Incentives and Contracting for Availability: Procuring Complex Performance

Nigel D. Caldwell, Vince Settle

Research output: Chapter in Book/Report/Conference proceedingChapter (peer-reviewed)

Abstract

Procuring complex performance where both the performance required and the infrastructure to support the requirement are complex, is the current frontier on procurement knowledge. Trends to bundle contracts for products and services together exemplify the challenge. These product-service bundles take the form of contracts for the use of the product (e.g., including long term maintenance and support) rather than just the product as an artefact. Such contracts bind a Prime contractor and the customer into complex long term agreements. Contractual incentive mechanisms have long been used to align the interests of customer and supplier in such projects. This chapter explores the use and role of incentives in complex engineering support environment, drawing on a case study from recent research on availability contracting to support fighter jets. The chapter presents the challenge to the conventional incentive mechanisms inherent in the combination of flexibility and cost control required in contracting for jet fighters availability.
Original languageEnglish
Title of host publicationComplex Engineering Service Systems
Subtitle of host publicationConcepts and Research
PublisherSpringer
Chapter8
Pages149-162
Number of pages14
ISBN (Electronic)9780857291899
ISBN (Print)9780857291882
DOIs
Publication statusPublished - 2011

Publication series

NameDecision Engineering
PublisherSpringer
ISSN (Print)1619-5736

Keywords

  • Supply Chain
  • Business Model
  • Incentive Scheme
  • Incentive Mechanism
  • Complex Performance

ASJC Scopus subject areas

  • Business, Management and Accounting(all)

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  • Cite this

    Caldwell, N. D., & Settle, V. (2011). Incentives and Contracting for Availability: Procuring Complex Performance. In Complex Engineering Service Systems: Concepts and Research (pp. 149-162). (Decision Engineering). Springer. https://doi.org/10.1007/978-0-85729-189-9_8