Project Monitoring System

Studying project supervision systems based on principal-agent theory in China’s construction market project management Monitoring System has experienced a long process of three systems. The first is a unitary planned economic system; the second is the binary model between owner and contractor; the third is the triangular model currently used between owners, contractors and supervisors (Liu, 2007). The introduction of a project supervision system is designed to strike a balance among construction market players. However, there are a series of problems in the actual operation of the project control system, which seriously limit the formation of market modes (Huang, Cheng & Tan, 2003). The development of information economics has provided a good explanation for the above problems. Information economics Monitoring System using asymmetric information game theory is an application in economics, and is also a new development of microeconomics. The information asymmetry hypothesis is the basis of the existence of information economics. In the construction market, owners and contractors are parties to a game of information asymmetry. The introduction of a project monitoring system can reduce information asymmetry, resulting in a fairer game. This is in accordance with the principles of supervision of fairness and justice. In China, the surveillance market is still in its infancy. Therefore it is urgent to use a comprehensive Monitoring System and fair bidding system in the construction market to solve this problem.
A principal-agent problem or agency dilemma occurs when one person or entity (the “agent”) is able to make a decision affecting, or on behalf of, another person or entity: the “principal”. The dilemma exists because sometimes agents are motivated to act in their own best interests rather than those of the principal. The agent-principal relationship is a useful analytical tool in political science and economics, but it may apply to other fields as well. Problems arise where the two parties have different interests and information is asymmetric (the agent has more information), so that the principal cannot directly ensure that the agent always acts in his best interests [2], especially when activities that are useful to the principal are detrimental to the agent. and where elements of what the agent does are expensive for the principal to comply with. Moral hazards and conflicts of interest can arise. Indeed, the principal may be sufficiently concerned about being exploited by the agent that he or she chooses not to enter into the transaction at all, when the deal actually benefits both parties: a suboptimal outcome that lowers overall welfare. Deviation from the interest of the principal by the agent is called ‘agency cost’ (Hu, 2004). Various mechanisms can be used to align the interests of the agent with those of the principal. In employment, employers (principals) may use piece rates/commissions, profit sharing, wage efficiency, performance measurement (including financial reports), agents who place bonds, or threats of termination of employment. As a solution to the principal-agent problem, though, tipping isn’t perfect. In the hope of getting a larger tip, a server, for example, Monitoring System might be inclined to give the customer an extra-large glass of wine or a second scoop of ice cream. While these larger portions keep customers happy and increase the chances of servers getting a good tip, they cut into a restaurant’s profit margin.