Risk/reward compensation model for civil engineering infrastructure alliance projects

Love, P.E.D. and Davis, P.R. and Chevis, R. and Edwards, D.J. (2011) Risk/reward compensation model for civil engineering infrastructure alliance projects. Journal of Construction Engineering and Management, 137 (2). pp. 127-136. ISSN 07339364 (ISSN)

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Abstract

A risk/reward model is described as that which aligns project participants' behaviors toward the achievement of a project's performance objectives through the use of incentives. A risk/reward model typically includes the following mechanisms: risk/reward shared percentages among nonowner participants, project cost risk/reward, noncost risk/reward, risk cap, and achievability of performance targets. This paper examines the influence of a risk/reward model on the behavior of project participants. Twenty-nine industry practitioners from eight civil infrastructure project alliances were interviewed. The interviews revealed that individual features of a risk/reward model identified had merits, but the achievability of performance targets model appeared to be the most appropriate for promoting positive behaviors within the project team. Additionally, it was found that all incentive aspects of the model examined led to positive and constructive behaviors occurring due to their perceived fairness and equity of payment structure. Participants indicated that having a commercial interest in an alliance's performance outcomes ensured collaboration and engagement throughout the project's life cycle. It is concluded that risk/reward sharing is pivotal to obtaining a successful project outcome for the procurement of civil engineering infrastructure projects when using an alliance. © 2011 ASCE.

Item Type: Article
Uncontrolled Keywords: Alliance, Australia, Behaviors, Compensation, Project team, Risk/reward model, Alliance, Australia, Behaviors, Compensation, Project team, Risk/reward model, Project management, Civil engineering
Subjects: H200 Civil Engineering
K200 Building
Divisions: UoA Collections > UoA16: Architecture, Built Environment and Planning
Faculty of Computing, Engineering and the Built Environment
Faculty of Computing, Engineering and the Built Environment > School of Engineering and the Built Environment
Faculty of Computing, Engineering and the Built Environment > School of Engineering and the Built Environment > Integrated Design Construction
Depositing User: Hussen Farooq
Date Deposited: 20 Jul 2016 11:06
Last Modified: 20 Jul 2016 11:06
URI: http://www.open-access.bcu.ac.uk/id/eprint/2163

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