Study on the Improvement Strategy of Trust Level between Owner and PMC Contractor Based on System Dynamics Model

Abstract

Based on the theory of system dynamics, we investigated the factors influencing the trust relationship between owners and PMC contractors in a Chinese management scenario, and proposed effective management strategies to increase the level of trust between the two parties. In the early stages of PMC project implementation, calculative trust between the owner and the PMC contractor predominated, while relational trust predominated in the middle and late stages. The applicability of the PMC model and the control configuration between the owner and the PMC contractor are also vital factors influencing the trust level. Principal determinants of calculative trust are the management capability and reputation of the PMC contractor, the sufficiency of the owner’s authorization, and the efficacy of the owner’s supervisory measures. There are four factors that influence relational trust, in order of decreasing influence: the sufficiency of the owner’s authorization, the effectiveness of the owner’s supervisory measures, the social similarity between the owner and PMC contractor, and the management capability and reputation of the PMC contractor. The research can be used as a guide for enhancing PMC project management performance and achieving PMC project success.

1. Introduction

The construction market is distinct from the general commodity market in that it has its own unique regulatory framework and management structure. It is a unique and exceptional marketplace. Construction project transaction mode, project management mode, and consulting service mode undoubtedly reflect the development level of the construction market and are fundamental to the successful implementation of construction projects. In 2022, China’s Ministry of Housing and Construction proposed the development objective of optimizing the organization mode of engineering construction, widely implementing whole-process engineering consulting, and gradually enhancing the voice and competitiveness of Chinese enterprises on the global market. Project management contracting (hereafter referred to as PMC) is an internationally recognized method for organizing and implementing engineering projects in which a project management contractor (PMC contractor) provides the owner with organization and management of the entire process. Actively implementing PMC to meet the demand of modern large-scale project construction for comprehensive, cross-stage, and integrated consulting services is an important measure to deepen China’s engineering construction project organization and implementation reform [1], improve the level of engineering construction management, ensure project quality and investment efficiency, and regulate the order of the construction market [2].

The Guangxi Zhuang Autonomous Region Institute of Water Resources Science and Research and the Institute of Project Management of Hohai University conducted a joint survey on the promotion and application of the PMC in 2021. In total, 70% of the experts agreed that the PMC was in line with the trend of construction industry reform and had a positive attitude toward its adoption. However, only 37% of the experts had applied the PMC model compared to DBB, EPC, and other models. In the survey, experts also noted that PMC projects typically have poor outcomes. Regarding PMC contractors and project legal persons, supervision unit responsibilities are unclear, too dependent on the level of project management company, and the target (schedule, quality, investment) control is difficult for the owner. In accordance with the project management system, PMC contractors manage subcontractors uniformly throughout the duration of the project, assuming full responsibility for the construction and the associated risks. The large number of stakeholders, the complexity of interrelationships, the high degree of unpredictability, and the competing interests in construction projects necessitate collaboration between owners and PMC units to reduce the inherent conflicts and risks. There is consensus in the research literature that relationship governance is an effective approach to support project success and that project managers must pay more attention to their project relationships and devote more time and energy to relationship management, resulting in a mental shift from adversarial to collaborative relationships [3]. However, because of the influence of traditional project management ideology, in Chinese engineering practice, the relationship between owners and PMC contractors is typically adversarial and marked by mutual mistrust. The owner unit wishes to increase its control over the project, preventing the PMC contractor from utilizing its management advantages and preventing it from having a separate legal entity status, resulting in numerous disagreements and conflicts between the two parties. Wu et al. conducted a questionnaire survey and quantitative analysis of 468 construction industry professionals, and found that trust between project participants affects contract flexibility, which significantly and positively affects project success, and that project conflict plays a destructive role in project success, with the most negative impact coming from relationship conflict resulting from a lack of trust [4]. Dabou et al. reviewed the literature on topics related to relationship management in construction projects between 2000 and 2020, and concluded that by adopting the appropriate team building activities and strengthening the relationship governance among team members, members’ trust will increase and, as a result, their joint productivity and commitment to achieving project goals may be enhanced [5]. The results of a systematic review of the literature in this field by Deep et al. revealed that trust, commitment, and reliability are the driving forces of collaboration in construction projects, and that appropriate attention to the enabling factors of collaboration, i.e., “trust, commitment, and reliability”, in the context of project execution decisions can facilitate collaboration and thereby increase project productivity [6]. In PMC projects, the owner selects the PMC contractor solely based on the lowest bid, without knowing the full scope of the PMC contractor. Ling et al. found that contractors excessively push for favorable offers while suppliers do not share costs, and that owners are concerned about the opportunistic behavior of PMC contractors to gain profits, and that these risks can be mitigated through collaboration based on the trust and dependability of project participants [7]. Increasing the level of trust between owners and PMC contractors is crucial for enhancing the management performance of PMC projects.

According to transaction cost economics [8], trust, as a “soft constraint”, is a fundamental component of relational governance that helps to build good interpersonal and organizational relationships, thereby reducing the probability of opportunity, complementing and partially replacing formal contractual governance [9], significantly enhancing contract efficiency, and reducing transaction costs. Particularly in China’s market environment, which places greater emphasis on social norms, trust relationships can compensate for the inflexibility of formal contracts [10]. Moreover, in engineering practice, where the level of uncertainty is high, the level of trust between the parties of a transaction will evolve dynamically under the influence of internal and external factors [11]. Furthermore, because the relationships and relational behaviors between people depend on their culture, principles, and environment, and because the results may indicate different evaluations of trust or the need to consider new contextual factors, research on relational governance is still limited in developing countries, and more research is required in various contexts [12]. Considering this, this paper raises the issue of enhancing the level of trust between owners and PMC contractors based on domestic and international studies and the Chinese engineering project management scenario, with a particular emphasis on PMC-based water conservation projects. Adopting the theory and method of system dynamics (SD) based on the analysis of the generation and evolution mechanisms of the trust between the owner and the PMC contractor during the implementation phase, constructing a cause–effect relationship diagram and a stock flow diagram to improve the level of trust between the owner and the PMC contractor, analyzing the key conditions for improving the level of trust between the two sides, and then designing six different management strategies.

