Decision Process Models of Contractor Behavior: The Development of Effective Contract Incentives

摘要

An objective of this research was to develop a capability to model the potential impact of various incentive schemes on the performance of defense contracts. It was necessary to develop a computer simulation model such basic elements as DOD project goals, DOD incentive mechanisms, contractor goals, and contractor organizational response mechanisms. Each of these elements, which collectively determine the behavioral pattern of the decision process model (DPM), are decoupled and parameterized to facilitate analysis of different incentive schemes and/or behavioral assumptions. The objective of this contract was to validate the DPM simulation and its application to developing and testing alternative incentive schemes. The major practical use of building a DPM type simulation is its ultimate application in answering 'what if' type policy questions involving the design parameters of the contractual relationship between the DOD and defense contractors. For example, the simulation results indicated that increasing the contractor's fee improves cost control performance. The DPM simulation results suggest that the higher the weight (including those assigned to the quality of the proposal) the better the cost control performance and social efficiency. A simulation model of this type has other uses in the training or education of policy makers and or DOD project managers. In business education similar simulation models have been designed as management games. Such games, which can be extremely complex, are used as laboratories for training students to apply analytical tools and integrate functional area knowledge (marketing, production, accounting, financial planning, etc.) within a competitive decision making environment.