Pay-for-performance contracting

Journal Article · Fri Dec 01 04:00:00 EST 1995 · Hydrocarbon Processing

OSTI ID:163256

Smith, R A ^[1]

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1. Pritchard Corp., Overland Park, KS (United States)

While pay-for-performance, also known as incentive contracting, may not be suitable for every project or every owner and contractor, it offers an innovative way of encouraging superior performance. If structured properly, pay-for-performance can lead to reduced costs, shorter schedules and enhance the competitiveness of both owners and contractors. Incentive contracting has come a long way in the past ten years. Previously, very few contracts were incentive-based. However, many owners and contractors have found that pay-for-performance contracting offers significant advantages over straight reimbursable or lump sump contracting, resulting in widespread use of this contracting technique. While this technique has been used for contracts between owners and contractors, it also has been successfully applied to contracts between owners and equipment and material suppliers; and between contractors and suppliers. Although discussions in this article focus primarily on owner/contractor contracts, they apply equally well to contracts with suppliers.

• OSTI ID: 163256
• Journal Information: Hydrocarbon Processing, Journal Name: Hydrocarbon Processing Journal Issue: 12 Vol. 74; ISSN HYPRAX; ISSN 0018-8190
• Country of Publication: United States
• Language: English

Related Subjects

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CONTRACTS
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SAFETY
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