2. Literature Review

2.1. Research on PMC

PMC is widely utilized in the construction of international megaprojects. Examples include Sinopec Engineering Construction Company’s PMC project for the Nanhai Ethylene Project and Langfang’s PMC project for the Chittagong-Dhaka oil pipeline project in Bangladesh. Sinopec Longway Engineering Project management Co. PMC is now one of the most important project management models in the oil, transportation, and water conservation industries, among others. Current PMC research focuses on the theoretical definition and scope of PMC, the study of PMC risks [13], the study of applied practices [14], and the study of comparison with other models [15]. The PMC contractor is responsible for the full project management coordination and supervision role on behalf of the owner until project completion and shall promptly report the work to the owner, who oversees and inspects the PMC contractor’s work. In traditional Chinese project management, each phase of project execution is tendered separately, and the owner assumes all risks during the construction period [16]; conversely, in PMC, the PMC contractor assumes overall management and target control of each phase and transfers a portion of the owner’s risks. The influence of traditional construction thinking, the requirements of the construction supervision system, and the lack of understanding of PMC, particularly in the PMC contractor and the supervision unit management responsibilities, are the primary reasons why PMC is difficult to promote on the market [17]. The engineering field survey revealed that PMC can reduce the owner’s management workload and aid in investment savings, but the application of PMC on the ground still faces difficult-to-solve nonadaptive problems, such as imperfect support policies, low social acceptance, and the difficulty of owner supervision, etc. Wang. et al. noted that PMC contractors can realize the value-added of the project by playing to their professional advantages, which is more suitable for water conservation projects with large project scales, high technical difficulty, where the project owner consists of multiple government units, and where organizational relationships are more complex [18]. According to Ghanbarizadeh et al., projects with the following conditions are suitable for PMC: complex composition of the owner, insufficient management capacity of the owner, insufficient management experience of the owner, and large size and technical complexity of the project [19]. The project management characteristics of various project types, as well as industries and characteristics, vary considerably. The project team discovered through field surveys that China currently employs the PMC model most frequently for water conservation projects. The applicability of the PMC model to water conservation projects was also mentioned in the literature above; therefore, the scope of this paper is limited to water conservation projects. Consequently, the PMC project-specific scenario factors included in this paper’s model include project size, technical complexity, potential for project cost savings, owner management capability and experience, and project land acquisition, migration, and demolition workload.

2.2. Research on Trust Generation

Trust denotes the belief and dependence of one party on the other, as well as the acceptance that future uncertainty may result in harm [20]. In engineering, trust is defined as the expectation that the giver believes the receiver will not fail him and the receiver will not disappoint the giver, even if opportunistic behavior is possible [21]. The focus of research on trust-generating mechanisms was the process of building trust, including the characteristics of the recipient and the interaction between the parties.

Dixit noted that for both owners and contractors, technical and managerial capabilities are highly valued as trust-affecting factors, referring primarily to the marketability of the contractor [22]. The owner entrusts the PMC contractor to manage and serve the entire process of organizing and implementing the project on behalf of the owner in accordance with the contract, relying on consulting management services to achieve performance. If the PMC contractor demonstrates an inability to meet the owner’s specifications, the owner’s trust in the PMC will be severely eroded. Bolton concluded that reputation is a positive characteristic of contractors, and the better the reputation, the easier it is to establish trusting relationships with others and gain access to trust opportunities [23]. In construction projects, owners tend to place their trust in contractors who have successfully completed all work tasks on previous projects and who get along well with the owner side [24].

The management focus of the PMC contractor is to collaborate with various professional teams from different organizations to provide the owner with high-quality project management services, whereas the owner is primarily located in the function of leading and supervising, which to some extent weakens the owner’s control power over the project [25]. Shi et al. noted that the owner must establish effective macroscopic supervision measures, with a focus on contract performance [26], to enable the PMC contractor to fully exploit its management strengths and to restrict its opportunistic behavior. Complete supervisory measures reduce the opportunistic risks caused by information asymmetry and incomplete contracts on the one hand [27], prevent the occurrence of malicious design changes, risk transfer, and improper use of funds by PMC contractors, and accomplish the goal of regulating their performance behaviors. In contrast, when the owner’s supervisory measures are more comprehensive, members are able to comprehend the systems and processes implemented by the organization, which increases their certainty and security in the environment and increases the likelihood that PMC contractors will engage in innovative behavior [28]. Thus, the assurance of effective oversight measures can contribute to the formation of trust between the parties to some extent.

The empirical research of Li Ming and other scholars demonstrated that leaders provide sufficient power and support to members of the organization through empowerment, and that members of the organization provide sufficient trust and loyalty to the leader based on their perception of the leader’s behavior [29]. Deep et al. found that the power dynamics between the prime contractor and subcontractor are defined by the parties’ bargaining power and are influenced by the clarity of their procurement decisions, the state of competition, and the number of competitors on the market [30]. The PMC contractor acts as an extension of the owner, managing the schedule, quality, cost, safety, and environment from the owner’s perspective, while the owner need only monitor and incentivize the PMC contractor to achieve project objectives and reduce transaction costs. If the owner still wishes to strengthen its own control rights and delegate less authority to the PMC contractor, or even bypasses the PMC contractor to perform detailed management work, then compared to the traditional project management model, not only does the owner not reduce the number of contracts signed, but an additional management level is added due to the adoption of PMC [31]. Moreover, Ju, QQ, and Ding’s research indicated that PMC is susceptible to blurring the working interface between the participating subjects and increasing the contradictions in the organizational management system when the owner is overly centralized [32], and the PMC unit is restricted in performing management functions, which reduces its motivation and impacts the efficiency of project management. Therefore, the owner’s empowering leadership is conducive to allowing PMC contractors to maximize their management strengths and foster a culture of organizational trust and equity.

