Project Contracting

Projects often require complex contractual agreements between the party who owns the project and the party who executes the project. The design of such contractual agreements can be a daunting task for the project owner, who has much to lose by handing over the control over the project to a contractor who has an inherently different set of motivations. To aid the project owner in making the right decisions, a quantitative model has been developed by the Operations Research and Scheduling research group. This model can be used as a basis for computational experiments, from which generalised managerial guidelines for contract design can be distilled. Moreover, this model can also be used to analyse an individual case study and provide detailed guidance for contract design in a specific situation. 

Reference:

• Our first paper on this subject has been published in Omega. The data used in our experiments can be downloaded here.
• Kerkhove, L.-P. and Vanhoucke, M., 2016, "Incentive contract design for projects: The owner’s perspective", Omega - The International Journal of Management Science, 62, 93–114 (doi:10.1016/j.omega.2015.09.002).