Subsidy Allocation Mechanism for Successful Implementation of Green Contracting Strategies

Deepak K. Sharma1 & Qingbin Cui2

1PhD, Sustainable Infrastructure Group, University of Maryland, 0122F Engineering Lab Building, College Park, MD, USA 20742, Email:
2Assistant Professor, Project Management Program, Clark School of Engineering, University of Maryland, 1157 Glenn L. Martin Hall, College Park, MD, USA 20742. Phone: (301) 405-8104 Email:


Construction industry in the U.S. is one of the top Green House Gas (GHG) emitters. It produced 1.7% of the total U.S. GHG emissions in 2002. These emissions are equivalent to 6% of total U.S. industry related GHG emissions, earning it a third rank on the list of highest emitting industries. However, these numbers represent only a part of the total construction emissions but if we add all the direct and indirect construction emissions from the supply chain of construction projects, the construction emissions would represent up to 54% of the total U.S. emissions. Hence, there is a need to lower emission levels from each and every emitter in the construction supply chain. This research work, defining and addressing the importance of Lean Carbon Supply Chain (LCaSC) for construction projects, develops a subsidy allocation mechanism using a two-stage sequential game to model the Agency’s and Contractor’s behavior. The subsidy allocation mechanism would enable successful implementation of Green Performance Contracting strategies at a minimum cost.


Construction Supply Chain, Carbon Supply Chain, Game Theory, Implementation, Subsidy Design



Sharma, D.K. & Cui, Q. 2012, 'Subsidy Allocation Mechanism for Successful Implementation of Green Contracting Strategies' In:, Tommelein, I.D. & Pasquire, C.L., 20th Annual Conference of the International Group for Lean Construction. San Diego, USA, 18-20 Jul 2012.

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