People decide whether to trust others based on how similar they are to them in terms of family background, race, values, etc.; i.e., trust is generated by social similarity, and in general, the greater the similarity, the greater the trust [33]. Similar social backgrounds frequently indicate similar behavioral norms, simple mutual comprehension, and straightforward consensus in interactions or economic transactions. On the Chinese market, the giver’s evaluation of the recipient’s trust places greater emphasis on the recipient’s social relationship with his or her own party [34]. Social relationships are interpersonal connections. In the differential pattern, the social network of Chinese people consists of four levels centered on personal connections, from close to far, and four personal ties: family, acquaintances, people with vague impressions, and strangers. The closer the recipient is to the giver’s core personal ties, the more socially similar the parties are in terms of operating habits and cultural background, and the easier it is to trust mutual trust [35]. Whether the owner and the PMC contractor are in the same circle of acquaintances, have relatives in common, or have received favors, these social similarities are the most influential factors in determining the level of trust between the two parties.

This paper will therefore choose the managerial competence and reputation of the PMC contractor, the effectiveness of the owner’s supervision measures, the sufficiency of the owner’s authorization, and social similarity as the antecedents for the generation of the trust relationship in the model.

2.3. Research on the Evolution of Trust

The division of trust dimensions is based on Rousseau and colleagues’ classification of trust as calculative, relational, and institutional [36]. Calculative trust is based on rational choice and arises when the giver perceives that the recipient is exerting beneficial behavior, relational trust arises from long-term interactions between the parties and has a clear emotional dimension, and institutional trust emphasizes the role of institutions as a necessary condition to facilitate the generation of trust. In Chinese engineering projects, all three types of trust exist, but based on the literature and project practice, there are few institutional trust components. Therefore, calculative trust and relational trust are selected as the trust dimensions for this study. Most scholars concur that trust levels are a dynamic process that changes dynamically as the environment changes, but fewer studies have been conducted to micro-analyze this dynamic evolutionary process. Kramer and Tyler (1996) proposed a three-stage model for the development of trust formation: the first stage is based on the precise calculation of gains and losses in the interaction, the second stage is based on the individual’s cognitive understanding of the object of interaction, and the third stage is based on the mutual recognition of both parties in the interaction in terms of feelings and cognition [37]. Tang proposed that the level of trust is the ratio of multiple dimensions of trust, and as the information asymmetry between the two parties in the cooperation decreases, the trusting subject will extend from calculative trust to knowledge trust and then to recognition of trust [38]. Zhang et al. described the state of trust in Chinese engineering project organizations as mistrust, attempted trust, cognitive trust, and relational trust, which generally progress from low to high levels [39]. The dynamic characteristics of trust indicate that the overall level of trust will either increase or decrease as time progresses. Based on existing research findings, the following hypothesis is proposed: the level of calculative trust between owners and PMC contractors is higher in the early stage of PMC project implementation, whereas the project of relational trust on the project is greater in the middle and late stages.

The relationship between the participants is governed by contracts, and the allocation of control stipulated in the contract not only affects the size of the respective risk sharing, but also the project’s overall efficacy [40]. Sun et al. demonstrated that a level in trust between the public and private sectors facilitates the public sector’s transfer of control to social capital, thereby maximizing the expertise and management advantages of social capital [41]. The measurability of value, the long-term nature of the partnership, the complexity of the project [42], the special needs of the objective, the degree of privatization, the type of contract, and the level of trust are the most influential factors in the allocation of control [43]. The owner’s authorization of PMC contractors in the Chinese market environment is in jeopardy following the field investigation. Excessive delegation of authority by the owner to the PMC contractor may result in opportunistic behavior that is not conducive to the owner’s overall control and leads to the owner’s lack of involvement in project management. In contrast, excessive centralization of control by the owner has a direct project on the authority of the PMC contractor as the core of management, limiting the contractor’s authority and impacting the efficiency of the stakeholders’ workflow. Compared to traditional DB and DBB, the owner gives the PMC contractor more control in a PMC, and a reasonable allocation of control between the two parties is a prerequisite for more efficient cooperation and, consequently, improved project performance [44]. This paper proposes the following hypothesis: the configuration of control power between the owner and the PMC contractor influences the evolution of their level of trust.

The research of Lewicki and Bunker demonstrated that in interpersonal interactions, trust attributes change as the relationship develops, and that different types of trust, such as calculative trust and relational trust, have different connotations, but are closely linked and built together [45]. Jiang et al. noted that when calculative trust is low, relational trust is also low, and only when calculative trust reaches a certain level does relational trust begin to increase, i.e., calculative trust has a significant impact on relational trust, and only a high level of calculative trust can generate relational trust [46]. Benítez-Ávila et al. utilized questionnaire data to establish the correlation between calculative and relational trust, and the results demonstrated that relational trust maintained a consistently high correlation with calculative trust, with a correlation coefficient of 0.785 [47]. The PMC contractor relies on consulting management services for performance, and the higher the level of its professional management, the more it can inspire trust in the PMC contractor from the owner. Consequently, this paper proposes the following hypothesis: the calculative and relational trust between the owner and the PMC contractor are positively correlated, and the greater the calculative trust, the greater the relational trust.

3. Methodology

According to practical research and existing studies, the initial generation of trust between the owner and the PMC contractor is influenced by a variety of factors, and the level of trust appears to increase or decrease with the interaction of both parties. Consequently, the model presented in this paper consists of two primary subsystems: the trust generation subsystem and the trust level evolution subsystem.

3.1. Causal Loop Diagrams

3.1.1. Trust Generation Subsystem

As previously mentioned, the antecedents of trust generation include the four previously summarized factors, and the categories of trust relationships include both calculative and relational trust. After identifying the variables of this subsystem, construct the subsystem’s causal loop diagram based on the variables’ interrelationships. Performance in project management primarily refers to the efficacy and efficiency of project management activities. This subsystem contains four positive feedback loops, as shown in Figure 1.

