Performance incentives in contracts - Revision history

Editor at 08:31, 12 January 2024

2024-01-12T08:31:30Z

← Older revision		Revision as of 08:31, 12 January 2024
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	Other more broad ranging such as social or environmental performance, may also be included and could be defined both in terms of the contractor carrying out their tasks but also in the crossover with the building. Such as performance defined in terms of material choices and supply chains, the handover process as well as the post completion performance of the building in terms of operations during the first year or two.		Other more broad ranging such as social or environmental performance, may also be included and could be defined both in terms of the contractor carrying out their tasks but also in the crossover with the building. Such as performance defined in terms of material choices and supply chains, the handover process as well as the post completion performance of the building in terms of operations during the first year or two.

−	The indicators used to assess performance will normally defined within the contract or within a document referenced by the contract, these are often called Key Performance Indicators. The indicators and targets are designed to motivate the contractor to achieve those specific goals and or surpass these with benefits. The types of ~~indicators~~ that might be ~~used in construction contracts could be:~~	+	The indicators used to assess performance will normally be defined within the contract or within a document referenced by the contract, these are often called Key Performance Indicators. The indicators and targets are designed to be motivate the contractor to achieve those specific goals and or surpass these with benefits. Key performance indicators should be aligned with what is called SMART which is:
		+
		+	* Specific, that is that they should be specific to a particular goal or task in the project or programme.
		+	* Measurable, so that success of failure can be assessed, quantified and evidenced.
		+	* Attainable, in that it should be agreed prior to project commencement that they are achievable.
		+	* Realistic, similar to the two above the indicators need to be practically applicable to the project.
		+	* Timely, in that they need to be realistically woven into the programme of the project with appropriate deadlines.
		+
		+	The types of topics that might increasingly be covered through the use of indicators might cover;

	* Client satisfaction		* Client satisfaction
−	* ~~Defects~~	+	* Safety
		+	* Schedule
		+	* Cost and profit
		+	* Sustainability
		+
		+	The indoicators that might be used to measure these might be
		+
		+	* Number of and time to rectify defects
	* Rework rate		* Rework rate
	* Downtime percentage		* Downtime percentage
	* Incident rate		* Incident rate
	* Number of accidents		* Number of accidents
−	* Safety
−	* Schedule
	* Working hours		* Working hours
−	* ~~Cost~~	+	* Specific package costs
−	* Cost for construction	+
−	* Equipment utilization	+
	* Inspection pass rate		* Inspection pass rate
−	* Workforce productivity
−	* Profit
−	* Quality improvement
	* Safety meeting attendance		* Safety meeting attendance
−	* ~~Sustainability~~	+	* Site waste by volume
−	* Time to rectify defects	+
−	* Waste	+

	In general or traditionally there are two main types of incentive contracts; fixed-price contracting and cost-reimbursable contracting, there are however a wide variety of variations to these two basic forms which might be considered within this category cost plus contract, cost-plus award contract, share in savings contract, schedule incentives, multiple incentives, specific performance incentives contracting, schedule incentive contracting, Multiple incentive contracting,		In general or traditionally there are two main types of incentive contracts; fixed-price contracting and cost-reimbursable contracting, there are however a wide variety of variations to these two basic forms which might be considered within this category cost plus contract, cost-plus award contract, share in savings contract, schedule incentives, multiple incentives, specific performance incentives contracting, schedule incentive contracting, Multiple incentive contracting,

Editor at 08:20, 12 January 2024

2024-01-12T08:20:01Z

← Older revision		Revision as of 08:20, 12 January 2024
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	= Types of performance =		= Types of performance =

−	Performance most commonly relates to the traditional procurement method triangle of time, cost or quality. ~~However there are increasingly other indicators of performance that could be considered under what might be called sustainable procurement~~. ~~Many~~ of these ~~need clear and careful allocation as responsibility~~ may ~~lie more with design or engineering fields but~~ also ~~crossover into contractor responsibilities~~.	+	Performance most commonly relates to the traditional procurement method triangle of time, cost or quality. As such incentive contracts usually relate primarily to cost such as fixed price or cost plus contracts. Whilst performance in terms of cost are commonly key, these may also move beyond pure capital cost or expenditure considerations (CapEx) of a programme and project to include the operational costs some years ahead, after completion or operational expenditure (OpEx). These wider costs considerations are normally referred to as economic indicators.

