One of the questions frequently asked by owners is how and when to use “earned performance fees” in water and wastewater design-build projects. In this context, earned performance fees are defined as monetary benefits established to attain a specific achievement or goal.
The use of earned performance fees with any delivery method can be a powerful tool that helps both the owner and design-builder to better align accomplishing the project objectives. However, in a design-bid-build project, the intent of earned performance fees is often to drive innovation, collaboration, schedule, and cost savings, which are all hallmarks of design-build delivery. This begs the question: Why use earned performance fees for design-build delivery projects? One of the answers is: When earned performance fees are used with a design-build delivery project, it further stimulates maximizing innovation, collaboration, schedule, and cost savings – well beyond what can occur in the limited design-bid-build process, since much of the contractual arrangements are already locked in once the project goes out to bid.