Rosenfeld, Y and Geltner, D (1991) Cost-plus and incentive contracting: Some false benefits and inherent drawbacks. Construction Management and Economics, 9(5), pp. 481-490. ISSN 01446193
Abstract
Two problems associated with cost-plus and incentive contracts in the construction industry are discussed: the financial costs of an earlier construction start through the use of a fast-tracked' design-build cycle, and the counterproductive effects of the 'adverse selection' of competing construction firms that must occur in a cost-plus or incentive contract environment. Though they stem from basic economic principles, these problems are often ignored in the conventional wisdom. The authors argue that the demonstration of these serious, commonly overlooked drawbacks should result in a decrease in the use of cost-plus or incentive contracts.
| Item Type: | Article |
|---|---|
| Uncontrolled Keywords: | adverse selection; building procurement; cash flow; contracts; cost-plus contracting; project scheduling; uncertainty |
| Index terms: | adverse selection, construction industry, cost-plus, project scheduling, cash flow, construction firm, building procurement, incentive contract |
| Subjects: | financial management, financial risk, project controls, industry analysis, organization, contractual arrangements |
| Topics: | Time Control, Cost Management, Business Strategy, Research Practice, Procurement |
| Descriptive scope: | 3 PCT |
N.B. Descriptive scope is a count of how many of the five facets of empirical research are indicated by the words used in title, abstract and keywords. It is not intended as a judgement on the research; merely a count of the kind of word we would expect to indicate Phenomenon, Concepts, Theoretical framing, Empirical techniques, Analytical techniques. If all five are present, then a code of “5 PCTEA” will indicate this. If you feel the coding for this record is questionable, we welcome discussion around the terms we matched or the way we categorized them. The facet you would expect may not be coded, or a facet may be coded inappropriately. This can also bear on a larger question, of which facets should be treated as defining in construction management research. Please get in touch, and we will look at it. More details here