Incentive contracts for development projects

David T. Finley; Byron Smith; B. DeGroff

doi:10.1117/12.926803

25 September 2012 Incentive contracts for development projects

David T. Finley, Byron Smith, B. DeGroff

Proceedings Volume 8449, Modeling, Systems Engineering, and Project Management for Astronomy V; 84490S (2012) https://doi.org/10.1117/12.926803
Event: SPIE Astronomical Telescopes + Instrumentation, 2012, Amsterdam, Netherlands

Abstract

Finding a contract vehicle that balances the concerns of the customer and the contractor in a development project can be difficult. The customer wants a low price and an early delivery, with as few surprises as possible as the project progresses. The contractor wants sufficient cost and schedule to cover risk. Both want to clearly define what each party will provide. Many program offices do not want to award cost plus contracts because their funding sources will not allow it, their boards do not want an open ended commitment, and they feel like they lose financial control of the project. A fixed price incentive contract, with a mutually agreed upon target cost, provides the owner with visibility into the project and input into the execution of the project, encourages both parties to save costs, and stimulates a collaborative atmosphere by aligning the respective interests of customers and contractors.

Citation Download Citation

David T. Finley, Byron Smith, and B. DeGroff "Incentive contracts for development projects", Proc. SPIE 8449, Modeling, Systems Engineering, and Project Management for Astronomy V, 84490S (25 September 2012); https://doi.org/10.1117/12.926803

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