Performance-Based Incentive Mechanisms in Life-Cycle Contracts

Abstract

Within the framework of lean production, Russian industry needs to develop and introduce more effective mechanisms ensuring the fulfillment of state orders for capital- and technology-intensive systems, on the basis of performance-based logistics (PBL). In the present work, the introduction of PBL on the basis of a life-cycle contract for a specific program (product) is analyzed. One mechanism recommended in order to overcome the risks of indeterminacy is stepwise correction of incentive systems in the fulfillment of life-cycle contracts (with targeted increase in incentives for the attainment of specified results).