Category Archives: Incentives

Perverse Incentives – Part 1

“Common sense is not so common.” Voltaire In a previous article (see Designing Successful Performance Based Contracts) I highlighted three tests for a highly successful Performance Based Contract (PBC).  These were: Does the PBC drives the right behaviour in the … Continue reading

Posted in Behaviours, Incentives, the What | Tagged , , , , , , , , | 1 Comment

Unintended and Perverse Outcomes

A colleague from the Australian Department of Defence (thanks Hayley!) recently sent me a link to an article from the Canberra Times about “Losing our way: How the cult of the KPI has damaged our moral compass”.  This article is partly … Continue reading

Posted in Behavioural Economics, Case Study, Incentives, Outcome | Tagged , , , , , , , , , | 2 Comments

Reliability in Performance Based Contracts (PBCs) – Part 1

“I can predict things. I can improve the uptime and the reliability. I can intervene and cause a better outcome before there’s a problem. ” Michael Dell In previous articles I described how to consider availability in Performance Based Contracts … Continue reading

Posted in Incentives, Performance Measure, the How | Tagged , , , , , , | 2 Comments

Performance Based Contracting (PBC) Incentive Regime (Part 2)

In the previous article (see PBC Incentive Regime (Part 1)) I described the various benefits to both buyer and seller of having an incentive regime in a Performance Based Contract (PBC). In this article, let’s look at how to successfully … Continue reading

Posted in Incentives, the How, the What | Tagged , , , , , | 1 Comment

Performance Based Contracting (PBC) Incentive Regime (Part 1)

“Incentive – a thing that motivates or encourages someone to do something.” Oxford Dictionary There is a lot of debate on the use of incentives in Performance Based Contracts (PBC). Some argue, especially buyers from public sector organisations (e.g. state … Continue reading

Posted in Benefits, Incentives, the Why | Tagged , , , , , , | 2 Comments