The planning of construction incentivisation

Construction incentivization (CI) is used as a collective term to cover the range of incentive schemes that are commonly used to enhance construction project performance. Most reported studies of CI have mainly focused on reporting the effects of using CI on project performance. Moreover, recent case studies conducted in Hong Kong show that the effectiveness of CI in enhancing performance has not been as promising as intended. For example, the ten mega-projects currently under construction in Hong Kong all have incorporated CI, yet all these projects have recorded underperformance with lengthy delays, substantial cost overruns and serious quality issues. It is advocated that providing a singular financial reward (as most CI schemes are formulated) may not guarantee improved performance. Instead, CI can also be used to manage the relationship between the contracting parties. This study posits guidelines for the planning and implementation of CI approaches and includes 1) identifying the key components of effective CI; 2) investigating the key contributors of CI towards better project performance; and 3) developing planning principles of CI for construction projects. Through a literature review, five key components of CI were found, namely, goal commitment, information exchangeability, expectation alignment, risk efficiency and relationship investment. The study also concludes that CI schemes can be used to balance equity gaps (EGs) and maintain inter-organizational relationship (IORs). Accordingly, the following CI planning guidelines are proposed: 1) Balancing EGs should be an integrated part of every CI; 2) The key targets of CI should be established through consensus negotiation to improve the recognition of CI; and 3) For projects seeking outstanding performance, continued development of IORs to evoke cooperation for project performance is necessary.