Evaluation of incentive mechanisms on performance-based contracting systems in South Africa and Nigeria

Abstract

This thesis focuses on evaluating the use of incentive mechanisms for improving project performance in construction projects in South Africa and Nigeria. The literature review reveals that there is no existing framework or model for adopting incentive mechanisms in construction projects in both countries. Most incentive schemes adopted in construction projects are usually focused on achieving a single performance metric. This has led to over-investment of one‟s effort in one area at the expense of other performance metrics. This study advocated the need to incorporate the key performance metrics, such as cost, time, quality and safety/health in incentive mechanisms and develop a framework for incentive mechanisms targeted towards improved performance. The study further investigated on the sociological and operational constructs for evaluating performance in relation to incentive mechanisms. The literature review established that human social interactions play a significant role in achieving project success; these interactions are governed by workforce behaviour and are measured using sociological constructs. Likewise, the operational activities can significantly influence the attainment of performance goals. To achieve the research aim and also address the research problem, the study adopts these specific objectives: to assess the impact of incentives on employee motivation and identify positive motivational drivers that bridge the gap; to evaluate the sociological and operational constructs of performance in relation to incentive mechanisms; to appraise the economic impact of incentive mechanisms; and to adopt the research outcomes to model for incentive payoffs and develop a framework for incentive mechanisms. An explanatory sequential approach of mixed methods research approach was adopted for data collection which is based on ontology and epistemology philosophies. First, a quantitative survey was conducted using a stratified probability (random) sampling technique. The findings from the questionnaire survey were then transformed into semi-structured questions for case study interviews. Second, a qualitative survey was conducted using non-probability (purposive) sampling technique. The outcomes from the questionnaire survey and case study were adopted to develop a framework for incentive mechanism consisting of three components. Results of the validation process revealed that the top ranked economic challenges associated with the use of incentives can be resolved through the implementation of the developed framework for incentive mechanisms. This thesis recommends the need to develop a software programme incorporating the three components of incentive mechanism framework for effective usage.