Sharing fractions in cost-plus- incentive-fee contracts

摘要

A Cost-Plus-Incentive-Fee (CPIF) contact tries to provide a risk sharing approach between owner and contractor. It is between the two extremes of firm fixed price and cost plus contracts. This paper reviews the literature of risks in contracts. It uses utility theory to explain how own- ers and contractors determine the best sharing fraction from their points of view. Negotiation is discussed as a vehicle for owners and contractors to convince each other regarding the sharing Fraction that is acceptable to both of them.