Operations and Supply Chain Management Commons^™

Inherent Jeopardy Of Performance Based Contracting Metrics: A Simulation Experiment, Daniel Cherobini

Theses and Dissertations

There is a growing trend across the world to adopt Performance Based Contracting strategies to support logistics systems. Using these policies, contract payments are strongly related to the performance achieved compared to prespecified metrics. However, managers are not always confident on what are the most suitable performance goals to use in these agreements. As a consequence, contractors struggle to deliver the desired performance results, while aircraft fleets experience an increase in support costs. And when the results are inadequate, leaders are tempted to impose even more performance targets to contractors, willing to exercise more control over the support organization. In …