Study on Apportionment of Construction Cost for a Transregional Public Project

Abstract

A transregional public engineering project, such as waterway construction, is generally characterized by its public goods, requires a large amount of capital to fund and is difficult to raise money for the project if it going to be constructed in a developing area. So regional or provincial governments which benefited from the project should act on their own initiative to become active participators. But due to the diversity in interests, local governments tend to shirk their responsibility to construct with an excuse that the project is so-called "transregional" and "public". Therefore, the key concern of such a project now lies in a right approach to apportioning cost among various parties. We need a more comprehensive one of apportionment because the participators in a cooperative project tend to choose their most favorable methods that will lead to disputes over their choices. This paper discusses the general principles of apportioning financial cost for the construction of transregional public project, reviews different apportioning methods, on the basis of game theory, puts forward a synthetical approach of financial cost apportioning which integrates the cooperative strategy with multi-goals programming and is in line with fairness, effectiveness and take the local economic situation and the benefits of the project into consideration at the same time, and finally verifies the approach by a real project as an example to show this approach effective and valuable