Incentives, Other Management

Assignment Help:

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.


Related Discussions:- Incentives

Explain why it is necessary to introduce the dummy activity, Question: ...

Question: The following diagram shows a C.P.A.-network modeling the stages in the construction project. Each arc is labeled with the letter denoting the activity it represents

Consumer behavior, How do advertisers try to use group influence? Can you f...

How do advertisers try to use group influence? Can you find any specific examples and describe the relevant theory of group behavior and influence?

Inside and across boundaries - communities of practice, Inside and Across B...

Inside and Across Boundaries The Communities of Practice might exist within a business unit or stretch across the divisional boundaries and most of them cross the boundaries be

Functions of library classification , Functions of library classification :...

Functions of library classification : Functions of library classification can be summarised as follows: i) Library classification helps to arrange documents in a systemati

Main features of the communication system, Question 1: Explain how you ...

Question 1: Explain how you would set up the Front Office Department of a new 100 room beach resort. You should consider the following points in your answer: • Manpower requ

Factors driving contracting , Factors Driving Contracting  In this sect...

Factors Driving Contracting  In this section let us try to analyse the factors which drive contracting decisions. Here, the buy mode is referred as contracting, subcontracting

What is the maximum usable frequency for the path, Question: (a) A HF ...

Question: (a) A HF digital radio data link operates over a distance of 1000 km. Depending on transmission frequency, reflection can occur from the F2 region of the ionospher

Elements of an effective ergonomic program, Question: (a) What, accord...

Question: (a) What, according to you, are the essential elements of an effective ergonomic program? State the reasons for establishing such a program at a place of work. (b

Customer marketing interface, five to make a displeased student to patonise...

five to make a displeased student to patonise a school canteen

Importance of an environmental impact assessment, Question 1: (a) Ident...

Question 1: (a) Identify and clearly explain the benefits of implementing ISO 14001? (b) Describe the importance of an Environmental Impact Assessment (EIA). Explain the are

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd