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

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  • Tianyu Fan

    (School of Water Conservancy, North China University of Water Resources and Electric Power, Zhengzhou 450046, China)

  • Zhongbing Gao

    (Langfang Water Affairs Development Co., Ltd., Langfang 065099, China)

  • Xuefeng Pang

    (Langfang Water Affairs Development Co., Ltd., Langfang 065099, China)

  • Yizhou Li

    (Langfang Water Affairs Development Co., Ltd., Langfang 065099, China)

  • Zihan Wang

    (School of Water Conservancy, North China University of Water Resources and Electric Power, Zhengzhou 450046, China)

  • Ying Guo

    (School of Water Conservancy, North China University of Water Resources and Electric Power, Zhengzhou 450046, China)

  • Zhiyong Li

    (School of Water Conservancy, North China University of Water Resources and Electric Power, Zhengzhou 450046, China)

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.

Suggested Citation

  • Tianyu Fan & Zhongbing Gao & Xuefeng Pang & Yizhou Li & Zihan Wang & Ying Guo & Zhiyong Li, 2026. "Sustainable Quality Control Decisions in Water Conservancy Supply Chains: A Principal-Agent Approach Considering Early Completion Benefits," Sustainability, MDPI, vol. 18(14), pages 1-30, July.
  • Handle: RePEc:gam:jsusta:v:18:y:2026:i:14:p:7279-:d:1992611
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