skip to primary navigationskip to content

Cambridge Service Alliance

developing new understanding and approaches to complex service systems

Studying at Cambridge

 

Risks of Outcome-Based Service Contracts

last modified Feb 21, 2017 01:19 PM
February Paper on 'Investigating risks of outcome-based service contracts from a provider's perspective' by Jingchen Hou and Andy Neely

Investigating risks of outcome-based service contracts from a provider's perspective

Increasingly servitized companies use outcome-based contracts (OBCs) or performance-based contracts (PBCs) to provide advanced services such as availability or capability. These agreements often incorporate gain share and pain share mechanisms, and service providers are paid based on the outcomes of the total solutions or the outcomes of customer value in a continual use situation. However, the service providers of OBCs are concerned about the fact that there is usually a risk transfer from the customers to the providers, and more risks are introduced to the service providers. This research aims to unpack and analyse risks of OBCs from the providers’ perspective. In this paper, we differentiate commercial risk at the contract negotiation stage and operational risk at the contract implementation stage, and identify twenty-three risk factors that lead to commercial risk and / or operational risk in OBCs. These risk factors are then categorized in five dimensions and their contributions to commercial risk and operational risk are evaluated respectively. The five dimensions are complexity and dynamism regarding the context, and capability, alignment and dependency regarding the stakeholders. By proposing the risk framework of OBCs, this paper provides guidance for risk management for practitioners who use outcome-based contracts for the service provision.

RSS Feed Latest news

July Webinar by Christoph Peters on Modular Service Structures for AI Services

Jul 09, 2018

9 July 2018 - Modular Service Structures for the Successful Design of Flexible Customer Journeys for AI Services and Business Models - by Christoph Peters and Mohamed Zaki.

July Community of Interest Meeting

Jul 04, 2018

In collaboration with our Industrial Partners, the July Community of Interest Meeting (CoI) took place at Perkins, in Peterborough. The focus of this year events is on 'How companies can strategically design, pilot and experiment digital services in the new digital age?’

Mohamed Zaki won the Emerald Literati Award

Jul 03, 2018

Mohamed's and co-authors paper "The interplay of customer experience and commitment" published in the Journal of Services Marketing has been selected by the Emerald Editorial Team as Highly Commended in the 2018 Emerald Literati Awards

2nd Customer Management Leadership Group Academic-Practitioner Workshop

Jun 26, 2018

Dr Mohamed Zaki was invited to participate in the 2nd Customer management Leadership Group Academic-Practitioner Workshop on 17-19 June at the University of Manchester.

June paper on 'Modular Service Structures for the Successful Design of Flexible Customer Journeys for AI Services and Business Models – Orchestration and Interplay of Services'

Jun 26, 2018

June paper on 'Modular Service Structures for the Successful Design of Flexible Customer Journeys for AI Services and Business Models – Orchestration and Interplay of Services'

View all news

Upcoming events

Industry Day - 3 October 2018

Oct 03, 2018

Moller Centre, Cambridge

Shift to Services Executive Education Programme

Nov 07, 2018

IfM, Cambridge, UK

Ecosystems Strategy One Day Course

Nov 15, 2018

IfM, Cambridge

Upcoming events