(1) Positive feedback loop R1: Only by providing high quality intellectual management services can the PMC contractor induce the owner to have calculative trust and believe that the PMC contractor is capable of scientific management and improving project management performance on behalf of the owner. This, in turn, generates relational trust, promotes project success through good cooperation, and allows the PMC contractor to gain experience and market reputation.

(2) Positive feedback loop R2: The owner establishes a calculative trust by rationally supervising, enhancing its own macroscale and strategic regulatory control, attempting to overcome information incompleteness and asymmetry, minimizing opportunistic behavior, and ensuring that its own interests are not jeopardized. In turn, this improves the performance of project management and contributes to relational trust, allowing for mutual understanding and predictable behavior between the parties, thereby enhancing the efficacy of supervisory measures.

(3) Positive feedback loop R3: The owner’s full authorization of the PMC contractor can guarantee the PMC contractor’s performance and ensure its conditional fulfillment of the contract as required, thereby promoting the formation of calculative trust, enhancing project management performance, and establishing relational trust. The PMC contractor will have a strong sense of being trusted and supported, which encourages the PMC contractor to develop a sense of organizational identity and loyalty. As a result, the owner will be more confident in authorizing the PMC contractor, creating a virtuous circle.

(4) Positive feedback loop R4: When both parties share social similarities, such as a similar cultural background, values, and education, they will have similar behavioral norms and management concepts, resulting in relationship-based trust based on emotions. After frequent interactions and information exchange, the cultures permeate and strengthen each other’s emotional identities, and each party believes that their behavioral styles and ideologies are consistent with the other’s.

3.1.2. Trust Level Evolution Subsystem

According to previous findings, the subsystem of trust level evolution consists of six primary variables: “calculative trust”, “relational trust”, “owner’s control”, “PMC contractor’s control”, “PMC contractor’s management level”, and “owner’s central position of macro supervision”. We employed situational factors that are unique to PMC projects, such as the total project investment, project size, potential for cost savings, technical difficulty, the owner’s management capability and experience, and the land acquisition, migration, and demolition workload. Figure 2 depicts a causal loop diagram of the evolution of trust level based on the interrelationships between the main variables and situational factors. This subsystem consists of one positive feedback loop and one negative feedback loop.

(1) Positive feedback loop R1: The positive feedback loop in the trust-generating subsystem is identical to R1, and it is through R1 that the two subsystems are connected to form a single system.

(2) Negative feedback loop B1: Technical difficulty, the owner’s management capability, and experience are the primary determinants of the owner’s configuration control, whereas the PMC contractor’s configuration control derives from the owner’s concessions and is influenced by the owner’s macro-regulation. The PMC contractor’s control is the key to its management advantage, while the level of management demonstrated by the PMC contractor influences the calculative trust between the two parties, which in turn influences the owner’s configuration of control.

3.2. Stock Flow Diagram

As shown in Figure 3, the stock flow diagram was further depicted using the system dynamics Vensim PLE software to facilitate computer simulations for subsequent quantitative results, following the construction of causal loop diagrams.

In this paper, the functions and coefficients were continuously adjusted during the construction of the system dynamics model to ensure that the results were reasonable. This was accomplished by adjusting the coefficients of dependent variables by combining the opinions of experts and attempting to match the actual situation of the generation and evolution of trust level in large engineering projects. Each expert was interviewed for approximately 15 to 20 min, and their information is presented in

Table 1. Background information of experts interviewed.

Interviewee	Position	Subordinate Units	Working Seniority	Representative Major Projects Participated in
A	professor	Hohai University	24	south water to north
B	professor	Hohai University	16	south water to north
C	project managers	Contractor	11	Baise reservoir irrigation area project for drought control in northwest Guangxi
D	project entity	Government	9	Baise reservoir irrigation area project for drought control in northwest Guangxi
E	project supervision	Consulting company	13	Jiangsu Xinmeng River extension and dredging project

. Based on the actual construction time cycle of most PMC projects, the simulation cycle of the system is determined to be 60 months, with a 0.25-month step, or approximately one week. Following is a summary of the model equations:

calculative trust level = INTEG (change rate of calculative trust level, 0.0681)

relational trust level = INTEG (change rate of relational trust level, 0.0423)

project management performance = INTEG (change rate of project management performance, 0.0749)

cooperation level = INTEG (change rate of cooperation level, 0.0528)

change rate of calculative trust level = management level × influence rate of management level + opportunistic behavior × (−0.602)

change rate of relational trust level = project management performance × influence rate of project management performance + similar management concepts × 0.387

change rate of project management performance = calculative trust level × influence rate of calculative trust level

change rate of cooperation level = relational trust level × influence rate of relational trust level + conflict × (−0.465)

influence rate of management level = 0.528

influence rate of calculative trust = 0.739

influence rate of project management performance = 0.613

influence rate of relational trust = 0.534

conflict = land acquisition, migration, and demolition workload × 0.392 + PMC contractor’s coordination ability × (−0.481)

management level = PMC contractor performs management functions × 0.201 + managerial competence and reputation of the PMC contractor × 0.385 + PMC contractor’s enthusiasm × 0.112 + PMC contractor’s control × 0.302

PMC contractor performs management functions = adequacy of owner’s authorization × 0.537

managerial competence and reputation of the PMC contractor = project success × 0.231 + PMC contractor’s coordination ability × 0.32 + PMC contractor’s resource integration ability × 0.304 + PMC contractor’s social responsibility performance × 0.145

PMC contractor’s enthusiasm = PMC contractor’s control × 0.427 + room for cost savings × 0.253

PMC contractor’s control = owner’s control × 0.533 + owner’s central position of macro supervision × 0.386

room for cost savings = 0.287 × total project investment + 0.212 × project size

adequacy of owner’s authorization = PMC contractor’s organizational identity and loyalty × 0.351

