Developing Incentive Contracts

Start Date: 20 Jan 2019
End Date: 24 Jan 2019
Duration: 5
Country: Istanboul / Turkey
Category: Project & Contracting & Law

Course Description


Participants will learn when and how the various incentive contracts may be used to influence contractor behavior and achieve better performance. Course highlights include: conditions for the use of incentive contracts; limitations on their use; and attendant problems with negotiating and making changes to incentive contracts. This course will benefit those involved in structuring incentive contracts, including those for performance-based services.

Course Objective


After successful completion of this course, the student will be able to:

§  Determine if the use of an incentive contract is appropriate

§  Select the best suited incentive contracting arrangement

§  Solicit, evaluate, negotiate, and award incentive contracts

§  Administer an incentive contract


Who Should attend?


  • Contract Professionals
  • Project Engineers and Project Professionals
  • Claims Personnel and Business Audit Officers
  • Contract Strategists
  • Commercial Professionals
  • Purchasing Officers & Personnel
  • Buyers
  • Supply Professionals

Course Outline


Introduction to Incentive Contracting

Basic principles of incentive contracting. Selection of contract type. Elements of basic incentive contract types. Relationships of incentive contracting and pricing policies.

Incentive Contract Negotiation

Advance planning. Request for proposals. Estimates and objectives. Proposal analysis. Selection of contract types for R&D. Prenegotiation objectives. Preaward profit objectives. Special clauses. Tradeoffs in negotiation. Documentation.

Cost Incentives

Fixed-price incentive - cost only. Cost-plus-incentive-fee - cost only. Range of incentive effectiveness. Broken share lines for single and multiple incentives.

Multiple Incentive Contracts

Target cost. Multiple incentive structuring. Incentive measurements and payment. Performance structuring. The effect of fixed overhead on incentive sharing arrangements.

Schedule Incentives

Cost-plus-incentive-fee. Fixed-price-incentive.

Contract Changes

Incentive contract changes. Cost incentive changes. Multiple incentive changes.

Award-Fee Contracts

Cost-plus-award-fee (CPAF) contracts. Criteria for use. Disputes clause. Award fee plan. Performance areas. Evaluation criteria. Basis for scoring. Distribution of award fee. CPAF contract administration. Timeliness of actions. Fixed-price-with-award fee. Limitations.

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