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Construction contract incentive schemes - lessons from experience (C554)

There is little published material available in the UK on the incentivisation of contracts. This factor coincided with CIRIA’s response to the increasing concern within the construction industry of the pressure on pricing using traditional tendering processes, with the consequent impact on the time and quality aspects of projects. The rise of the “claims culture” had led to conflict between clients and contractors, with “winners” and “losers” emerging. A study on the incentivisation of contracts was not intended to seek a panacea but rather to provide an alternative procurement route when more traditional methods were likely to create potential conflicts - with subsequent detrimental effects on the overall success of the project.

This publication summarises the findings from a survey of 20 construction projects which used incentivised contracts. Clients, contractors and consultants from the private and public sector were interviewed and the detailed case studies form part of the report. The studies covered utilities, transportation, civils infrastructure, building, and heavy and light process manufacturing. The report interacts with recent important guidance documents aimed at the construction industry, such as the Latham and Egan Reports, and the guides published by the Office of Government Commerce. The “what”, “how” and “when” issues relating to incentive schemes are discussed and conclusions are drawn from both the case studies and a Construction Productivity Network workshop.

Key words: project management, procurement, construction management, supply chain management.

ISBN: 978-0-86017-554-4
Author: D Richmond-Coggan
Number of pages: 128 (paperback)
Publisher: CIRIA
Date of Publication: April 2001