Performance-Based Contracts: Maximizing Success, Sharing Risk
Author(s):
Lorrie K. Mitchell, C.P.M., A.P.P.
Lorrie K. Mitchell, C.P.M., A.P.P., Partner, Mitchell Enterprises, 770/448-4544, 404/808-8804; lorriekm@bellsouth.net
90th Annual International Conference Proceedings - 2005 - San Antonio, TX
Abstract
In the past, contracts were negotiated solely with a set fee structure. Occasionally, a
penalty clause would be negotiated into the arrangement, and less seldom an incentive clause
was included. A Performance Based Contract (PBC) is the true Win/Win scenario of the
perfect union of these concepts. Topics that warrant discussion include: Is a Performance
Based Contract beneficial, can/should all contracts be performance based, what type of
relationship should exist/be developed with the supplier and how does a customer/end-user
participate in this process, what type of environment is conducive to making this type of
relationship work, what do you base performance on, what characteristics should the buyer
and supplier possess, and how do you implement this type of program?
Performance-Based Contracts: Maximizing Success, Sharing Risk — 69 KB (PDF)
