How to alter path dependency and promote the use of EPC model in public projects of China?

Abstract

The key to promoting the EPC (Engineering, Procurement, Construction) model in China’s public construction projects is to alter the path dependence of a project owner’s choice of project delivery model (PDM). This study uses evolutionary game theory to discuss the mechanism of government incentives as an external motivation to alter path dependence in the PDM. In addition, a cellular automata simulation to examine the influence of various government incentives on the project owner’s choice. The results show that the combination of subsidies and penalties can produce the best incentive. Subsidies are more effective at promoting PDM institutional change, whereas penalties are more effective at preventing PDM institutional change from anti-recession effects. Based on our results, we propose that the Chinese government should take active subsidy measures at the initial stage of EPC promotion, and adopt a dynamic incentive strategy of continuously reducing subsidies and increasing penalties according to the improvement of the development degree of EPC model.