Incentive Mechanisms in Consortium-Based PPP Projects: Considering Team Collaboration and Reciprocal Member Preferences

The incentive mechanism functions as a core safeguard to ensure the efficient execution of consortium-based Public–Private Partnership (PPP) projects and the realization of value-added outcomes. The heterogeneity of consortium members, their reciprocal preferences, and the collaborative dynamics of the team collectively contribute to the formation of project alliances characterized by resource synergy, complementary advantages, and risk sharing. However, these same factors also contribute to the multi-layered structure of principal–agent relationships and the inherent complexity of incentive pathways and mechanisms in consortium-based PPP settings. Drawing upon the team collaboration effect and reciprocal preferences among consortium members, this study incorporated the member heterogeneity and developed three incentive models for such projects, such as the Dual-Performance (DP) mode, the Total-Performance (TP) mode, and the Individual-Performance (IP) mode. This study examined the conditions under which these incentive modes were established, the relationship between incentive intensity and optimal effort levels of consortium members, and the influence of reciprocal preferences on incentive effectiveness. Further, the selection criteria and appropriate application scenarios for each of the three incentive models were analyzed according to a comparative analysis, thereby putting forward effective suggestions for improving the effort levels of private investors in consortium-based PPP projects. The study results indicate that team synergy effects play an imperative role in improving the optimal effort levels under all three modes, whereas reciprocity preferences exhibit a negative relationship with effort in the DP and TP modes. When reciprocity remains within a moderate range, the DP mode achieves highest aggregate effort levels, whereas the IP mode induces positive incentive effects only under extreme reciprocity conditions. Thus, the application of dual incentive coefficients can enhance operational adaptability and allocative efficiency and governments should establish a multidimensional collaborative incentive for consortium-based PPP projects to strengthen effectiveness and project quality. This comprehensive evaluation provides crucial insights for policymakers, emphasizing the strategic selection of incentive mechanisms to enhance the sustainability and effectiveness of consortium-based PPP Projects.