Positive incentives encourage positive actions, behaviors, and relationships. Negative incentives encourage behaviors and actions that are defensive. Effective incentive plans are designed carefully to respond to specific requirements and particularities of application. A contractor's degree of risk aversion increases with his inability to absorb the potential loss. Two-way communication is essential at all levels of both the owner's and contractor's organizations.
Incentive plans take time.
You can't incent capabilities into a relationship which neither owner nor contractor is capable of providing. Incentive plan design should be flexible. Don't be afraid to change the design if it is not yielding results. Review the plan at least annually. The incentive clauses in the service agreement must be designed around the plant's overall maintenance and asset management goals.