Sustainable Quality Control Decisions in Water Conservancy Supply Chains: A Principal-Agent Approach Considering Early Completion Benefits

Water conservancy infrastructure is essential for sustainable socio-economic development, but quality failures caused by information asymmetry among stakeholders may undermine long-term project performance. Existing studies rarely integrate early completion benefits into quality control decisions or investigate governance strategies under different information conditions. This study develops a three-level principal-agent model involving the owner, supervisor, and contractor by incorporating early completion incentives into the quality supervision framework. The optimal quality monitoring level (Pa), quality guarantee deposit (S), and penalty mechanism (F) are derived under symmetric, asymmetric, and incomplete information scenarios, where probability density functions are introduced to characterize behavioral uncertainty under incomplete information. The results show that early completion incentives require a balance between schedule acceleration and quality risk control. Under sufficient contractor quality probability-based behavior, increased time effort reduces the owner’s supervision demand, whereas schedule compression combined with weak quality control increases the need for financial constraints. Under asymmetric and incomplete information, higher penalties and adaptive deposit strategies are required to mitigate moral hazard. Moreover, contractor probability-based behavior and supervisor performance exhibit substitution effects on owner supervision, indicating that strong partner probability-based behavior can reduce monitoring costs. These findings provide practical guidance for designing adaptive contracts, including differentiated supervision strategies and probability-based behavior-based deposit mechanisms, thereby enhancing the resilience and sustainability of water infrastructure supply chains.

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Publication Details

Journal
Sustainability
Published
2026-07-16
DOI
https://doi.org/10.3390/su18147279
Primary Topic
Water resources management and optimization
Type
article
Field-Weighted Citation Impact
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article

Sustainable Quality Control Decisions in Water Conservancy Supply Chains: A Principal-Agent Approach Considering Early Completion Benefits

Z Y Li, Tianyu Fan, Ying Guo, Yizhou Li et al.
Sustainability
Water resources management and optimization
article

Sustainable Quality Control Decisions in Water Conservancy Supply Chains: A Principal-Agent Approach Considering Early Completion Benefits

Z Y Li, Tianyu Fan, Ying Guo, Yizhou Li, Xuefeng Pang, Zhongbing Gao, Zihan Wang
article en

Abstract

Water conservancy infrastructure is essential for sustainable socio-economic development, but quality failures caused by information asymmetry among stakeholders may undermine long-term project performance. Existing studies rarely integrate early completion benefits into quality control decisions or investigate governance strategies under different information conditions. This study develops a three-level principal-agent model involving the owner, supervisor, and contractor by incorporating early completion incentives into the quality supervision framework. The optimal quality monitoring level (Pa), quality guarantee deposit (S), and penalty mechanism (F) are derived under symmetric, asymmetric, and incomplete information scenarios, where probability density functions are introduced to characterize behavioral uncertainty under incomplete information. The results show that early completion incentives require a balance between schedule acceleration and quality risk control. Under sufficient contractor quality probability-based behavior, increased time effort reduces the owner’s supervision demand, whereas schedule compression combined with weak quality control increases the need for financial constraints. Under asymmetric and incomplete information, higher penalties and adaptive deposit strategies are required to mitigate moral hazard. Moreover, contractor probability-based behavior and supervisor performance exhibit substitution effects on owner supervision, indicating that strong partner probability-based behavior can reduce monitoring costs. These findings provide practical guidance for designing adaptive contracts, including differentiated supervision strategies and probability-based behavior-based deposit mechanisms, thereby enhancing the resilience and sustainability of water infrastructure supply chains.

SustainabilityVol. 18(14)
North China University of Water Resources and Electric Power (CN), Langfang Normal University (CN)
Industry, innovation and infrastructure
Openalex Percentile: Top 11%
Water resources management and optimization
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