What is the expected outcome of using "performance-based contracting"?

Using performance-based contracting focuses on clearly defined results and outcomes rather than the process or the resources used to achieve them. This approach aligns the goals of the contracting parties by emphasizing the desired performance results. In this framework, the success of the contract is measured by how well the service provider meets specific performance targets that are directly correlated with the objectives of the purchasing entity.

When the objectives of a contract are explicitly linked to the desired outcomes, both parties have a clearer understanding of what is expected. This alignment encourages the contractor to focus on achieving results rather than merely delivering services or goods based on input metrics. Consequently, this can lead to improved efficiency and effectiveness in service delivery, making it a powerful contract management tool that drives accountability and performance.

On the other hand, while performance-based contracting can indirectly encourage collaboration by fostering a mutual interest in achieving objectives, the primary focus remains on the alignment of objectives with the results achieved. This can lead to improved outcomes and satisfaction for all involved.

In contrast, other choices may contribute to a more general understanding of contract management but do not capture the primary essence of performance-based contracting, which is fundamentally about aligning outcomes with expectations.