Relational Contracting: Driving Maximum Value

On Demand Webinar

Webinar Details $219

  • Webinar Length: 100 Minutes
  • Guest Speaker:   Jim Bergman
  • Topic:   Purchasing, Taxation and Accounting
  • Credit:   ATAPU 1.5, ISM 1.5
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Contracts have gaps.  They are incomplete.  Plus, many contracts are drafted by lawyers, for lawyers, in a way that only a lawyer can understand.  As a result, many of the contracts we use are incomplete and ineffective as we pursue value and try to mitigate risk.  However, a more effective approach is available, and it has become increasingly popular in the past few years – the relational contract.

This session will provide insights into relational contracting by co-author Jim Bergman, whose recent book on the subject contains insights which Noble laureate Oliver Hart describes as “pathbreaking”.  How does a relational contract differ from a traditional transactional contract?  What are the key elements of a relational contract?  What is required of the parties to make a relational contract successful?  These, and more questions, will be addressed in this insightful session by one of the leading practitioners of relational contracting. 

Your Benefits of Attending:

  • Establish a solid understanding of relational contracting.
  • Understand when a relational contract is viable and when it is not.
  • Develop insight into the contract language which differs relational contracts from transactional contracts.
  • Hear the personal insights and experiences of a leading practitioner of relational contracting.
  • Uncover the cultural barriers preventing relational contracting from succeeding and how to overcome those barriers.
  • Create a foundation for more effective SOW's, SLA's and KPI's.
  • Learn a proven process that enables relational contracting to deliver greater value.

Join Jim Bergman as he shares his expertise on relational contracting and how it could take your contracts to the next level.

  1. Introduction 
  2. Key Benefits 00:02:05
  3. Topics 00:07:32
  4. How Does a Relational Contractor Differ From a Traditional Contract? 00:10:09
  5. Traditionally, Two Ends of The Spectrum 00:10:18
  6. Allocating Risk and Reward Through Contracts 00:11:40
  7. The Results Vs. Resources Decision 00:12:51
  8. Relational Contracting - A Hybrid 00:18:24
  9. What Are The Key Elements of A Relational Contract? 00:24:24
  10. The Written Terms and Conditions, Including SOWs, SLAs, and KPIs 00:24:46
  11. Written Terms Which Are Not Onerous, Nor Unfair 00:31:02
  12. Tenets Of Strong Relationships 00:41:57
  13. Social Norms 00:42:49
  14. Speaking Of A Charter 00:45:52
  15. Enterprise Mission, Vision, Values 00:50:17
  16. Ten Elements 00:50:46
  17. Gain Sharing/Pain Sharing 00:55:53
  18. What Is Required of The Parties To Make a Relational Contract Successful? 00:57:08
  19. Culture 00:57:19
  20. Collaboration 01:00:37
  21. Trust 01:01:28
  22. Focus On Relationship 01:02:20
  23. Communication Plan 01:03:06
  24. Project Management Tools 01:04:45
  25. Executive Sponsors and Stakeholders 01:09:46
  26. Steps to Creating and Sustaining a Relational Contract 01:11:11
  27. Form Team 01:11:27
  28. Step 1: Lay The Foundation for Partnership 01:12:40
  29. Step 2: Co-Create a Shared Vision/Objectives 01:12:59
  30. Step 3: Adopt Guiding Principles 01:15:56
  31. Step 4: Align Expectations and Interests 01:16:43
  32. Step 5: Stay Aligned 01:17:56
  33. Measures and Metrics on Relationships 01:18:01
  34. Are Relational Contracts Enforceable? 01:20:51
  35. Yes! 01:21:032
  36. Expectations are Enforceable 01:25:30
  37. Rocks - The Clauses 01:27:36
  38. Pebbles - The Relationship Tenets 01:28:03
  39. Sand - Social Norms 01:28:15
  40. The Amount of Water 01:28:44
  41. How Do We Know We Need Relational Contracting? 01:30:16
  42. Value Leakage 01:30:38
  43. Unmanaged Risk 01:31:55
  44. Defects In The Relationship/Contract 01:32:12
  45. Diminished Trust 01:32:41
  46. Disenfranchised Stakeholders 01:33:17
  47. Seeking a Competitive Advantage 01:33:46
  48. Fostering Innovation 01:34:05
  49. What Are The Benefits of Relational Contracting? 01:35:26
  50. Key Benefits - Time, Money, Quality  01:35:32
  51. Key Benefits - Innovation 01:36:22
  52. Key Benefits - Reputation 01:36:39
  53. Key Benefits of Today’s Session 01:37:49
  54. Questions? 01:39:21
  55. Speaker’s Closing Words 01:39:37
  56. Presentation Closing 01:40:59

