A game theory approach for competition and cooperation among project’s subcontractors with interaction activities

Hafezalkotob, A.; Hoseinpour, E.; Damghani, K.

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Journal of Project Management

ISSN 2371-8374 (Online) - ISSN 2371-8366 (Print) Quarterly Publication Volume 2 Issue 2 pp. 71-86 , 2017

A game theory approach for competition and cooperation among project’s subcontractors with interaction activities Pages 71-86 Download PDF

Authors: Ashkan Hafezalkotob, Elahe Hoseinpour, Kaveh Khalili Damghani

DOI: 10.5267/j.jpm.2017.6.002

Keywords:

Abstract: Some projects are often performed by many subcontractors that cooperate with each other and some of them are conducted by outsourcing them to several firms; so subcontractors carry out activities in competition. Appropriate trade-off between time and cost and achieving more benefit and cost saving are objectives of both models. In this paper, it is investigated that how different subcontractors of a project can cooperate to achieve more advantages if possible and how sub-contractors can compete to make the results better and find the optimum cost to minimize the time for each of them. The competition here does not mean eliminating a competitor, but the aim is to challenge the contractors in order to choose the best decision. The purpose of this study is to address the challenges in time and cost management and to find more profit allocation among subcontractors and fair competition for fair allocation as well. A model based on cooperative game theory in time/cost trade-off problem of projects is suggested and then a competition model among subcontractors based on non-cooperative game theory is proposed. A case study is rep-resented to comprehensively illustrate the problem, the cooperative techniques of cooperative game theory, and the payoff matrix of non-cooperative model among subcontractors. Results of the proposed model reveal that subcontractors can obtain higher profit from cooperation if pos-sible. When they outsource the project and compete with each other, they must consider the in-teraction activities and choose the best strategies for cost saving and gain more reward from the client. Moreover, it is found that some techniques such as Shapley value, Core, Max-Min Core, or Equal Profit Method (EPM) are able to fairly assign extra profit of cooperation, and using the payoff matrix, Nash equilibrium, and Nash bargaining helps to find the optimum point to mini-mize time and cost for interaction activities state.

How to cite this paper

 Hafezalkotob, A., Hoseinpour, E & Damghani, K. (2017). A game theory approach for competition and cooperation among project’s subcontractors with interaction activities.Journal of Project Management, 2(2), 71-86.

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