An Optimised Project Requires Optimised Incentives

Joel W. Darrington1 & Gregory A. Howell2

1Attorney, Construction Practice Group, McDonough Holland & Allen PC, 500 Capitol Mall, 18th Floor, Sacramento, CA 95814, USA, Phone +1 916/444-3900, jdarrington@mhalaw.com
2Managing Director, Lean Construction Institute, Box 1003, Ketchum, ID 83340, USA, Phone +1 208/726-9989, ghowell@leanconstruction.org

Abstract

Lean projects seek to optimise the project rather than its parts and to maximize value to the customer. Traditional economic incentives can get in the way of that behaviour. To better align the behaviour of project participants with a Lean project delivery model, compensation structures at both the company-to-individual level and inter-company contract level need to better address both the economic and non-economic motives that impact project performance. Hypothesis: Social science research increasingly shows that non-economic human motives play a key role in job performance, and that they interact in complicated ways with economic incentives. We have identified certain contract incentive principles that we believe should promote non-economic motives. We believe that because Lean projects depend greatly on the non--economic motives of participants, contract incentives that foster such non-economic motives are important for success. By reviewing and extrapolating from relevant literature, this paper will explore certain key non--economic human motives and their impact on project performance, how these non--economic motives interact with economic incentives, and strategies for structuring effective incentives. The conclusion will suggest areas for further research.

Keywords

Intrinsic motivation; Human motivation; Contract incentives; Performance incentives.

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Reference

Darrington, J.W. & Howell, G.A. 2010, 'An Optimised Project Requires Optimised Incentives' In:, Walsh, K. & Alves, T., 18th Annual Conference of the International Group for Lean Construction. Haifa, Israel, 14-16 Jul 2010. pp 591-600

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