The impact of financial incentive mechanisms on motivation in Australian government large non-residential building projects

The use of financial incentives mechanisms (FIMs) in Australian government large nonresidential building projects is seen as a way to improve project motivation and outcomes and reinforce long-term commitment between participants. Yet very little empirical research has been conducted into how FIMs should be applied in the context of construction projects and what determines their impact on motivation. The primary aim of this research was to identify the motivation drivers impacting on the achievement of FIM goals. This allowed for the formulation of recommendations to improve Australian government building procurement strategies, creating the potential for better project outcomes.The research involved four major case studies of large construction projects. Analysis of motivation drivers on each project was based on interviews with senior project participants, secondary documentation and site visits. Once the motivation drivers were identified, they were ranked by the weighted number of motivation indicators impacted, to give an indication of their relative importance. The results provide Australian government clients with key areas for policy direction.The findings indicate that the following motivation drivers (in order of impact) were more important than FIM design in achieving FIM goals:equitable contract risk allocation and managementscope for future project opportunities with the clientharmonious project relationshipsearly contractor involvement in design stagesvalue-driven tender selection processes.A consequence of ignoring these key procurement initiatives can be a less than ideal FIM goal performance, despite the nature of FIM design, including the strength of the reward on offer. FIMs have the potential to be a valuable addition to any project procurement strategy. Yet, the main message of this thesis is: If clients rely solely on financial incentives as the driver of motivation it will likely result in failure.