Analysis of Top Chinese Contractors´ Surplus Distribution in International Construction Markets

The past decade has witnessed a rapid development of the international construction market. This research aims to investigate top Chinese contractors´ surplus distribution created by Value Engineering (VE). During the past few decades, VE approach has been widely used in the area of construction, which focuses on the lowest lifecycle cost consistent with performance, quality and reliability. Only each entity is satisfied with their costs and benefits that their incentives are aligned, or else they will be slack to use VE approach. In this paper the net financial benefits is defined as surplus which can be distributed between owners and contractors or designers, so the research on surplus distribution was identified as being useful both in theory and practice. This paper set a surplus distribution model based on game theory and find out the Nash equilibrium and Pareto optimality of the model. It derives some analytical results from the model such as the proportion optimization. By comparison of Nash equilibrium and Pareto optimality, this paper indicates the extremely importance of mutual coordination.