Incentives and effort elicitation in construction contracting: modeling strategic behavior under DBB and CMR/GMP contracts

Owners in the construction industry face persistent challenges in aligning the incentives of designers and contractors with project objectives, often leading to suboptimal collaboration and effort allocation. While prior research has qualitatively examined these dynamics, few studies have formalized them into replicable models that reveal underlying equilibrium behaviors. This study addresses this gap by applying dynamic game-theoretic frameworks to two prevalent procurement archetypes: Lump Sum contracts typically associated with Design-Bid-Build (DBB) and Guaranteed Maximum Price (GMP) contracts often linked with Construction Manager at Risk (CMR). Theoretical predictions are evaluated using survey evidence from designers and contractors on U.S. commercial construction projects. Results confirm systematic differences in effort and in perceptions of counterpart effort across contract types, consistent with model predictions: DBB structures mirror a sequential Prisoner’s Dilemma in which both agents minimize effort, whereas CMR/GMP structures elicit higher contractor effort and shift bargaining power toward designers. The study also highlights the critical but underexplored role of owners in orchestrating incentives. By linking contract type to strategic behavior, this research provides a conceptual decision-support framework for owners and expands the construction management Body of Knowledge on incentive alignment in procurement strategies.