Incentive Mechanisms and Their Impact on Project Performance

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    Good performance characterizes project success and value for money. However, performance problems are not uncommon in project management. Incentivization is generally recognized as a strategy of addressing performance problems. This chapter aims to explore incentive mechanisms and their impact on project performance. It is mainly based on the use of incentives in construction and engineering projects. The same principles apply to project management in other industry sectors. Incentivization can be used in such performance areas as time, cost, quality, safety and environment. A client has different ways of incentivizing his contractor’s performance, e.g. (1) a single incentive or multiple incentives; and (2) incentives or disincentives or a combination of both. The establishment of incentive mechanisms proves to have a significant potential for relationship development, process enhancement and performance improvement. In order to ensure the success of incentive mechanisms, both contractors and clients need to make extra efforts. As a result, a link is developed among incentive mechanisms, project management system and project performance.
    Original languageEnglish
    Title of host publicationHandbook on Project Management and Scheduling Vol. 2
    EditorsChristoph Schwindt, Jurgen Zimmermann
    Number of pages16
    ISBN (Electronic)9783319059150
    ISBN (Print)9783319059143
    Publication statusPublished - 08 Oct 2014

    Publication series

    NameInternational Handbooks on Information Systems 2015


    • Incentive mechanism, Project performance, Improvement, Reward

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