Minnesota Department of Transportation

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Innovative contracting

Innovative contracting methods

Incentive / disincentive

Incentive / disincentive is a process where the contractor is paid an incentive for completing a project earlier than the time specified in the contract. If the contractor completes the project later than the time allowed, disincentive money is subtracted from payments due.

Incentive and disincentives can be used in a wide variety of projects. It is best applied when MnDOT is willing to pay the contractor to expedite the work to reduce the contract time. It is similar to the A+B in that it works well with urban reconstruction and bridge-related projects


  • Early completion
  • No-excuse bonus
  • Pay for performance

When to use incentives and disincentives

  • Projects with high road-user or business impacts
    • Urban reconstruction projects
    • Bridge replacement projects
    • Detour projects
    • Urban pavement rehabilitation projects (if confident with quantities)
    • Interstate (high volume) projects with major traffic impacts
  • Projects with commitments to open a roadway as quickly as possible. May require additional funding.


  • Reduced construction time
  • Potential for lower contract administration costs
  • Improved public relations by information businesses/residents that you are committed to completing the project as quickly as possible.
  • Better control of project acceleration


  • May require additional funding
  • Contract changes can lead to disputes regarding incentive
  • Can encourage lower quality work

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