed to correctly perform the duties of the supervision engineer contract, and dereliction of duty occurred in the work. Second, the supervision engineer failed to perform his duties due to subjective arbitrariness, resulting in engineering losses, such as decision-making on the handling of engineering change claims. Improper handling will cause greater economic losses and delays to the owners.

(4) Occupational moral hazard refers to the supervision engineer's use of the project for personal gain, such as eating, taking, asking for from the contractor, etc.

(5) Risks of internal management mechanism of supervision engineer's project department, such as unclear responsibilities of personnel at all levels of supervision institutions, will inevitably lead to loopholes in the whole project.

2.2 The solution of moral hazard in the contract performance stage

The problem of moral hazard between project owners and supervision enterprises is mainly solved through incentive mechanism and restraint mechanism.

(1) incentive mechanism. According to the hypothesis of property rights economics, the agent is a rational economic man. Under the established system, the agent's behavior goal is to satisfy his own interests to the maximum extent with the help of the conditions provided by the principal, that is to say, the agent's behavior depends on his survival system. An effective system can make the agent's goal roughly consistent with the client's goal, on the contrary, it will make the agent's goal seriously deviate from the client's goal. This involves the design of incentive mechanism. The connotation of incentive mechanism design is that the client doesn't know the private information of the agent and doesn't fully understand the behavior mode of the latter, so the mechanism design is carried out to induce the agent with private information to proceed from his own interests and act in line with the client's goal. The central problem of incentive mechanism design is how to mobilize the internal enthusiasm of agents and make them work actively for the best interests of enterprises. In the construction market, the relationship between project owners and supervision enterprises is maintained through economic contracts. Therefore, in order to prevent moral hazard, the owner must embody the incentive mechanism in the entrusted supervision contract, that is, under the given asymmetric information structure, through the optimal incentive contract or institutional arrangement, the interests of the supervisor are consistent with those of the project owner. For example, the rationalization proposal award in the supervision contract has played an important role in engineering practice. The owner of a hydropower project began to design and adopt a concrete gravity dam. According to the analysis of the supervision engineer, it is more economical to use the local material dam-concrete face rockfill dam. This proposal alone can save the owner 3 million yuan in investment. The design of supervision entrustment contract should fully embody the principle of consistency of responsibility, right and benefit. The supervisor must bear some risks and get corresponding benefits from such risks, so that the supervisor can consciously restrain his behavior and try his best to do a good job in project management for the project owner. In addition, in the process of project implementation, appropriate rewards can be given according to the management performance of the supervisor.

(2) Constraint mechanism. Constraint mechanism can be divided into internal constraint mechanism and external constraint mechanism. Internal restraint is mainly to clarify the responsibilities and obligations of supervisors through contracts, and they must be allowed to bear some risks. In the existing model of supervision entrustment contract, there are few clauses in this respect, and even the only clauses (about the breach of contract by the supervisor) are not easy to operate, which leads to the supervision engineer's weak sense of responsibility and the randomness and flexibility of supervision work. The author suggests that: First, the responsibilities and obligations of the supervisor in the current supervision entrustment contract should be supplemented and refined to make it more conducive to the actual evaluation of supervision work. Second, the performance bond system can be introduced according to the terms of the civil construction contract. When the supervisor fails to perform his duties or damages the interests of the client, he can be directly investigated for responsibility. The third is to introduce professional liability insurance. That is, the responsibility risk of supervision engineers is transferred through market means, so that supervision engineers can better play their personal abilities and protect the interests of owners. The professional liability insurance here is aimed at the loss caused to the owner or the third party by the negligent behavior of the supervision engineer when providing services according to the entrustment contract, and this behavior must be unintentional subjectively and limited to the behavior within the professional scope of the supervision engineer. At present, professional liability insurance has not been carried out in China, which needs further study.

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