Incentive Contract Design in Outsourcing Project with Uncertain Completion Time

For projects with obvious time value, such as scientific research and development and large-scale projects like hydropower construction, early completion can bring significant economic benefits. Considering resources, schedule and cost, outsourcing has become a strategic choice for such projects. At present, the research on project income incentives and duration optimization is mostly based on deterministic duration or non-cooperative perspective. In actual construction, the duration is often uncertain due to the influence of exogenous variables. Therefore, in the uncertainty of the duration, considering the risk preferences of all parties involved, designing a cooperative incentive mechanism is of great significance to the project outsourcing practice. From the perspective of cooperative game, this article makes cooperative incentive contracts with certain and uncertain duration respectively, to enlarge the project output, so both contractor and subcontractor can earn more. Finally, it provides several meaningful suggestions for the outsourcing project incentive problem in practice through model analysis.