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| NOPS' painshare is capped at their Corporate Overhead and Profit. Historically, this is the model which has been used for most alliance contracts. The cap on painshare may be attractive to the NOPs if the project risk is particularly high. However, the cap means that the Owner will carry the entire project overrun where the project becomes distressed. This may undermine the key features of the alliance, including the concepts of risk and opportunity sharing and 'best-for-project' decision making. Also, this model does not include any incentive for the NOPs to achieve non-cost KRAs. |