−	~~Whilst economic indicators are commonly~~ key, ~~these may move beyond pure capital cost~~ or ~~expenditure considerations~~ (~~CapEx~~) to ~~include the operational costs some years ahead~~, ~~after completion; operational expenditure (OpEx)~~. Other more broad ranging such as social or environmental performance, may also be included and could be defined both in terms of the contractor carrying out their tasks but also in the crossover with the building. Such as performance defined in terms of material choices and supply chains, the handover process as well as the post completion performance of the building in terms of operations during the first year or two.	+	If a project has a particular deadline of key importance, the focus maybe on the delivery time for the scheme and as such supported by the use of schedule incentive contracts. The final element of quality will often need further definition as it could cover a broader spectrum of what might be called performance incentives as described below, or more often than not included along with the former performance aspects in what is sometimes called multiple incentive contracts.
		+
		+	There are increasingly indicators of performance (both in terms of the contractor and the building) that could be interpreted as measures of quality but usually expand beyond traditional remits, this might be referred to as sustainable procurement, covering economic, social and environmental performance. Many of these performance parameters or indicators of performance will need clear and careful definition and allocation of responsibility, as they may lie with design or engineering aspects of a project but also crossover into contractor responsibilities and sometimes the building users.
		+
		+	Other more broad ranging such as social or environmental performance, may also be included and could be defined both in terms of the contractor carrying out their tasks but also in the crossover with the building. Such as performance defined in terms of material choices and supply chains, the handover process as well as the post completion performance of the building in terms of operations during the first year or two.

	The indicators used to assess performance will normally defined within the contract or within a document referenced by the contract, these are often called Key Performance Indicators. The indicators and targets are designed to motivate the contractor to achieve those specific goals and or surpass these with benefits. The types of indicators that might be used in construction contracts could be:		The indicators used to assess performance will normally defined within the contract or within a document referenced by the contract, these are often called Key Performance Indicators. The indicators and targets are designed to motivate the contractor to achieve those specific goals and or surpass these with benefits. The types of indicators that might be used in construction contracts could be:

Editor at 07:58, 12 January 2024

2024-01-12T07:58:06Z

← Older revision		Revision as of 07:58, 12 January 2024
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	= Types of incentives in contracts =		= Types of incentives in contracts =

−	There is some ~~arguement~~ to say that most contracts in themselves, should act as performance incentives, through payment arrangements, extensions of time, recommendations, letters of appreciation and references. However, these types of contracts offer more ~~sepcifically~~ incentives in the form of rewards or penalties to the contractor based on their performance.	+	There is some argument to say that most contracts in themselves, should act as performance incentives, through payment arrangements, extensions of time, recommendations, letters of appreciation and references. However, these types of contracts offer more specifically incentives in the form of rewards or penalties to the contractor based on their performance.

−	The paper [https://www.irbnet.de/daten/iconda/CIB5038.pdf Incentives in Construction Contracts: Should we pay for Performance?] (W.Hughes, I. Yohannes and JB Hillig 2007) points out that although incentives are commonly used as tools in construction projects there efficacy is often assumed but not often ~~questionned~~ or researched. It goes on to describe the drive in the UK around this time for 'value for money', whilst at the same time there being no formally accepted definition or general consensus of what is meant by value. Performance ~~assessement~~ is inherently impacted by the interpretation of value.	+	The paper [https://www.irbnet.de/daten/iconda/CIB5038.pdf Incentives in Construction Contracts: Should we pay for Performance?] (W.Hughes, I. Yohannes and JB Hillig 2007) points out that although incentives are commonly used as tools in construction projects there efficacy is often assumed but not often questioned or researched. It goes on to describe the drive in the UK around this time for 'value for money', whilst at the same time there being no formally accepted definition or general consensus of what is meant by value. Performance assessment is inherently impacted by the interpretation of value.

	= Performance of whom or what? =		= Performance of whom or what? =
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	in terms of material and product choices made through the procurement process and through which supply chains.		in terms of material and product choices made through the procurement process and through which supply chains.