PMC contractor’s organizational identity and loyalty = relational trust level × 0.263

project success = cooperation level × 0.367

owner’s control = calculative trust level × 0.387 + technical difficulty × 0.267 + owner’s management capability and experience × 0. 346

owner’s central position of macro supervision = owner plays the supervision function × 0.638

owner plays the supervision function = effectiveness of owner’s supervision measures × 0.739

effectiveness of owner’s supervision measures = effective implementation of supervision power × 0.387 + sound supervision system × 0.343 + predictable behavior of both parties × 0.27

predictable behavior of both parties = mutual understanding × 0.529

mutual understanding = relational trust level × 0.316

opportunistic behavior = asymmetric information × 0.208

asymmetric information = effectiveness of owner’s supervision measures × (−0.497)

similar management concepts = social similarity × 0.422

social similarity = affective commitment × 0.381

affective commitment = relational trust level × 0.468 + interpersonal relations × 0.311 + similar social background × 0.221

Before conducting quantitative simulations, tests are conducted to verify the model’s accuracy and reliability, and to ensure that it accurately represents real-world behavior. As depicted in Figure 4, a typical example is used to determine whether the modeling behavior is reasonable. In the example, the authors created five test scenarios by adjusting the variable “effectiveness of owner’s supervision measures” to determine whether the variable’s effect on the “calculative level of trust” is consistent with objective data. In Scenario 1, the effectiveness of owner’s supervision measures is set to 1; in Scenario 2, it is set to 0.7; in Scenario 3, it is set to 0.4; in Scenario 4, it is set to 0.2; and in Scenario 5, it is set to 0. As demonstrated in Figure 4, the value of the calculable trust level decreases as the effectiveness of the owner’s supervision measures diminishes. The simulation’s outcomes are consistent with previous research. Therefore, we can conclude that the model is reasonable and trustworthy, and that it can be used for future simulations and strategy analysis.

4. Initial Simulation Results

Initial constant values range between 0 and 1. Initial values are as follows: PMC contractor coordination ability = 0.7; PMC contractor resource integration ability = 0.6; PMC contractor social responsibility performance = 0.6; effective implementation of supervision power = 0.5; sound supervision system = 0.6; interpersonal relations = 0.4; similar social background = 0.4; technical difficulty = 0.5; owner’s management capability and experience = 0.3; land acquisition, migration, and demolishing = 0.1; land acquisition, migration, and demolishing = 0.1. The outputs of this model’s key state variables, including project management performance, cooperation level, calculative trust level, and relational trust level, are depicted in Figure 5 and Figure 6.

As shown in Figure 5, the project management performance and cooperation levels are intended to measure the PMC project’s management level. As the level of trust between the two parties increases, the levels of project management performance and cooperation also increase significantly, indicating that the level of trust between the owner and the PMC contractor increases the PMC project management level. As depicted in Figure 6, the level of calculative trust is highest at the beginning of a project’s implementation, while the level of relational trust gradually increases, and increases significantly in the middle and late stages. In the beginning stages, the owner and the contractor are frequently unfamiliar with one another; therefore, calculative trust becomes the predominant trust type, and both parties evaluate their respective benefits and risks, as well as the other party’s ability to fulfill the contract terms [48]. Under the influence of China’s tradition of valuing social relationships, harmonious relationships have become an emotional requirement for organization members, particularly in the implementation of PMC projects, in which the PMC contractor acts as an extension of the owner and the cooperation between the two parties relies more heavily on inter-organizational trust. As the project progresses and constant communication takes place, the two parties establish relational trust and a close working relationship.

5. Management Strategy Simulation Results

Initial simulation results indicate that the level of trust between the owner and PMC contractor has a greater level on management performance and cooperation. Consequently, we will investigate further the factors that can effectively increase the level of trust and thus contribute to the success of PMC projects. Existing research findings indicate that the antecedents and evolutionary dynamics of trust are frequently perceived as the primary drivers of trust level enhancement. Therefore, in the single management strategy simulation section, we established separate management strategy scenarios for the managerial competence and reputation of the PMC contractor (management strategy A), the effectiveness of the owner’s supervision measures (management strategy B), the adequacy of the owner’s authorization (management strategy C), the social similarity (management strategy D), the complexity factors specific to the PMC (management strategy E), and the social similarity (management strategy F), i.e., only one variable is adjusted while keeping the others constant during the simulation.

5.1. Scenario A: The Driving Effects of PMC Contractor’s Managerial Competence and Reputation

This section’s objective is to analyze the effect of changes in the PMC contractor’s managerial competence and reputation on the level of trust. According to the formula, the authors first set the initial value for “PMC contractor’s managerial competence and reputation” to 0.05, and then gradually increased it to 0.3 (MAN-1 scenario), 0.6 (MAN-2 scenario), and 0.9 (MAN-3 scenario), respectively. Every 10 months is considered a time node, and the observed dates of a total of six time nodes are considered.

Table 2. Scenario A simulation results.

Time	MAN-1		MAN-2		MAN-3
	Calculative Trust Level	Relational Trust Level	Calculative Trust Level	Relational Trust Level	Calculative Trust Level	Relational Trust Level
1	24.927	16.381	37.295	34.624	46.289	42.719
2	29.429	19.392	43.029	39.132	51.792	44.623
3	35.82	21.927	49.185	43.743	60.179	47.563
4	41.782	24.791	57.283	48.732	69.152	52.262
5	48.294	27.902	68.197	52.426	79.278	57.592
6	54.201	30.592	78.284	57.734	91.42	63.815

shows that an increase in the values of the PMC contractor’s managerial competence and reputation results in an increase in the values of both calculative and relational trust. In the MAN-1, MAN-2, and MAN-3 scenarios, the level of calculative trust increased by 12.23%, 14.79%, and 15.32%, respectively, at the conclusion of the simulation, and the level of relational trust increased by 9.64%, 10.12%, and 10.80%, respectively. The results of Scenario A’s simulation indicate that the managerial competence and reputation of the PMC contractor contribute significantly to both calculative and relational trust, with the contribution to calculative trust being more pronounced. The PMC contractor participates fully in both the decision-making and implementation phases, focusing on enhancing the project’s quality and operational efficiency. Only if the PMC contractor possesses management mechanisms and management capabilities that are compatible with project management services can the owner believe that the PMC contractor is capable of scientific management of the project [49], resulting in the owner having a calculative trust in the PMC contractor. The higher the reputation of the PMC contractor, the greater its professional ethics and social responsibility, which encourages the owner to have calculated and relational trust in the PMC contractor, i.e., to believe that the PMC contractor will adhere to national standard specifications and perform project management services in good faith.

