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Vested outsourcing ‘requires working as a team’ 

12 April 2016 | Herpreet Kaur Grewal

“Traditional and one-dimensional thinking” is a barrier to vested outsourcing, according to a debate by a panel of FM experts.


Traditional outsourcing and business relationships focus on the contractual relationship, ”creating win-lose arrangements where one party benefits at the other’s expense”.


But the arrangement known as a vested agreement creates a situation where both parties are equally invested in each other’s business success.


Under a vested arrangement, all parties must agree upon a “desired outcome”, which can include cost reductions, revenue increases, schedule improvements, increased market share and better levels of customer service that can be measured objectively to determine if the relationship is successful. 


Those taking part in the debate included OCS’s head of re-engineering Julie Jackson; Scott Newland COO of European Customer Synergy (ECS); James Wood, director of Orchard Consulting; Julie Kortens, senior business executive for Channel 4; and Bellrock sales and marketing director Jerry Kane.


The panel also said that vested contracts were similar to “gain share contracts”, but that honesty, transparency, loyalty and commitment are needed on both sides to implement them.


Jackson said: “You must have the right contractual framework to allow the move from buying transactions or services from suppliers to truly working as one team.”


According to the panel, current barriers to vested outsourcing in the FM industry were a lack of knowledge about vested outsourcing; traditional and one-dimensional thinking; reverting to other procurement models as soon as a problem occurs; the lack of real partnerships; and no ‘good practice’ models.