Incentives, Other Management

Incentives

These are rewards given when vendor/contractor exceeds your expectation. Incentives should increase contractor?s profit. Incentives can be categorised as:

  • Cost incentive: No incentive for the contractor can be structured. In a contract where design and development are included, a value engineering clause can be incorporated to motivate the contractor to submit a proposal for cost reductions. The contractor gets the opportunity to consider an extra profit for himself while quoting the price reduction.
  • Technical incentive: These are incentives for quality and performance of work. These can also be applied to contracts which include design and development in addition to construction.
  • Schedule incentive: All construction contracts incorporate a Liquidated Damages (LD) clause which refers to penalty for delay in time of completion. Sometimes a Bonus clause for early completion is incorporated. In such a case, the LD clause is called a Penalty clause.

Caution must be exercised while combining cost, technical and schedule incentives in a contract to ensure that different incentives do not counteract or conflict with each other. Also, when more than one contract is awarded, one contractor who is given an incentive for early completion may complete his work early but this will turn out to be a benefit only if you can ensure that the following interfacing contractor can commence his work consistent with the previous contractor?s work completion.

Posted Date: 9/28/2012 2:47:43 AM | Location : United States







Related Discussions:- Incentives, Assignment Help, Ask Question on Incentives, Get Answer, Expert's Help, Incentives Discussions

Write discussion on Incentives
Your posts are moderated
Related Questions
Rules of thumb for a competitive negotiation:    Stick to your planned target and walk away points.    You are likely to get a better overall deal if you make a larger nu

SIZE OF SAMPLE: Large  samples are more  representative  of the population of interest than the sinall  samples. There  are no specific  rdes for determining the desired sampl

Sewing Materials - binding materials: Thread: Sewing is the central operation in binding. The life of binding depends very much on the kind of sewing and the material used f

Question 1: What are the alternative ways in which a decision can be made that affects the parties involved? In what ways will negotiation be seen as a tactical contest?

Question 1 When you establish an export firm there are numerous regulations which have to be followed. List the steps in establishment of an export import firm. Describe the proce

Question 1: What do you understand by the term logistics? What are the five elements of logistics and why are they crucial to conference and events management? Question 2:

ISO 9000 Quality System Standards ISO  is  the  universal  hallmark  of  quality  which  consists  of  a  family  of standards for quality management systems such as ISO 9000.

Dealer Library Plan (DLP): Under this plan, as agreement is reached between the library and the publishers or a group of publishers whereby the publishers send books as soon a

QUESTION Previously, there was much emphasis on preparation of the end state ‘master plan', which was assumed to be sufficient for guiding and controlling future development pa

Card Form: Library catalogue in the card form is by far the most popular physical form. It is widely prevalent in libraries throughout the world including India. In this form