IACCM Contract Management Forum

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Avon Cosmetics Ltd
2020-08-03 17:04:51

Outcome based commercial model

Hi, we're looking to evolve one of our outsourcing contracts from traditional FTE's governed by SLA's to outcome based contract and metrics. Does anyone know what the contract commercial construct/principles for that would be? Does anyone have experience with outcome-based outsourcing contract? What are the pitfalls?
 •  Victorian State Government  •   2020-08-04 01:54:46
Contact Andrew Jacopino IACCM member
 •   2020-08-06 20:28:25
I would be curious to know this as well. My main question would be around how to measure the outcome.
 •  University of Tennessee  •   2020-08-07 00:10:31
The University of Tennessee has done significant research in this areas and has online courses, white papers and books on the topic. The result of their research is known as the "Vested" methodology/business model and it has been successfully put into practice by over 50 organizations in over 80 deals. You can find several case studies on UT's dedicated website on the topic at www.vestedway.com

Let me know if you have any questions...you can ping me on Linkedin and we can chat if you have questions.
Kate Vitasek
(lead researcher and faculty for UT's Vested work)
 •  Avon Cosmetics Ltd  •   2020-08-07 08:04:32
Thank you Paul Kruspe and Kate Vitasek, I will follow up on your recommendations.
 •  Rolls-Royce  •   2020-08-18 08:08:22
When contracting goods that need to be specifically designed/developed for customers, we usually have Statements of Work in place where you describe the content and the milestones you want to contract. The better the outcome is described the easier the supplier will find the bidding.
I would be careful how risk transfer is handled and how a potential change can be managed, i.e. you need a change management process and clause.
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