  • Binary Analysis 00:13:27
  • Collaboration 01:00:51
  • Contract 00:09:26, 00:11:39, 00:14:26, 00:17:54, 00:32:53
  • Key Performance Indicator (KPI) 00:24:49, 00:27:38
  • Reciprocity 00:42:06
  • Relational Contracting 00:01:41, 00:02:47, 00:09:26, 00:24:37, 00:32:39, 01:11:22
  • Risk Allocation 00:11:53
  • Risk Registers 01:06:25
  • Scope of Work (SOW) 00:24:46,00:27:49
  • Service Level Agreement (SLA) 00:24:47, 00:27:49
  • Stakeholders 01:10:09, 01:33:21
  • Supplier 00:12:04, 00:14:59, 00:45:39
  • Supply Chain Management 00:35:46
  • Total Quality Management (TQM) 00:02:55
  • Value Leakage 01:31:02

Binary Analysis: Binary analysis is a type of code review that looks at files composed of binary code and assesses their content and structure, all without the need for access to source code.

Collaboration: A method of purchase whereby, in buying similar commodities, buyers for two or more departments exchange information concerning planned purchases in order to minimize competition between them for commodities in the same market.

Contract: A written or spoken agreement, especially one concerning employment, sales, or tenancy, that is intended to be enforceable by law.

Key Performance Indicator (KPI) : A Key Performance Indicator is a measurable value that demonstrates how effectively a company is achieving key business objectives. Organizations use KPIs at multiple levels to evaluate their success at reaching targets.

Reciprocity: The practice of exchanging things with others for mutual benefit, especially privileges granted by one country or organization to another.

Relational Contracting: It is a contract whose effect is based upon a relationship of trust between the parties.

Risk Allocation: Risk allocation is the process of identifying risk and determining how and to what extent they should be shared. Most owners understand that risk is an inherent part of the construction process and cannot be eliminated.

Risk Register: A risk register is a document used as a risk management tool and to fulfill regulatory compliance acting as a repository for all risks identified and includes additional information about each risk, e.g. nature of the risk, reference and owner, mitigation measures. It can be displayed as a scatterplot or as a table.

Scope of Work (SOW): The Scope of Work (SOW) is the area in an agreement where the work to be performed is described. The SOW should contain any milestones, reports, deliverables, and end products that are expected to be provided by the performing party. The SOW should also contain a time line for all deliverables.

Service Level Agreements (SLA): A service level agreement (SLA) is a formal document that defines a working relationship between parties to a service contract.

Stakeholders: A stakeholder is a party that has an interest in a company and can either affect or be affected by the business. The primary stakeholders in a typical corporation are its investors, employees, customers and suppliers.

Supplier: A supplier is an entity that supplies goods and services to another organization. A supplier is usually a manufacturer or a distributor. A distributor buys goods from multiple manufacturers and sells them to its customers. Similar Terms. A supplier is also known as a vendor.

Supply Chain Management: In commerce, supply chain management, the management of the flow of goods and services, involves the movement and storage of raw materials, of work-in-process inventory, and of finished goods as well as end to end order fulfillment from point of origin to point of consumption.

Total Quality Management (TQM): Total quality management consists of organization-wide efforts to "install and make permanent climate where employees continuously improve their ability to provide on-demand products and services that customers will find of particular value."

Value Leakage: The difference between the value expected from a contract and the value realized in its implementation during its lifetime.

Guest Speaker

  • Jim Bergman

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ATAPU Credit

Aurora Training Advantage is offering continuing education points designed to recognize dedication to training and excellence in purchasing.

ISM Credit

Institute of Supply Management

This program may be used for Continuing Education Hours (CEH) toward recertification for programs offered by the Institute for Supply Management®, including the Certified Professional in Supply Management® and Certified Professional in Supplier Diversity®.