Cost Management: A Strategic Emphasis 5th Edition by David Stout, Edward Blocher, Gary Cokins

Exercise 19

What is the essence of a fixed-performance contract and what dysfunctional consequences can occur through the use of this type of incentive system?

Step 1 of 2

“The fixed performance contracts are kind of compensation based contracts where the actual performance is measured with the budget fixed to find out the difference between actual performance and the fixed budgeted figures.”