Outcome-based contracts - Adding value to the contract life-cycle

There is growing evidence that an outcome-based contract has substantial impact on the results achieved in a contract life cycle. Outcome-based contracts are results based, focusing on the outputs, quality or outcomes. They typically tie at least a portion of a contractor's payment, contract extensions or contract renewals to the achievement of specific, measurable performance standards and requirements.\r
\r
The purpose of an outcome-based contract is to obtain overall better value, better performance and lower costs. \r
Outcome-based contracting requires output based specifications and procedures that require the contractor to devise the most effective and efficient way to perform the work.\r
\r
The steady move away from traditional product-based sales into a world of solutions and services is changing the emphasis of contracts. Rather than each transaction being driven by specific delivery of input, many agreements now relate to phased activity where completion is rather less precise and success can be gauged only over time and linked to an extended outcome.