Skin ADV

Supply Chain Glossary

Glossary  >  C  >  Contract, Performance Based  


 

Contract, Performance Based


Source: Procurement Glossary
Author: Paul Rogers
Institute: CIPS - UK

Courtesy of


 

Performance based contracts seek to focus upon the output required from the contractor, and create measures and remuneration mechanisms which align the contractor’s performance with the outcomes desired.  This contrasts with traditional approaches in that the specifications focus less on the ‘how’ and more on the ‘what’ through a clear statement of expected work outcomes.  The statement of work shows the detailed work elements including a performance standard, acceptable quality levels, how performance will be measured and monitored, and the percentage of the contract price each service represents.  Performance based contracts require clear definition of what is needed and measurement processes which relate directly to actual performance levels.

For example, supposing a buyer pays a maintenance provider for supporting a pump.  The fees are 15% of the initial acquisition cost, and the fee is paid annually.  The fee structure is unrelated to the actual cost expended by the supplier, and the supplier may or may not focus on achieving the required uptime levels - assuming that these are specified and measured.  A performance-based contract might reward the provider for uptime, the provider will only be paid if the pump is functional, and the provider will be paid less - or not at all - if the pump reliability is less than specified.  This would be a performance-based contract, and align the contractor to delivering the required pump availability.  See also Risk and Reward.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 




Job Opportunities
 
Imaging Order Management Logistics Specialist
     
     Nashville, Tennessee  -  PERM  -  Philips

Quality Manufacturing Engineer
     
     Murrysville, Pennsylvania  -  PERM  -  Philips

Global Supplier Account Manager
     
     Home Based  -  PERM  -  Philips

Supply Chain Quality Engineer
     
     Mount Pleasant, Pennsylvania  -  PERM  -  Philips

Electrical Engineer - Procurement
     
     Bothell, Washington  -  PERM  -  Philips

Supply Chain Project Manager
     
     Murrysville, Pennsylvania  -  PERM  -  Philips

Transportation Manager - Americas Region
     
     Bothell, Washington  -  PERM  -  Philips

Category Sourcing Manager
     
     Nashville, Tennessee  -  PERM  -  Philips

Transport Specialist (Nashville, TN)
     
     Nashville, Tennessee  -  PERM  -  Philips

Supply Planner
     
     Murrysville, Pennsylvania  -  PERM  -  Philips

Physical Distribution Manager
     
     Lockbourne, Ohio  -  PERM  -  Philips

Material Handler 3
     
     Reedsville, Pennsylvania  -  PERM  -  Philips

Procurement Manager Bay Area, CA
     
     Bay Area, CA  -  PERM  -  Teldar Group

Procurement Director Bay Area, CA
     
     Bay Area, CA  -  PERM  -  Teldar Group

Sourcing Manager North Carolina
     
     North Carolina  -  PERM  -  Teldar Group

 

Supply chain E-learning



Explore available supply chain e-learning modules by language and academy



News & Trends
 

Last update 11 Aug 2022
PMI at lowest for two years as output and new orders fall in July
   Source: S&P Global US Manufacturing PMI   -  IHS Markit
United States 


Fashion

Today’s omni-channel marketplace means competition is increasing, consumers are demanding more relevant products, inventory lifecycles are shorter and fulfillment is incredibly complex. Business conditions are constantly changing, which means you need the flexibility to adapt quickly and continu...

The Challenges in Global Supply Chain Management

To say that 2020 brought record global supply chain challenges would be a gross understatement. With COVID-19, trade wars, weather events, port congestion, and other significant upheavals, many companies saw more disr...


Education
 

Resources
 
PPG INDUSTRIES, LTD.

Company Established in 1883, PPG Industries manufactures protective and decorative coatings, sealants, adhesives, metal pretreatment products, flat glass, fabricated glass, continuous-strand fiberglass products, and...

6 ways to know which solutions really predict performance

The testing and assessment industry has aggressively expanded over the last two decades. There are numerous solutions from HR consultants, I/O psychologists, and technology vendors. But, one size does not fit all when...