登录查看更多内容

全部
RFP

How do you negotiate and modify a performance based contract if needed?

由人工智能和领英社区提供技术支持

Performance based contracts (PBCs) are a type of contract that link the payment and incentives of the contractor to the results and outcomes of the project. PBCs can be beneficial for both the buyer and the seller, as they encourage efficiency, innovation, and quality. However, PBCs also require careful planning, monitoring, and communication, as well as the ability to negotiate and modify the contract if needed. In this article, you will learn how to do that effectively.

此文章中的业界达人

由社区从 5 条内容中精选。了解更多

Ashish A.

Head Client Services - APAC | Engineering | Risk & Analytics | Cloud-Driven Digital Transformation | Fintech Leader |…
Nicholas Seiersen

The Right Deals with the Right Trading Partners with Vested agreements for complex services
Jeff Dean

MDM Professional

1 Define the performance objectives

The first step to negotiate and modify a PBC is to define the performance objectives clearly and realistically. Performance objectives are the measurable and verifiable indicators of the desired results and outcomes of the project. They should be aligned with the buyer's needs and expectations, as well as the seller's capabilities and resources. Performance objectives should also be SMART: specific, measurable, achievable, relevant, and time-bound.

添加您的观点

Jeff Dean

MDM Professional
举报内容
It is important to identify any dependencies on the buyer as well as third-parties that may have an impact on the performance objectives. For example, if design complete is a performance criteria by a certain date the buyer is required to approve or request changes within a certain number of business days before the deadline.

已翻译

赞

2 Establish the performance measures

The second step is to establish the performance measures that will be used to evaluate the contractor's performance and determine the payment and incentives. Performance measures are the metrics and criteria that quantify and qualify the performance objectives. They should be objective, reliable, valid, and transparent. Performance measures should also be balanced, covering both the quality and the quantity of the performance, as well as the cost and the time.

添加您的观点

Nicholas Seiersen

The Right Deals with the Right Trading Partners with Vested agreements for complex services
举报内容
Both the achievement of the objectives and the creation of real value must be measured. Service improvements may indicate that incentives have been earned, but measurement of value must also be done so the appropriate amount of value can be released. If the ratings at a call centre improve, but number of calls from a constant customer base with a stable business does not improve, what value has been created?

已翻译

赞

3 Negotiate the payment and incentives

The third step is to negotiate the payment and incentives that will be linked to the performance measures. Payment and incentives are the financial rewards and penalties that motivate the contractor to achieve or exceed the performance objectives. They should be fair, reasonable, and proportional to the level of performance and risk. Payment and incentives should also be flexible, allowing for adjustments and contingencies based on the actual performance and circumstances.

添加您的观点

Ashish A.

Head Client Services - APAC | Engineering | Risk & Analytics | Cloud-Driven Digital Transformation | Fintech Leader | Cloud Solutions | Gen AI & Data Science Enthusiast | 2x AWS | PMP? | TOGAF? | ACI - IBF | SMU
举报内容
- Payment terms aren't just about money, they're about timeline: Milestone-based payments can help with cash flow, especially for smaller vendors. Tie it back to demonstrable progress. - Incentives aren't a magic bullet: If the project is inherently risky, throwing more money on success may not be wise. Think about shared-risk models for high uncertainty. - Balancing rewards means balancing power: A heavily incentive-based contract can put too much pressure on the vendor to cut corners to get paid. Find a mix that motivates without compromising quality.

已翻译

赞
Nicholas Seiersen

The Right Deals with the Right Trading Partners with Vested agreements for complex services
举报内容
In a PBC, the incentives and how to earn them must be clear from the start. That way the provider can determine how much effort and how much investment they wish make.

已翻译

赞

4 Draft the contract terms and conditions

The fourth step is to draft the contract terms and conditions that will govern the PBC. Contract terms and conditions are the legal and contractual provisions that define the rights and obligations of both parties, as well as the procedures and mechanisms for managing the contract. They should be clear, concise, and consistent with the performance objectives, measures, payment, and incentives. Contract terms and conditions should also be comprehensive, covering all the relevant aspects of the PBC, such as scope, schedule, quality, risk, change, dispute, and termination.

添加您的观点

5 Monitor and evaluate the performance

The fifth step is to monitor and evaluate the performance of the contractor throughout the contract period. Monitoring and evaluation are the processes of collecting, analyzing, and reporting the data and information related to the performance measures. They should be timely, accurate, and objective. Monitoring and evaluation should also be collaborative, involving both parties in the feedback and learning loop.

添加您的观点

6 Modify the contract if needed

The sixth step is to modify the contract if needed based on the results of the monitoring and evaluation. Modification is the process of changing or updating the contract terms and conditions to reflect the changes in the performance objectives, measures, payment, incentives, or other aspects of the PBC. Modification should be justified, documented, and agreed upon by both parties. Modification should also be proactive, anticipating and addressing potential issues or opportunities before they become problems or risks.

添加您的观点

7 Here’s what else to consider

This is a space to share examples, stories, or insights that don’t fit into any of the previous sections. What else would you like to add?

添加您的观点

Ashish A.

Head Client Services - APAC | Engineering | Risk & Analytics | Cloud-Driven Digital Transformation | Fintech Leader | Cloud Solutions | Gen AI & Data Science Enthusiast | 2x AWS | PMP? | TOGAF? | ACI - IBF | SMU
举报内容
- Regular reviews are for course correction, not just judgment. Can you help the vendor get back on track before missing a major milestone? That's a win for both sides. - Communication is a contract term: Don't leave it vague. Specify how often you'll review metrics, who's involved, and how escalation works if there's a dispute.

已翻译

赞

RFP

+ 关注

给文章评分

我们借助人工智能创建了此文章。您认为这篇文章怎么样？

很棒不太好

举报此文章

查看全部

How do you negotiate and modify a performance based contract if needed?

1

2

3

4

5

6

7

1 Define the performance objectives

2 Establish the performance measures

3 Negotiate the payment and incentives

4 Draft the contract terms and conditions

5 Monitor and evaluate the performance

6 Modify the contract if needed

7 Here’s what else to consider

RFP

给文章评分

感谢您的反馈

更多RFP相关文章

更多相关阅读内容