Comments on: Outsourcing Contract Penalties: Do Vendors Respond to the Pain? http://360vendormanagement.com/2008/04/03/outsourcing-contract-penalties-do-vendors-respond-to-the-pain/ Best Practices in Outsourcing, Vendor Management, ROI, and Improved Performance Thu, 04 Dec 2008 18:36:05 +0000 http://wordpress.org/?v=2.6.3 By: Kendall Gordan, SE http://360vendormanagement.com/2008/04/03/outsourcing-contract-penalties-do-vendors-respond-to-the-pain/#comment-360 Kendall Gordan, SE Mon, 01 Dec 2008 20:52:44 +0000 http://360vendormanagement.com/2008/04/03/outsourcing-contract-penalties-do-vendors-respond-to-the-pain/#comment-360 I've also found that if the vendor ends up in penalty land, they will defer the project behind actual paying clients. Kendall Gordan, SE www.foxfiresoftware.com I’ve also found that if the vendor ends up in penalty land, they will defer the project behind actual paying clients.

Kendall Gordan, SE
http://www.foxfiresoftware.com

]]> By: Nuckles http://360vendormanagement.com/2008/04/03/outsourcing-contract-penalties-do-vendors-respond-to-the-pain/#comment-358 Nuckles Thu, 27 Nov 2008 16:23:21 +0000 http://360vendormanagement.com/2008/04/03/outsourcing-contract-penalties-do-vendors-respond-to-the-pain/#comment-358 Over time I've found that vendors are more responsive to fee incentives/rewards than outright penalties. But I often use some combination of both for my clients. A fee incentive for producing a key set of deliverables with quality, on time and within budget, and then penalties if the key set of deliverables is not produced on time, etc. The danger with penalties is that they cannot be overly punitive. If a vendor finds itself in penalty land, and its working to finish a project at a greatly reduced rate, you could find the vendor's B Team showing up to complete the project, then the C Team, and so on. Most project owners want a finished project, not a languishing project. Over time I’ve found that vendors are more responsive to fee incentives/rewards than outright penalties. But I often use some combination of both for my clients. A fee incentive for producing a key set of deliverables with quality, on time and within budget, and then penalties if the key set of deliverables is not produced on time, etc.

The danger with penalties is that they cannot be overly punitive. If a vendor finds itself in penalty land, and its working to finish a project at a greatly reduced rate, you could find the vendor’s B Team showing up to complete the project, then the C Team, and so on. Most project owners want a finished project, not a languishing project.

]]> By: it outsourcing http://360vendormanagement.com/2008/04/03/outsourcing-contract-penalties-do-vendors-respond-to-the-pain/#comment-357 it outsourcing Wed, 19 Nov 2008 20:50:48 +0000 http://360vendormanagement.com/2008/04/03/outsourcing-contract-penalties-do-vendors-respond-to-the-pain/#comment-357 Capped risk is an interesting idea, not sure how you control excused non performance. While it's not a perfect world, where do you draw the line when it comes to lapses in it outsourcing quality control?? Capped risk is an interesting idea, not sure how you control excused non performance. While it’s not a perfect world, where do you draw the line when it comes to lapses in it outsourcing quality control??

]]> By: E-Sourcing Forum » Sourcing Blogs: 360 Vendor Management http://360vendormanagement.com/2008/04/03/outsourcing-contract-penalties-do-vendors-respond-to-the-pain/#comment-335 E-Sourcing Forum » Sourcing Blogs: 360 Vendor Management Wed, 16 Jul 2008 18:37:57 +0000 http://360vendormanagement.com/2008/04/03/outsourcing-contract-penalties-do-vendors-respond-to-the-pain/#comment-335 [...] Do Vendors Respond to the Pain? [...] [...] Do Vendors Respond to the Pain? [...]

]]> By: Web Designer http://360vendormanagement.com/2008/04/03/outsourcing-contract-penalties-do-vendors-respond-to-the-pain/#comment-322 Web Designer Mon, 05 May 2008 11:20:33 +0000 http://360vendormanagement.com/2008/04/03/outsourcing-contract-penalties-do-vendors-respond-to-the-pain/#comment-322 It is a nice blog! very interesting topic. I want to ask if this is a big disadvantage?Thanks! It is a nice blog! very interesting topic. I want to ask if this is a big disadvantage?Thanks!

]]> By: tony http://360vendormanagement.com/2008/04/03/outsourcing-contract-penalties-do-vendors-respond-to-the-pain/#comment-274 tony Thu, 10 Apr 2008 16:45:00 +0000 http://360vendormanagement.com/2008/04/03/outsourcing-contract-penalties-do-vendors-respond-to-the-pain/#comment-274 @ Peter: What do you mean by "validating" performance metrics? @ Peter: What do you mean by “validating” performance metrics?

]]> By: Peter Snapton http://360vendormanagement.com/2008/04/03/outsourcing-contract-penalties-do-vendors-respond-to-the-pain/#comment-273 Peter Snapton Thu, 10 Apr 2008 16:05:01 +0000 http://360vendormanagement.com/2008/04/03/outsourcing-contract-penalties-do-vendors-respond-to-the-pain/#comment-273 Just wanted to find out whether there is any framework or methodology that can be used to validate performance metrics. Just wanted to find out whether there is any framework or methodology that can be used to validate performance metrics.

]]> By: Ronnie http://360vendormanagement.com/2008/04/03/outsourcing-contract-penalties-do-vendors-respond-to-the-pain/#comment-262 Ronnie Mon, 07 Apr 2008 21:17:20 +0000 http://360vendormanagement.com/2008/04/03/outsourcing-contract-penalties-do-vendors-respond-to-the-pain/#comment-262 An additional approach is to add incentives for supperior performance, especially for those metrics which measure cost, just make sure there is a cap so the vendor is not incented to a point of driving on metric at the cost of others. An additional approach is to add incentives for supperior performance, especially for those metrics which measure cost, just make sure there is a cap so the vendor is not incented to a point of driving on metric at the cost of others.

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