Motivation toward financial incentive goals on construction projects

a r t i c l e i n f o Construction industry observers tout the use of financial incentives as promoters of motivation and commitment on projects. Yet, little empirical evidence exists concerning their effectiveness. What are the drivers of motivation on construction projects? The reasons that construction project participants are motivated to pursue voluntary incentive goals are examined through four Australian case studies. The results demonstrate the critical role played by project relationships and equitable contract conditions in promoting the effectiveness of financial incentives. In the context of a construction project, this study finds financial incentives to be less important to motivation and performance than relationship enhancement initiatives. This finding is unexpected and has implications for the design of project procurement strategies. These results suggest that if project clients ignore the importance of relationship quality between participants, the impact of any financial incentive will be compromised. Construction projects shape the built environment in which people live and work. The built environment is typically a country's most important asset, both economically and socially. For advanced countries around 95% of people work in the built environment, where they generate around 80% of GDP (Newton et al., 2009). The performance of construction projects and the whole-of life management of constructed assets influences a country's productivity, competitiveness , living quality and ecological sustainability (Newton et al., 2009). Yet many countries face significant challenges with the performance of construction projects and constructed assets (Manseau and Seaden, 2001). The use of financial incentives in construction projects is seen as a key means of improving built environment outcomes. Financial incentives are typically used on construction projects to invigorate motivation towards above business-as-usual (BAU) goals and provide the contractor with the opportunity for higher profit margins if exceptional performance is achieved. BAU includes the mandatory minimum requirements that are to be delivered under the construction contract. Voluntary goals are higher-order goals set by the client above minimum BAU requirements. Financial incentives aim to increase the efficiency and effectiveness of projects by stimulating the motivation to work harder and smarter in pursuit of such goals (Sliwka, 2003). There are three main types of financial incentives used on construction contracts (Bower et al., 2002): 1. Share of savings incentives, where cost savings are shared between the client and the contractor based on an agreed formula; 2. Schedule incentives, where a premium is offered to the contractor for the …