5.2. Scenario B: The Driving Effects of the Effectiveness of the Owner’s Supervision Measures

This section’s objective is to examine how the effectiveness of the owner’s supervision measures affects the level of trust between the parties. According to the calculation formula, the authors set the initial value of “effectiveness of owner’s supervision measures” to 0.05; the values were then gradually increased to 0.3 (SUP-1 scenario), 0.6 (SUP-2 scenario), and 0.9 (SUP-3 scenario), respectively. Every 10 months is considered a time node, and observation data are collected from a total of six nodes over the course of the 60-month simulation period. It is evident from

Table 3. Scenario B simulation results.

Time	SUP-1		SUP-2		SUP-3
	Calculative Trust Level	Relational Trust Level	Calculative Trust Level	Relational Trust Level	Calculative Trust Level	Relational Trust Level
1	26.271	17.028	35.184	31.842	42.592	39.419
2	29.017	20.481	39.294	38.284	45.81	44.38
3	33.81	24.158	44.295	45.259	51.109	52.502
4	35.185	29.492	50.11	52.397	57.129	61.424
5	39.201	34.81	56.194	59.313	63.391	70.492
6	43.191	38.883	62.592	66.811	70.902	79.622

that an increase in the value of the effectiveness of an owner’s supervision measures results in an increase in both the calculative and relational trust values. At the conclusion of the simulation, the calculative trust level increased by 10.18%, 11.39%, and 11.85% in the SUP-1, SUP-2, and SUP-3 scenarios, while the relational trust level increased by 11.70%, 12.64%, and 12.95%, respectively. The simulation results indicate that the effectiveness of the owner’s supervision measures contributes significantly to both calculative and relational trust, with relational trust being the most affected. The PMC weakens the owner’s control over the project and creates an information asymmetry between the owner and the PMC contractor [50], one of the primary obstacles to the development of trust between the parties. The PMC contractor has an absolute information advantage, and there is a moral risk of concealing pertinent information intentionally for its own benefit and causing harm to the owner. The primary objective of owner supervision measures is also to collect information, overcome information incompleteness and asymmetry, attempt to have sufficient information, reduce uncertainty, and establish a calculative trust relationship. However, it is not sufficient to have calculative trust in a partnership because it represents a utilitarian relationship and, more importantly, a relational trust based on understanding because of effective regulation reducing information asymmetry.

5.3. Scenario C: The Driving Effects of the Owner’s Adequacy Authorization

The objective of this section is to analyze the impact of the owner’s authorization on the level of trust. According to the formula, the authors first set the initial value of “adequacy of owner’s authorization” to 0.05, and then gradually increased it to 0.3 (AUT-1 scenario), 0.6 (AUT-2 scenario), and 0.9 (AUT-3 scenario), respectively. Every 10 months is considered a time node, and observation data are collected from a total of six nodes over the course of the 60-month simulation period.

Table 4. Scenario C simulation results.

Time	AUT-1		AUT-2		AUT-3
	Calculative Trust Level	Relational Trust Level	Calculative Trust Level	Relational Trust Level	Calculative Trust Level	Relational Trust Level
1	23.492	21.471	35.275	31.305	43.524	42.501
2	27.583	25.395	39.582	38.241	47.282	49.292
3	32.502	29.482	44.285	49.242	55.285	59.251
4	36.213	35.31	51.472	60.424	62.401	69.284
5	41.492	40.821	61.832	71.592	71.583	81.489
6	46.474	45.825	70.295	81.456	81.302	92.893

demonstrates that an increase in the sufficiency of an owner’s authorization increases both calculative and relational trust levels simultaneously. In the AUT-1, AUT-2, and AUT-4 scenarios, the calculative trust level increased by 12.01%, 13.69%, and 13.58% at the conclusion of the simulation, while the relational trust level increased by 12.26%, 13.78%, and 13.99%, respectively. The results of the simulation indicate that the sufficiency of the owner’s authorization contributes significantly to both calculative and relational trust, with the contribution to relational trust being greater. On the one hand, the owner’s full authorization helps to clarify the responsibility and rights relationship and avoid overlapping management interfaces while granting the PMC contractor an independent legal entity status [51], so that the design and construction units and other participants can cooperate with its work and promote the formation of rationally calculated trust. On the other hand, the owner’s empowering leadership behavior is strongly linked to the PMC contractor’s emotional commitment, has a positive impact on organizational commitment, stimulates the management team’s sense of involvement and mission, improves cohesion and willingness to cooperate [52], enables the PMC contractor to recognize his identity and value based on the organization, enhances his awareness of project goals and sense of belonging to the organization, and establishes an emotion-based trust.

5.4. Scenario D: The Driving Effects of Social Similarity between the Owner and the PMC Contractor

This section examines the influence of social similarity between the owner and PMC contractor on trust. According to the formula, the initial value of “social similarity” is set to 0.05; the value is then increased to 0.3 (SIM-1 scenario), 0.6 (SIM-2 scenario), and 0.9 (SIM-3 scenario), respectively. Every 10 months is considered a time node, and observation data are collected from a total of six nodes over the course of the 60-month simulation period. It is evident from

Table 5. Scenario D simulation results.

