{"id":38513,"date":"2018-09-07T15:57:53","date_gmt":"2018-09-07T13:57:53","guid":{"rendered":"http:\/\/www.cmpartners.nl\/?p=38513"},"modified":"2018-09-07T15:57:53","modified_gmt":"2018-09-07T13:57:53","slug":"from-contract-to-partnership-examining-vested-and-cats-cm","status":"publish","type":"post","link":"https:\/\/www.cmpartners.nl\/en\/kennisblog\/from-contract-to-partnership-examining-vested-and-cats-cm\/","title":{"rendered":"From contract to partnership: Examining VESTED and CATS CM"},"content":{"rendered":"

The landscape of contracts displays increasing diversity. An increasingly common development is that more attention is paid to different forms of contracts. The most common types are the transaction-based and performance-based contracts. The newer types of contracts are much closer to real partnerships. They are more about the effect that the services generate or the influence they have on the organisation\u2019s objectives. One way to set up these contracts is the Vested \u2122 method. How does this method relate to, for example, the CATS CM contract management method?<\/p>\n

Different types of contracts<\/h2>\n

In a transaction-based contract, the supplier delivers a product or carries out an activity and receives a compensation for this, almost always in the form of euros. In a performance-based contract, the compensation is based on the service level achieved. An example of this is the supplier providing the service desk. The related activities are receiving phone calls and solving the problems reported by callers. The compensation is based on whether or not the call is answered within the agreed response time and solving the reported problems within the posed maximum time.<\/p>\n

The newer types of contracts are about the effect of the services delivered on their influence on the organisation\u2019s objectives. As such, this is the basis for determining the compensation. To return to the example of the service desk: the satisfaction of the caller or the contribution of the service desk to customer retention is the basis for the compensation.<\/p>\n

\u2018The Vested Way\u2019<\/h2>\n

A possible approach to achieve these types of contracts is the Vested methodology. This approach is gaining popularity. More and more organisations are deploying Vested to set up contracts. It is also common to see contracting processes in which a formal Vested approach was not applied, but which are still retroactively called Vested contracts by the developers of this methodology.<\/p>\n

The popularity of Vested is easily explained. Binding a supplier in a real partnership (the most misused word in the purchasing industry) who helps realise your organisational objectives appeals to many people. Let\u2019s by honest, who wouldn\u2019t want that?<\/p>\n

When to use which type of contract<\/h2>\n

So why don\u2019t organisations transition to Vested contracts en masse?\u00a0 There are several reasons for this. First of all, not every contract is suitable for the Vested approach. Secondly, it is in practice not easy to find a supplier who supports the same approach. Finally, one\u2019s own organisation must often be convinced of the approach. This is no easy task!<\/p>\n

A number of books and many whitepapers have appeared about Vested<\/a>. If I look at the most important topics treated in these reference materials, they mostly concern the substantiation of why the Vested approach delivers better results. This reasoning arises from scientific research, a field study of outsourcing contracts and a decision-making model to determine whether Vested is practicable or not. But these whitepapers also describe the guideline for realising a Vested contract and the topics that must be included in such a contract. The latter is of course interesting from a (post-award) contract management perspective, because this lays the foundation for the execution phase of the contract.<\/p>\n

Framing the result<\/h2>\n

When we zoom in on the latter, we see that the approach proposes to record the following topics as result objectives:<\/p>\n