USING MANAGEMENT INCENTIVE CONTRACTS. TECHNICAL ASSISTANCE BRIEFS

Management incentive clauses may be incorporated in contracts which transit operating agencies make with private managements to improve productivity and establish clear priorities. Transit management services may thus become more attractive for private sector participants. Financial incentives may be used to encourage improved performance in target areas or when overall contractor performance is only acceptable and a competitive market for the contract exists. Several examples of these types of contracts are given. For successful use of incentive clauses, the agency must define clearly the performance it hopes the contractor to achieve. Performance indicators can be used to evaluate management performance, but the degree of authority, control and accountability a management firm has does vary from system to system. Payments to management firms should be tied to the indicators and methods of payment include unit rate, incremental amount, proportional amount, one-time bonus and fee pool. The two contract types utilized are cost-plus-incentive (or award) fee, or the fixed price incentive contracts. It is important to design an incentive system the agency can afford and one that will motivate the management firm.

  • Corporate Authors:

    Urban Mass Transportation Administration

    Office of Management Research and Transit Service
    Washington, DC  United States  20590
  • Publication Date: 0

Media Info

  • Pagination: 7 p.

Subject/Index Terms

Filing Info

  • Accession Number: 00389893
  • Record Type: Publication
  • Files: TRIS, USDOT
  • Created Date: Oct 30 1984 12:00AM