Optimal contract modes based on BIM capability maturity: the case of design and construction contracts

Abstract

Building Information Modeling (BIM) has transformed project delivery, yet contract design for BIM-enabled projects remains anchored in qualitative frameworks that implicitly assume uniform BIM capability across contracting parties. In practice, however, the designer and constructor often operate at substantially different levels of BIM capability maturity (BIM-CM), creating heterogeneous information environments that standard principal-agent models do not address. This study develops a normative analytical framework that treats BIM-CM as the central determinant of contract architecture. We construct a dual-agent principal-agent model in which the designer and constructor contribute complementary efforts through a collaborative production function, and we solve for optimal contract modes under three BIM-CM configurations: both parties at high maturity, both at low maturity, and–most distinctively–mixed maturity, where one party is mature and the other is not. Nine propositions are derived, and second-order conditions are verified to establish equilibrium uniqueness. The results yield three contract prescriptions. Under high BIM-CM, a compulsory (fixed-price) contract achieves the first-best: the risk-neutral owner bears all output risk. Under low BIM-CM, an incentive contract with risk-sharing is optimal. The mixed-maturity configuration produces a hybrid compulsory-plus-incentive contract absent from standard theory. A novel free-riding mechanism (Fig. 3) is identified: the high-maturity party’s observable effort, transmitted through the collaborative production function, raises the low-maturity party’s remuneration while depressing its own effort, such that the first-best remains unattainable even with one fully mature partner. Agency costs are decomposed into risk and incentive components and compared across configurations. The paper contributes a maturity-contingent contract typology and a decision heuristic that translate formal results into actionable guidance, replacing uniform qualitative prescriptions with differentiated contract recommendations grounded in BIM capability assessment.