Time	SIM-1		SIM-2		SIM-3
	Calculative Trust Level	Relational Trust Level	Calculative Trust Level	Relational Trust Level	Calculative Trust Level	Relational Trust Level
1	22.401	19.824	37.291	31.482	41.402	39.582
2	22.593	22.524	37.158	37.235	41.847	43.219
3	22.913	27.647	37.109	44.284	41.194	49.174
4	23.491	33.858	38.493	50.378	41.773	56.284
5	22.74	40.085	37.279	57.324	41.631	64.629
6	22.852	44.752	37.299	64.263	41.947	72.682

that the increase in the value of social similarity has no effect on calculative trust, but has a profound effect on relational trust. At the conclusion of the simulation, the level of relational trust increased by 11.64% in SIM-1, 12.10% in SIM-2, and 12.46% in SIM-3. Social similarity between the owner and the PMC contractor contributed significantly to relational trust, but little to calculative trust, according to the simulation results. Understanding, including emotional trust due to the existence of existing relationships, is the foundation of relational trust. Cooperation is crucially dependent on the “personal touch” within an organization in the Chinese context. Alternatively, if the owner and the PMC contractor are in the same circle of acquaintances, this trust is not primarily based on the character and ability of the other party, but rather on the personal relationship between this person and himself; this human relationship serves as a trust guarantee, which motivates the person to engage in trustworthy behavior [53]. Alternatively, when both parties share social similarities such as cultural background, values, and education, they will have similar behavioral norms and management concepts, which will easily produce a sense of identity, which will then produce relational trust based on a shared sense of identity.

5.5. Scenario E: The Driving Effects of Characteristic Factors of PMC Projects

This section analyzes the impact of the PMC project’s defining characteristics on the level of trust between the owner and PMC contractor. First, the initial value of the project’s cost-saving space, technical difficulty, owner’s management ability and experience, and land acquisition, migration, and demolition workload are set to 0.05. Next, the value is gradually increased, and the following two scenarios are established: the cost-saving space is increased to 0.6, the technical difficulty is increased to 0.6, the management capability and experience of the owner are increased to 0.3, and the land acquisition, migration, and demolition workload is increased to 0.3 (CHA-1 scenario); the cost-saving space is increased to 0.3, the technical difficulty is increased to 0.3, and the management capability and experience of the owner are increased to 0.6. (CHA-2 scenario). Every 10 months is considered a time node, and observation data are collected from a total of six nodes over the course of the 60-month simulation period. The simulation outcomes are displayed in

Table 6. Scenario E simulation results.

Time	CHA-1		CHA-2
	Calculative Trust Level	Relational Trust Level	Calculative Trust Level	Relational Trust Level
1	23.394	21.486	23.598	21.472
2	27.428	26.392	24.329	21.481
3	32.582	32.593	24.387	20.682
4	39.396	41.298	23.398	20.385
5	47.973	50.927	22.562	20.372
6	54.095	59.178	22.287	20.074

. In the CHA-1 scenario, the level of trust between owners and PMC contractors increases over time, whereas in the CHA-2 scenario, the level of trust decreases. Consequently, the characteristics of the PMC project are the most influential factors in the evolution of the level of trust between owners and PMC contractors.

The CHA-2 scenario involves more land acquisition, migration, demolition, and relocation, leading to ambiguous responsibilities and conflicts between the owner and the PMC contractor. In addition, the project scale is small, the technical difficulty is low, and the owner has matching management experience and ability, and is unwilling to relinquish control rights to the PMC contractor, resulting in the PMC contractor not having independent legal entity status and being like an empty shell [54], which places the PMC contractor in an awkward position during project implementation. The participation of PMC contractors decreases management efficiency. For this level, the project progress payment must first be allocated to the PMC contractor, and then the PMC contractor must allocate it to the construction units, which is two months behind the traditional contracting model, resulting in dissatisfaction among owners and construction parties and a decline in trust. In the CHA-1 scenario, the project scale is large and technically challenging, the owner lacks the necessary management capacity, the land acquisition, migration, and demolition workload is small, there is greater potential for cost and schedule savings, the PMC contractor’s scientific management is effective, the owner is willing to cede more control rights to the PMC contractor, and the level of trust between the two parties steadily increases as the project progresses. Therefore, PMC can only maximize its benefits when applicable, fostering mutual trust and close collaboration between the owner and the PMC contractor. Moreover, PMC is inapplicable when there is little room for cost savings, little technical difficulty, the owner has adequate management skills and experience, and there is a high volume of work in land acquisition, migration, and demolition, making it difficult to establish trust between the parties.

5.6. Scenario F: The Driving Effects of Control Configuration between the Owner and the PMC Contractor

This section’s objective is to analyze the effects of control configuration on the level of trust between parties. Owner’s control = 0.1%, PMC contractor’s control = 0.9% (CON-1); owner’s control = 0.4%, PMC contractor’s control = 0.6% (CON-2); owner’s control = 0.6%, PMC contractor’s control = 0.4% (CON-3); owner’s control = 0.9%, PMC contractor’s control = 0.1%. (CON-4). Every 10 months is considered a time node, and observation data are collected from a total of six nodes over the course of the 60-month simulation period. The simulation outcomes are displayed in

Table 7. Scenario F simulation results.