−	It may be further defined in terms of the handover process of a building over an above simple completion to occupation, highlighted by initiatives such Soft Landings. Finally the post completion performance of the building in terms of its operational success, during the first year or two through to a number of years. Whilst there can be some difficulty in capturing ~~aswell~~ as incentivising many of these aspects ~~contractiually~~, they are demands that are increasingly being asked of projects.	+	It may be further defined in terms of the handover process of a building over an above simple completion to occupation, highlighted by initiatives such Soft Landings. Finally the post completion performance of the building in terms of its operational success, during the first year or two through to a number of years. Whilst there can be some difficulty in capturing as well as incentivising many of these aspects contractually, they are demands that are increasingly being asked of projects.

	= Types of performance =		= Types of performance =
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	Performance most commonly relates to the traditional procurement method triangle of time, cost or quality. However there are increasingly other indicators of performance that could be considered under what might be called sustainable procurement. Many of these need clear and careful allocation as responsibility may lie more with design or engineering fields but also crossover into contractor responsibilities.		Performance most commonly relates to the traditional procurement method triangle of time, cost or quality. However there are increasingly other indicators of performance that could be considered under what might be called sustainable procurement. Many of these need clear and careful allocation as responsibility may lie more with design or engineering fields but also crossover into contractor responsibilities.

−	Whilst economic indicators are commonly key, these may move beyond pure capital cost considerations (~~capex~~) to include the operational costs some years ahead, after completion (~~opex~~). Other more broad ranging such as social or environmental performance, may also be included and could be defined both in terms of the contractor carrying out their tasks but also in the crossover with the building. Such as performance defined in terms of material choices and supply chains, the handover process as well as the post completion performance of the building in terms of operations during the first year or two.	+	Whilst economic indicators are commonly key, these may move beyond pure capital cost or expenditure considerations (CapEx) to include the operational costs some years ahead, after completion; operational expenditure (OpEx). Other more broad ranging such as social or environmental performance, may also be included and could be defined both in terms of the contractor carrying out their tasks but also in the crossover with the building. Such as performance defined in terms of material choices and supply chains, the handover process as well as the post completion performance of the building in terms of operations during the first year or two.

−	The indicators used to assess performance will normally defined within the contract or within a document referenced by the contract, these are often called Key Performance Indicators. The indicators and targets are designed to motivate the contractor to achieve those specific goals and or surpass these with benefits. The types of ~~indicaors~~ that might be used in construction contracts could be:	+	The indicators used to assess performance will normally defined within the contract or within a document referenced by the contract, these are often called Key Performance Indicators. The indicators and targets are designed to motivate the contractor to achieve those specific goals and or surpass these with benefits. The types of indicators that might be used in construction contracts could be:

	* Client satisfaction		* Client satisfaction
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	* Whole life costs.		* Whole life costs.

−	[[Category:DCN_Commentary]] [[Category:DCN_Project_Knowledge]] [[Category:Definitions]] [[Category:Appointments]] [[Category:Client_procedures]] [[Category:Construction_management]] [[Category:Contracts_/_payment]] [[Category:Cost_/_business_planning]] [[Category:Procurement]] [[Category:Public_procedures]]	+	[[Category:Articles_needing_more_work]] [[Category:DCN_Commentary]] [[Category:DCN_Project_Knowledge]] [[Category:Definitions]] [[Category:Appointments]] [[Category:Client_procedures]] [[Category:Construction_management]] [[Category:Contracts_/_payment]] [[Category:Cost_/_business_planning]] [[Category:Procurement]] [[Category:Public_procedures]]

Editor at 14:19, 11 January 2024

2024-01-11T14:19:42Z

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	However, lump sum contracts tend not to be fixed at all, but allow the price to change under certain circumstances:		However, lump sum contracts tend not to be fixed at all, but allow the price to change under certain circumstances:

−	Variations: These are changes in the nature of the works. Most contracts will contain provision for the architect or contract administrator to issue instructions to vary the design, quantities, quality, sequence or working conditions.	+	* Variations: These are changes in the nature of the works. Most contracts will contain provision for the architect or contract administrator to issue instructions to vary the design, quantities, quality, sequence or working conditions.
−		+	* Relevant events: A relevant event may be caused by the client (for example failure to supply goods or instructions), or may be a neutral event (such as exceptionally adverse weather) and may result in a claim for loss and expense by the contractor.
−	Relevant events: A relevant event may be caused by the client (for example failure to supply goods or instructions), or may be a neutral event (such as exceptionally adverse weather) and may result in a claim for loss and expense by the contractor.	+	* Provisional sums: An allowance for a specific element of the works that is not defined in enough detail for tenderers to price.
−		+	* Fluctuations: A mechanism for dealing with inflation on projects that may last for several years, where the contractor tenders based on current prices and then the contract makes provisions for the contractor to be reimbursed for price changes over the duration of the project.
−	Provisional sums: An allowance for a specific element of the works that is not defined in enough detail for tenderers to price.	+	* Payments to nominated sub-contractors or nominated suppliers.
−		+	* Statutory fees.
−	Fluctuations: A mechanism for dealing with inflation on projects that may last for several years, where the contractor tenders based on current prices and then the contract makes provisions for the contractor to be reimbursed for price changes over the duration of the project.	+	* Payments relating to opening-up and testing the works.
−		+
−	Payments to nominated sub-contractors or nominated suppliers.	+
−		+
−	Statutory fees.	+
−		+
−	Payments relating to opening-up and testing the works.	+

	A truly 'fixed' price contract would not necessarily be in the interests of the client as it would require that the contractor pricerisks over which they may have no control, and which might not arise.		A truly 'fixed' price contract would not necessarily be in the interests of the client as it would require that the contractor pricerisks over which they may have no control, and which might not arise.
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	* Manufacturing facilities.		* Manufacturing facilities.
	* Owned plant.		* Owned plant.
−	* These costs might be calculated on a pro-rata basis and charged, along with profits as a pre-agreed lump sum, or percentage fee. See the article cost plus contracts.	+	* These costs might be calculated on a pro-rata basis and charged, along with profits as a pre-agreed lump sum, or percentage fee.
		+
		+	See also the article cost plus contracts.

	= Related articles on Designing Buildings =		= Related articles on Designing Buildings =

Editor at 14:18, 11 January 2024

2024-01-11T14:18:34Z

← Older revision		Revision as of 14:18, 11 January 2024
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	* These costs might be calculated on a pro-rata basis and charged, along with profits as a pre-agreed lump sum, or percentage fee. See the article cost plus contracts.		* These costs might be calculated on a pro-rata basis and charged, along with profits as a pre-agreed lump sum, or percentage fee. See the article cost plus contracts.

−	[[Category:~~Articles_needing_more_work~~]]	+	= Related articles on Designing Buildings =
		+
		+	* Benchmarking.
		+	* Building performance.
		+	* Business plan.
		+	* Contracts for Difference.
		+	* Contingent liabilities.
		+	* Cost plan.
		+	* Cash flow.
		+	* Cost reimbursable contract.
		+	* Contingencies in construction.
		+	* Contingency plan.
		+	* Defined provisional sum.
		+	* Energy performance contracts.
		+	* Estimate.
		+	* Fixed price construction contract.
		+	* Guaranteed maximum price for construction contracts.
		+	* Low Carbon Contracts Company‎.
		+	* Lump sum contract.
		+	* Milestones.
		+	* Performance.
		+	* Performance contracting.
		+	* Performance requirements.
		+	* Programme consultant.
		+	* Progress of construction works.
		+	* Project crashing.
		+	* Project programme.
		+	* Project scorecard.
		+	* Preliminaries in construction.
		+	* Prime cost contract.
		+	* Project risk.
		+	* Provisional sum.
		+	* RAG rating.
		+	* Retention.
		+	* Schedule performance index (SPI).
		+	* Short period programme.
		+	* Strategic performance targets.
		+	* Time-location chart.
		+	* Time management of construction projects.
		+	* Undefined provisional sum.
		+	* Value management.
		+	* Whole life costs.
		+
		+	[[Category:DCN_Commentary]] [[Category:DCN_Project_Knowledge]] [[Category:Definitions]] [[Category:Appointments]] [[Category:Client_procedures]] [[Category:Construction_management]] [[Category:Contracts_/_payment]] [[Category:Cost_/_business_planning]] [[Category:Procurement]] [[Category:Public_procedures]]

