Innovative contract incentive features for construction

Incentive plans used by owners and contractors can be valuable contract administration tools to enhance project success. This article outlines many of the strategic choices available for designing and administering incentivized construction contracts. The project conditions that facilitate use of particular features and some of the pitfalls associated with each are also discussed. Cost effectiveness of incentive plans is also estimated, based on empirical experience from a number of plans. The importance of owner sincerity is stressed, as is the indirect impact on project performance because of more disciplined use of project control systems.