Abstract: Project manager’s speculation behaviors can be relieved by monitoring or incentives.This paper sets up a principal-agent model between a firm and its project manager using game theory.The model is used to analyze managerial speculation behaviors and the relationship between managerial behaviors and firms’monitoring.The concept of firm’s comprehensive monitoring-punishment degree and its critical quantity are put forward.Sug-gestions are given on how to prevent project managers from speculating.

Key words: game theory, project manager, monitoring, incentive compensation