Editor at 14:14, 11 January 2024

2024-01-11T14:14:51Z

← Older revision		Revision as of 14:14, 11 January 2024
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	= The use of incentives in construction contracts =		= The use of incentives in construction contracts =

−	~~Performance~~ incentives in contracting consist of essentially two aspects 'first aligning the objectives of both parties through the use of performance measures and second, linking them to payment' ([https://archive.org/details/constructioncont0000rich/page/130/mode/2up Construction contract incentive schemes: lessons from experience, London Construction Industry Research and Information Association; Richmond-Coggan 2001]).	+	The use of performance incentives in contracting consist of essentially two aspects 'first aligning the objectives of both parties through the use of performance measures and second, linking them to payment' ([https://archive.org/details/constructioncont0000rich/page/130/mode/2up Construction contract incentive schemes: lessons from experience, London Construction Industry Research and Information Association; Richmond-Coggan 2001]).

−	Sometimes referred to directly as performance incentive contracting, incentive contracting or indeed performance contracting, as a general ~~term~~ used to describe a number of different types of contract ~~forms~~ which encourage contractors to achieve specific goals, often relating to time, budget or quality, (which might also be referred to generally as the contractor's performance).	+	Sometimes referred to directly as performance incentive contracting, incentive contracting or indeed performance contracting, as general terms used to describe often a number of different types of contract form which encourage contractors to achieve specific goals, often relating to time, budget or quality, (which might also be referred to generally as the contractor's performance).

	= Types of incentives in contracts =		= Types of incentives in contracts =
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	In general or traditionally there are two main types or categories of incentive contracts; fixed-price contracting and cost-reimbursable contracting, there are however a wide variety of variations to these two basic forms which might be considered within this category.		In general or traditionally there are two main types or categories of incentive contracts; fixed-price contracting and cost-reimbursable contracting, there are however a wide variety of variations to these two basic forms which might be considered within this category.

−	= Types of ~~incentove~~ contracts =	+	= Types of incentive contracts =

	== Fixed price contracting ==		== Fixed price contracting ==
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	* Manufacturing facilities.		* Manufacturing facilities.
	* Owned plant.		* Owned plant.
−	* These costs might be calculated on a pro-rata basis and charged, along with profits as a pre-agreed lump sum, or percentage fee.	+	* These costs might be calculated on a pro-rata basis and charged, along with profits as a pre-agreed lump sum, or percentage fee. See the article cost plus contracts.

	[[Category:Articles_needing_more_work]]		[[Category:Articles_needing_more_work]]

Editor at 17:10, 10 January 2024

2024-01-10T17:10:48Z

← Older revision		Revision as of 17:10, 10 January 2024
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	Whilst economic indicators are commonly key, these may move beyond pure capital cost considerations (capex) to include the operational costs some years ahead, after completion (opex). Other more broad ranging such as social or environmental performance, may also be included and could be defined both in terms of the contractor carrying out their tasks but also in the crossover with the building. Such as performance defined in terms of material choices and supply chains, the handover process as well as the post completion performance of the building in terms of operations during the first year or two.		Whilst economic indicators are commonly key, these may move beyond pure capital cost considerations (capex) to include the operational costs some years ahead, after completion (opex). Other more broad ranging such as social or environmental performance, may also be included and could be defined both in terms of the contractor carrying out their tasks but also in the crossover with the building. Such as performance defined in terms of material choices and supply chains, the handover process as well as the post completion performance of the building in terms of operations during the first year or two.

