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Project price modeling by optimal fixed price incentive contract

Ahsan, Kamrul and Matsukawa, Hiroaki (2012) Project price modeling by optimal fixed price incentive contract. In: Proceedings of the 2012 International Conference on Industrial Engineering and Operations Management Istanbul, Turkey, July 3 – 6, 2012. Industrial Engineering and Operations Management Society, Instanbul, Turkey, pp. 1971-1980.

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Abstract

The project fixed price incentive (FPI) contract imposes either penalty or incentive for cost excess or cost savings. However, problems arise with target price and refunding rate of the project, which are determined by negotiation and often require compromise with an unavoidable, unfair contract. In this paper we propose an analytical model that can resolve the unfair contract dealing of FPI. Our objective is to find an optimal solution to maximize total profit and to determine a target price in the FPI approach. We use cooperative game theory and compare results with Firm Fixed Price (FFP) approach to demonstrate the significance of using the proposed model for price negotiation. --3rd International Conference on Industrial Engineering and Operations Management (IEOM 2012)

Item Type: Book Section
ISBN: 9780985549701
Uncontrolled Keywords: modelling, project management, project contracts, incentive contracts, fixed price incentive, FPI, risk management, models, contracts
Subjects: FOR Classification > 1503 Business and Management
Faculty/School/Research Centre/Department > College of Business
Depositing User: VUIR
Date Deposited: 12 Mar 2014 01:26
Last Modified: 22 Mar 2014 22:01
URI: http://vuir.vu.edu.au/id/eprint/24505
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