Target Agreement Meaning

The text of the objective agreements should therefore be simple, precise and easy to understand. Focus on positive goals and keep things short. The most obvious advantage of objective cost contracts is that they are able to coordinate the interests of the contractor and the client. Since both parties win or lose at the end of the project, they both have a common interest in keeping the actual cost of the project below the original estimate. At the end of the agreed period, the discussion will take place on the results of the objectives, during which the objectives set by a real and theoretical comparison will be achieved. The list of shocks that can lead to deviations from the objective has become clearer than exhaustive. Both the commission and the goals agreement include a variable salary paid in addition to a fixed salary. However, individual remuneration related to the commission`s results is made available to employees who are not or are not primarily assigned to distribution or who, in this case, are primarily a benefit related to turnover or profits. If the employer takes a goal whose performance is only the commission paid, it is an agreement on the objectives. There are three main elements that are part of estimating the target cost of a project: the implementation of a system such as objective agreements could only be cost-effective if costs are offset by significant improvements in staff performance. The process of approval by the project manager of the documents/designs produced by the contractor is closely related to variations.

Conflicts often arise when the project manager is perceived as using this procedure to impose on the contractor`s own design preferences, resulting in additional costs rather than using the variation method that allows for changes in objective costs. While this approach of the project manager may be accepted by the contractor under a refundable contract, since the buyer bears the additional costs, this approach is very different under a target cost regime. Under these conditions, the contractor must participate in the additional costs and the potential requirements of the project manager will likely be carefully considered by the contractor. Complaints can arise, unless the contract sets clear criteria for the rejection of the contractor`s proposals by the project manager. These may be safety considerations or failure to follow good engineering techniques. Goal cost contracts are based on a number called target cost. This number is negotiated by both the contractor and the customer prior to the conclusion of the contract and represents the expected costs for the contractor to provide the agreed goods or services. The risks associated with the eventual development of a broader field: selfishness.

Self-interest is often given to the public interest, so that individual collaborators who are able to support the group agree to achieve goals. There is no doubt, therefore, that the goal agreements for these companies work. However, there is still room for improvement. For a long time, targets and targets have generally been set each year, and this is still the case in some sectors and professions. In goal agreements, you set target types for similar commission contracts. You can combine these types of objectives with target values, correct values and correction values indicated for the commission contract, period, sub-object and trigger method. The essential requirements of the buyer for the project must be described in their entirety, all necessary information must be provided and all risks identified.

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