−	The indicators used to assess performance will normally defined within the contract or within a document referenced by the contract, these are often called Key Performance Indicators. The indicators and targets are designed to motivate the contractor to achieve those specific goals and or surpass these with benefits.	+	The indicators used to assess performance will normally defined within the contract or within a document referenced by the contract, these are often called Key Performance Indicators. The indicators and targets are designed to motivate the contractor to achieve those specific goals and or surpass these with benefits. The types of indicaors that might be used in construction contracts could be:
		+
		+	* Client satisfaction
		+	* Defects
		+	* Rework rate
		+	* Downtime percentage
		+	* Incident rate
		+	* Number of accidents
		+	* Safety
		+	* Schedule
		+	* Working hours
		+	* Cost
		+	* Cost for construction
		+	* Equipment utilization
		+	* Inspection pass rate
		+	* Workforce productivity
		+	* Profit
		+	* Quality improvement
		+	* Safety meeting attendance
		+	* Sustainability
		+	* Time to rectify defects
		+	* Waste

	In general or traditionally there are two main types of incentive contracts; fixed-price contracting and cost-reimbursable contracting, there are however a wide variety of variations to these two basic forms which might be considered within this category cost plus contract, cost-plus award contract, share in savings contract, schedule incentives, multiple incentives, specific performance incentives contracting, schedule incentive contracting, Multiple incentive contracting,		In general or traditionally there are two main types of incentive contracts; fixed-price contracting and cost-reimbursable contracting, there are however a wide variety of variations to these two basic forms which might be considered within this category cost plus contract, cost-plus award contract, share in savings contract, schedule incentives, multiple incentives, specific performance incentives contracting, schedule incentive contracting, Multiple incentive contracting,
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	In general or traditionally there are two main types or categories of incentive contracts; fixed-price contracting and cost-reimbursable contracting, there are however a wide variety of variations to these two basic forms which might be considered within this category.		In general or traditionally there are two main types or categories of incentive contracts; fixed-price contracting and cost-reimbursable contracting, there are however a wide variety of variations to these two basic forms which might be considered within this category.

−	= Fixed price contracting =	+	= Types of incentove contracts =
		+
		+	== Fixed price contracting ==

	Fixed price or lump sum (as well as stipulated sum) contracts are sometimes 'firm price' contracts, although even between these terms there can be some differences.		Fixed price or lump sum (as well as stipulated sum) contracts are sometimes 'firm price' contracts, although even between these terms there can be some differences.
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	A truly 'fixed' price contract would not necessarily be in the interests of the client as it would require that the contractor pricerisks over which they may have no control, and which might not arise.		A truly 'fixed' price contract would not necessarily be in the interests of the client as it would require that the contractor pricerisks over which they may have no control, and which might not arise.

−	= Cost reimbursable contracting =	+	== Cost reimbursable contracting ==

	A cost reimbursable contract (sometimes called a cost plus contract) is one in which the contractor is reimbursed the actual costs they incur in carrying out the works, plus an additional fee. Option E of the NEC3 Engineering and Construction Contract (ECC) is an example of a cost reimbursable contract.		A cost reimbursable contract (sometimes called a cost plus contract) is one in which the contractor is reimbursed the actual costs they incur in carrying out the works, plus an additional fee. Option E of the NEC3 Engineering and Construction Contract (ECC) is an example of a cost reimbursable contract.

Editor at 15:57, 10 January 2024

2024-01-10T15:57:53Z

← Older revision		Revision as of 15:57, 10 January 2024
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	= The use of incentives in construction contracts =		= The use of incentives in construction contracts =

−	Performance incentives in contracting consist of essentially two aspects 'first aligning the objectives of both parties through the use of performance measures and second, linking them to payment' (Construction contract incentive schemes: lessons from experience, London Construction Industry Research and Information Association; Richmond-Coggan 2001).	+	Performance incentives in contracting consist of essentially two aspects 'first aligning the objectives of both parties through the use of performance measures and second, linking them to payment' ([https://archive.org/details/constructioncont0000rich/page/130/mode/2up Construction contract incentive schemes: lessons from experience, London Construction Industry Research and Information Association; Richmond-Coggan 2001]).

	Sometimes referred to directly as performance incentive contracting, incentive contracting or indeed performance contracting, as a general term used to describe a number of different types of contract forms which encourage contractors to achieve specific goals, often relating to time, budget or quality, (which might also be referred to generally as the contractor's performance).		Sometimes referred to directly as performance incentive contracting, incentive contracting or indeed performance contracting, as a general term used to describe a number of different types of contract forms which encourage contractors to achieve specific goals, often relating to time, budget or quality, (which might also be referred to generally as the contractor's performance).
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	There is some arguement to say that most contracts in themselves, should act as performance incentives, through payment arrangements, extensions of time, recommendations, letters of appreciation and references. However, these types of contracts offer more sepcifically incentives in the form of rewards or penalties to the contractor based on their performance.		There is some arguement to say that most contracts in themselves, should act as performance incentives, through payment arrangements, extensions of time, recommendations, letters of appreciation and references. However, these types of contracts offer more sepcifically incentives in the form of rewards or penalties to the contractor based on their performance.

