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Contracts based on prescription or on results: which is preferable?

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fosco frongia Senior project manager| ENTE PATRIMONIALE CHIESA GESU' CRISTO SUG Fino Mornasco, Como, Italy
In a previous discussion the discussion was focused on contract style. In an answer I published some consideration which I think are worthy to be analyzed thoroughly.
I work in the construction field and I don't know if my comments could be applied in other ones.
Normally we draft a contract which is completed with other document called general conditions which defines general process needed to conduct the works. Among all other attachments are very important the technical specification which define, technically, some characteristic of the deliverable.
even though that structure is unaltered, In my experience I saw two different approach in contract drafting
- focusing these documents in the manner that the counterpart has to work in a specified manner (prescription focus), for instance: for a wall construction are not only indicated the materials but the construction process too
- focus them on the results (result focus). In this case taking again the example of the wall, the documents could indicate the materials but the attention is focused on final characteristic like acoustic - thermic performances etc.
Naturally these two different approach are based on different responsibility acceptance:
- in the first case the responsibility of the counterpart is more focused in respecting the prescription and less in the result (if the result is not like the expected one but the counterpart applied perfectly the prescription is it responsible of this issue?)
- in the second case the counterpart can apply different process because it is responsible only for the final result (be careful. in this case in some countries YOU are partially responsible concerning the action/process applied by the counterpart).
Generally I prefer this second approach but it is essential to consider very deeply the consequences you have and define control methods, acceptance criteria etc. in the same contract.
I'm interested in your opinion, about my considerations and if these two approach are applicable in you market field.
Many thanks in advance
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Dominic Law Product Manager| PCCW Global Happy Valley, Hong Kong
In my telecom/IT field it is more favorable with result focus because that can encourage innovation from the contractors in terms of the "prescription" to achieve the result. There could be some key "prescriptions" in the contract, for example you want to inter-connect with other existing equipment. Anyhow, in the tendering process the contractors need to propose or even demonstrate the "prescription", firstly to show the capability but also every stakeholder can later track the progress.
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1 reply by fosco frongia
Mar 02, 2016 5:00 PM
fosco frongia
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thanks Dominic
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Stéphane Parent Self Employed / Semi-retired| Leader Maker Prince Edward Island, Canada
In my IT project experience, process-driven work is typically managed by the client with the "vendor" supplying bodies. We typically call this staff augmentation.

Outcome-driven work is what we would call managed work, where the vendor is responsible for managing the resources and the work.

Staff augmentation projects are typically time & material while managed work projects are usually fixed price.
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1 reply by fosco frongia
Mar 02, 2016 5:00 PM
fosco frongia
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thanks Stéphane, very interesting
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Anonymous
I agree with you . Second approach better but anyway when specific conditions comes from nature of construction works needs to be considered very carefully
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fosco frongia Senior project manager| ENTE PATRIMONIALE CHIESA GESU' CRISTO SUG Fino Mornasco, Como, Italy
Mar 01, 2016 8:39 PM
Replying to Dominic Law
...
In my telecom/IT field it is more favorable with result focus because that can encourage innovation from the contractors in terms of the "prescription" to achieve the result. There could be some key "prescriptions" in the contract, for example you want to inter-connect with other existing equipment. Anyhow, in the tendering process the contractors need to propose or even demonstrate the "prescription", firstly to show the capability but also every stakeholder can later track the progress.
thanks Dominic
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fosco frongia Senior project manager| ENTE PATRIMONIALE CHIESA GESU' CRISTO SUG Fino Mornasco, Como, Italy
Mar 01, 2016 8:42 PM
Replying to Stéphane Parent
...
In my IT project experience, process-driven work is typically managed by the client with the "vendor" supplying bodies. We typically call this staff augmentation.

Outcome-driven work is what we would call managed work, where the vendor is responsible for managing the resources and the work.

Staff augmentation projects are typically time & material while managed work projects are usually fixed price.
thanks Stéphane, very interesting

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