1 Traditional Risk or Reward Model

Under this model, both underruns and overruns are split equally between Owner and NOPs as 50:50 gainshare/painshare.

There is no link to performance on non-cost KRAs. This means that the NOPs only have a financial incentive to achieve cost targets, and there is no additional payment for achieving exceptional non-cost performance (if required by the Owner). That is, there is no incentive for the NOPs to achieve non-cost KRAs.

The model is designed to achieve optimum commercial alignment between the Participants in regard to cost outcomes, i.e., the Participants share the risks and rewards of the project's cost outcomes equally.