−	The paper Incentives in Construction Contracts: Should we pay for Performance ? (W.Hughes, I. Yohannes and JB Hillig 2007) points out that although incentives are commonly used as tools in construction projects there efficacy is often assumed but not often questionned or researched. It goes on to describe the drive in the UK around this time for 'value for money', whilst at the same time there being no formally accepted definition or general consensus of what is meant by value.	+	The paper [https://www.irbnet.de/daten/iconda/CIB5038.pdf Incentives in Construction Contracts: Should we pay for Performance?] (W.Hughes, I. Yohannes and JB Hillig 2007) points out that although incentives are commonly used as tools in construction projects there efficacy is often assumed but not often questionned or researched. It goes on to describe the drive in the UK around this time for 'value for money', whilst at the same time there being no formally accepted definition or general consensus of what is meant by value. Performance assessement is inherently impacted by the interpretation of value.
		+
		+	= Performance of whom or what? =
		+
		+	In simple terms construction contracts are generally evaluated in terms of the project team, including the contractor, carrying out their tasks under the contract. But there is inherently a performance crossover with that of the building itself. That is to say performance might increasingly incorporate and be defined in terms of the various aspects of the buildings performance, which can, especially innovation projects be less clear
		+
		+	in terms of material and product choices made through the procurement process and through which supply chains.
		+
		+	It may be further defined in terms of the handover process of a building over an above simple completion to occupation, highlighted by initiatives such Soft Landings. Finally the post completion performance of the building in terms of its operational success, during the first year or two through to a number of years. Whilst there can be some difficulty in capturing aswell as incentivising many of these aspects contractiually, they are demands that are increasingly being asked of projects.

	= Types of performance =		= Types of performance =

−	Performance most commonly relates to the traditional procurement method triangle of time, cost or quality. However there are increasingly other indicators of performance that could be considered under what might be called sustainable procurement. Many of these need clear and careful allocation as responsibility may lie more with design or engineering fields but also crossover into contractor responsibilities. Whilst economic indicators are commonly key, these may move beyond pure capital cost considerations (capex) to include the operational costs some years ahead after completion (opex) such as social or environmental performance, may also be included and could be defined both in terms of the contractor carrying out their tasks but also in the crossover with the building. Such as performance defined in terms of material choices and supply chains, the handover process as well as the post completion performance of the building in terms of operations during the first year or two.	+	Performance most commonly relates to the traditional procurement method triangle of time, cost or quality. However there are increasingly other indicators of performance that could be considered under what might be called sustainable procurement. Many of these need clear and careful allocation as responsibility may lie more with design or engineering fields but also crossover into contractor responsibilities.
		+
		+	Whilst economic indicators are commonly key, these may move beyond pure capital cost considerations (capex) to include the operational costs some years ahead, after completion (opex). Other more broad ranging such as social or environmental performance, may also be included and could be defined both in terms of the contractor carrying out their tasks but also in the crossover with the building. Such as performance defined in terms of material choices and supply chains, the handover process as well as the post completion performance of the building in terms of operations during the first year or two.

	The indicators used to assess performance will normally defined within the contract or within a document referenced by the contract, these are often called Key Performance Indicators. The indicators and targets are designed to motivate the contractor to achieve those specific goals and or surpass these with benefits.		The indicators used to assess performance will normally defined within the contract or within a document referenced by the contract, these are often called Key Performance Indicators. The indicators and targets are designed to motivate the contractor to achieve those specific goals and or surpass these with benefits.

