Minnesota Department of Transportation
Jump to main content.
picture of washout
Innovative Contracting - Lane Rental
Description, benefits and drawbacks of lane rentals; includes specifications and examples
Home | Innovative Contracting | Contract Changes | Project Controls | Labor Compliance | References | Contacts


Innovative Contracting Staff


Special Provisions


Innovative Contracting

Guidelines 2008



Pay for Performance



The contractor is paid for work on a graduated scale based on the quality and longevity of the work over time.


Difference from Traditional Method

Traditional specifications precribe the methods and/or means of producing or constructing an item.  If the contractor complies with specifications but the final outcome is not acceptable, the contractor is not responsible for corrective action. 


Pay for performance specifications rely on final outcomes that can be measured against performance criteria set forth in the contract.  If the  contractor fails to meet minimum performance criteria, payment is withheld and corrective action is required. 



  • Eliminates blame when there is a problem with the quality of a specific work item
  • Shifts risk of providing a quality product to the contractor
  • Provides higher quality products for a longer duration




  • Time needed after project completion to ensure product performance
  • Product monitoring and inspection is time-consuming
  • Contractor may be required to finance a portion of the work during the performance period