Time	CON-1		CON-2		CON-3		CON-4
	Calculative Trust Level	Relational Trust Level	Calculative Trust Level	Relational Trust Level	Calculative Trust Level	Relational Trust Level	Calculative Trust Level	Relational Trust Level
1	27.211	23.682	29.413	24.817	27.419	22.593	28.234	26.918
2	28.892	23.251	32.591	26.289	29.532	23.971	27.292	25.175
3	27.352	22.484	35.292	30.714	30.831	25.581	23.825	20.498
4	26.871	20.617	40.185	37.632	32.421	27.914	21.587	17.289
5	25.851	18.181	47.213	47.295	33.325	29.195	19.472	13.592
6	25.274	16.927	55.824	58.278	34.874	31.522	17.281	10.472

. In the CON-2 scenario, the PMC contractor’s level of control is marginally greater than that of the owner, and the level of trust between the parties increases significantly. When the PMC contractor’s control exceeds the owner’s control to an excessive degree, the owner’s central position diminishes, and the PMC contractor is in a dominant position and may profit by jeopardizing the owner’s interests. Typically, PMC projects involve transactions with high values, lengthy lead times, intricate relationships, and lengthy use cycles after completion. These characteristics make the information between the owner and the PMC contractor asymmetrical, and differences in project costs, schedules, device performance, and utility with the contractor may be caused by factors beyond both parties’ control or by the PMC contractor’s actions, which are difficult for the owner to detect and stop [55]. When the owner has more control over the project than the PMC contractor, PMC does not apply and there is very little trust between the parties.

6. Discussions

Previous research on project trust was conducted at a macro level and did not account for project types, differences in project management models, or project transaction models [56]. In contrast, the scope of this study is defined as water conservation projects adopting the PMC model, with the unique characteristics of the PMC model and water conservation projects included as variables, thereby making the research results more applicable and instructive. The level of calculative trust between the owner and the PMC unit was higher in the early stages of PMC project implementation, whereas the impact of relational trust on the project was greater in the middle and late stages of project implementation. This result is consistent with the existing research literature regarding the dynamic evolution process of trust. During the initial phases of PMC project implementation, both parties should focus on cultivating and maintaining calculative trust. For the formation of pre-calculative trust, the managerial expertise and reputation of the PMC contractor are the most crucial factors. Other considerations include, in order, the sufficiency of the owner’s authorization, the effectiveness of the owner’s supervision measures, and the social similarity between the owner and the PMC contractor. During the middle and later phases of project implementation, greater emphasis should be placed on fostering relational trust. Adequacy of owner’s authorization and effectiveness of owner’s supervision measures contribute most to relational trust formation, followed by social similarity and the managerial competence and reputation of the PMC contractor.

Lau et al. demonstrated that competence motivates trust and is the first step in trust formation; they also indicated that the owner will have no further trust requirements if the contractor’s ability to complete the project is demonstrated through prequalification during the bidding phase [57]. Therefore, PMC contractors should first improve their capability level and market competitiveness, including upgrading their qualification level, scale, construction technology solutions, etc., and enhancing their social responsibility fulfillment to ensure a positive reputation. The use of the professional expertise of PMC contractors is contingent upon the transfer of project control. A reasonable control allocation is required to motivate the PMC contractor to work and to increase the level of trust between the parties. In the early stages of project implementation, the owner must sign a contract with the PMC contractor to transfer control to the PMC contractor. Inseparable from the effectiveness of the owner’s supervision measures is the transfer of control. In other words, despite the owner’s weak control over the project’s implementation, it remains at the center of the organization through effective supervision, reducing information asymmetry, detecting and preventing opportunistic behavior of the PMC contractor in a timely manner, and enhancing the level of trust. Therefore, the owner and PMC contractor should actively develop and apply modern information technology and resources such as the Building Information Model (BIM), big data, and Internet of Things to establish a public information management platform, where all parties can share information and work collaboratively, and the information between various departments and levels within the organization of project participants can be communicated and coordinated without barriers [58], so as to ensure that the project is completed on management and within management. Since trust results from interconnected social relationships, it has a close relationship with social culture. Compared to the institution-focused Western culture [59], the relationship-focused nature of Chinese culture is more significant, and the social similarity between the owner and the PMC contractor in the Chinese management context has a positive effect on the enhancement of relational trust. The owner and the PMC contractor should make proper use of social similarity so that it facilitates a strong, deep, trustworthy partnership, and avoid making social similarity a conduit for corruption and embezzlement [60]. The applicability of the PMC model is also a significant factor in the evolution of the trust level, as the PMC model can only fully benefit from scenarios in which it is applicable. The PMC model is inapplicable when the project requires more land acquisition, migration, or demolition, has a smaller project investment, a smaller project scope, fewer opportunities for cost savings, and the owner has sufficient management capacity. We recommend not blindly following the trend of selecting a PMC mode; rather, the actual circumstances of the project should be evaluated, and the appropriate project management model should be selected.

7. Conclusions

Based on system dynamics theory and methods, this paper investigates the key strategies for increasing trust between owners and PMC contractors. First, based on the literature analysis, the causal loop diagram and stock flow diagram of the model are constructed using system dynamics Vensim PLE software. The model was then debugged several times to ensure that the results were reasonable, and the coefficients of dependent variables were adjusted with expert opinions to determine the model equations, so that the model simulation results are largely consistent with the actual situation of trust level generation and evolution in large engineering projects. Six management strategy scenarios were based on this to test the efficacy of various strategies for increasing trust between the owner and PMC contractors. The simulation results indicated that calculative trust was dominant in the early stage of PMC project implementation, whereas relational trust was dominant in the middle and late stages; the managerial competence and reputation of the PMC contractor promoted the formation of calculative trust the most, whereas social similarity did not promote the formation of calculative trust; the adequacy of the owner’s authorization and the effectiveness of the owner’s supervisory measures facilitated the formation of calculative trust, as well as the social similarity between the owner and PMC contractor This paper’s findings provide theoretical support for enhancing the performance of PMC project management, thereby promoting the application of PMC on the ground, meeting the construction unit’s demand for comprehensive, cross-phase, and integrated consulting services, and enhancing the overall investment efficiency. The limitation of this paper’s research is that only the static trust factors of the organization are considered, while the dynamic characteristics that change with the progress of the project, such as the change in the interest demands of the team and the attitude commitment of both parties, are not included in the model as antecedent independent variables; as such, it will be necessary to establish a theoretical model to analyze these factors in future research.