Framework for Estimating Quality-Related Incentive and Disincentive in Construction Projects

Having provisions in contracts that incentivize "better " performance has been identified as an effective means to encourage the contractor to perform better. In the construction industry, such incentive-disincentive (I/D) schemes have more widely been used for time, cost, and safety performance goals, they are conspicuous in their absence for quality-related performance. In fact, there is only limited literature available on the latter. This study presents a framework to estimate the quality I/D amounts in construction projects. The relationship between the cost of conformance and a "project defect score " has been used to estimate the I/D amount. The proposed framework for quality I/D has been validated for its effectiveness from the data of three actual recently completed projects. The findings clearly show that the proposed quality I/D scheme helped achieve a win-win situation between client and contractor. Though this study is based on data from the building industry, the proposed framework can be fine-tuned with more data and extended to other areas of construction.