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.
Urban Mass Transportation AdministrationOffice of Management Research and Transit Service
Washington, DC United States 20590
- Publication Date: 0
- Pagination: 7 p.
- TRT Terms: Contractors; Incentives; Management; Performance; Policy; Productivity; Transit operating agencies
- Uncontrolled Terms: Performance indicators
- Old TRIS Terms: Management policies
- Subject Areas: Administration and Management; Highways; Policy; Public Transportation; I10: Economics and Administration;
- Accession Number: 00389893
- Record Type: Publication
- Files: TRIS, USDOT
- Created Date: Oct 30 1984 12:00AM