Penalizing Lateness or Sharing Cost: Project Outsourcing via Request-for-Quote

• 成果类型: Article
• 署名作者: Hou, Chengfan; Lu, Mengshi; Deng, Tianhu; Shen, Zuo-Jun Max
• 署名单位: Tongji University; Tongji University; Purdue University System; Purdue University; Soochow University - China; University of Hong Kong; University of Hong Kong
• 刊物名称: M&SOM-MANUFACTURING & SERVICE OPERATIONS MANAGEMENT
• ISSN/ISSBN: 1523-4614
• DOI: 10.1287/msom.2024.0894
• 发表日期: 2026
• 关键词: incentive contracts; asymmetric information; auctions; procurement; COMPETITION; MARKETS; DESIGN

摘要

Request-for-quote (RFQ) is the most commonly used mechanism for contractor selection in project outsourcing. Problem definition: We study how RFQ design interacts with the time-cost trade-off in project execution and compare two common contract forms: time-incentive contracts (penalizing lateness) and cost-sharing contracts (reimbursing direct costs). Methodology/results: Using a game-theoretic model, we characterize optimal RFQ designs under incomplete information about contractors' direct cost efficiency. Time-incentive contracts weaken competition, whereas cost-sharing contracts strengthen it, increasing work rates and shortening completion times. Clients prefer cost-sharing contracts, with this preference being stronger when time urgency is high, contractor heterogeneity is substantial, or the contractor pool is small; time-incentive contracts yield higher overall system efficiency in low-urgency settings, consistent with their prevalence in public projects. We derive a closed-form bound on the relative decrease in the client's payoff when using a fixed-term RFQ instead of a more complex upfront-fee RFQ and numerically show that fixed-term RFQs lose less than 0.28% of client payoff. Audit noise has no effect when correction costs are negligible or very high, but it introduces bidding frictions and lowers the optimal cost-sharing ratio when correction costs are moderate. Managerial implications: These insights guide contract selection by time urgency and market conditions and support the use of simple fixed-term RFQs with minimal profit loss.