What is the mainadvantagefor a supplier using a pain-share contract?
A.
The supplier will be penalised for not achieving a target cost.
B.
There is a shared approach to risk.
C.
It ensures cost certainty on the contract.
D.
It ensures a better relationship with the buyer.
The Answer Is:
B
This question includes an explanation.
Explanation:
Pain/gain share arrangements distribute both upside (gain) and downside (pain) between buyer and supplier, promoting fairness and shared accountability. This shared-risk structure encourages collaboration and continuous improvement.
[Reference:CIPS L5M15 –Risk and Reward Sharing in Contracts., ]
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