Editor at 15:21, 10 January 2024

2024-01-10T15:21:40Z

← Older revision		Revision as of 15:21, 10 January 2024
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	= Types of incentives in contracts =		= Types of incentives in contracts =

−	There is some arguement to say that most contracts in themselves, should act as performance incentives, through payment arrangements, extensions of time, recommendations, letters of appreciation and references. However, these types of contracts offer more sepcifically incentives in the form of rewards or penalties to the contractor based on their performance. The paper Incentives in Construction Contracts: Should we pay for Performance ? (W.Hughes, I. Yohannes and JB Hillig 2007) points out that although incentives are commonly used as tools in construction projects there efficacy is often assumed but not often questionned or researched. It goes on to describe the drive in the UK around this time for 'value for money', whilst at the same time there being no formally accepted definition or general consensus of what is meant by value.	+	There is some arguement to say that most contracts in themselves, should act as performance incentives, through payment arrangements, extensions of time, recommendations, letters of appreciation and references. However, these types of contracts offer more sepcifically incentives in the form of rewards or penalties to the contractor based on their performance.

−	~~= Types~~ of ~~performance =~~	+	The paper Incentives in Construction Contracts: Should we pay for Performance ? (W.Hughes, I. Yohannes and JB Hillig 2007) points out that although incentives are commonly used as tools in construction projects there efficacy is often assumed but not often questionned or researched. It goes on to describe the drive in the UK around this time for 'value for money', whilst at the same time there being no formally accepted definition or general consensus of what is meant by value.

−	~~Performance most commonly relates to the traditional procurement method triangle of time, cost or quality, however there are increasingly other indicators~~ of performance ~~that could be considered under what might be called sustainable procurement.~~	+	= Types of performance =

−	, such as social or environmental performance, may also be included and could be defined both in terms of the contractor carrying out their tasks but also in the crossover with the building. Such as performance defined in terms of material choices and supply chains, the handover process as well as the post completion performance of the building in terms of operations during the first year or two.	+	Performance most commonly relates to the traditional procurement method triangle of time, cost or quality. However there are increasingly other indicators of performance that could be considered under what might be called sustainable procurement. Many of these need clear and careful allocation as responsibility may lie more with design or engineering fields but also crossover into contractor responsibilities. Whilst economic indicators are commonly key, these may move beyond pure capital cost considerations (capex) to include the operational costs some years ahead after completion (opex) such as social or environmental performance, may also be included and could be defined both in terms of the contractor carrying out their tasks but also in the crossover with the building. Such as performance defined in terms of material choices and supply chains, the handover process as well as the post completion performance of the building in terms of operations during the first year or two.

	The indicators used to assess performance will normally defined within the contract or within a document referenced by the contract, these are often called Key Performance Indicators. The indicators and targets are designed to motivate the contractor to achieve those specific goals and or surpass these with benefits.		The indicators used to assess performance will normally defined within the contract or within a document referenced by the contract, these are often called Key Performance Indicators. The indicators and targets are designed to motivate the contractor to achieve those specific goals and or surpass these with benefits.

Editor at 15:16, 10 January 2024

2024-01-10T15:16:22Z

← Older revision		Revision as of 15:16, 10 January 2024
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	= Types of performance =		= Types of performance =

−	~~Other~~ indicators of performance, such as social or environmental performance, may also be included and could be defined both in terms of the contractor carrying out their tasks but also in the crossover with the building. Such as performance defined in terms of material choices and supply chains, the handover process as well as the post completion performance of the building in terms of operations during the first year or two.	+	Performance most commonly relates to the traditional procurement method triangle of time, cost or quality, however there are increasingly other indicators of performance that could be considered under what might be called sustainable procurement.
		+
		+	, such as social or environmental performance, may also be included and could be defined both in terms of the contractor carrying out their tasks but also in the crossover with the building. Such as performance defined in terms of material choices and supply chains, the handover process as well as the post completion performance of the building in terms of operations during the first year or two.

	The indicators used to assess performance will normally defined within the contract or within a document referenced by the contract, these are often called Key Performance Indicators. The indicators and targets are designed to motivate the contractor to achieve those specific goals and or surpass these with benefits.		The indicators used to assess performance will normally defined within the contract or within a document referenced by the contract, these are often called Key Performance Indicators. The indicators and targets are designed to motivate the contractor to achieve those specific goals and or surpass these with benefits.