My name is Sari van Poelje, I’m an expert in business innovation and I help businesses innovate as quickly as they innovate their products.
One of the things we know is that contracting is very important to create a cooperative relationship. And in the past, we’ve explained what is actually a contract. Now, we’re going to talk about the three levels of contracting and specifically this time, level one.
Contracting Level 1: Administrative Contract
Level one is how do you create an administrative, what we call an administrative contract. It’s kind of your legal business like contract, so if a contract is a bilateral agreement, one of the really important things is that we have the structure of the contract in place. So, what are we doing together? Who is doing it? When are we doing it? Perhaps why are we doing it, but certainly at what cost or within the organization with what resources?
This administrative part of a contract structures our relationship. We’re saying within these boundaries, we’re going to relate to each other to actually realize a goal.
Oddly enough, many times people forget to make a very clear administrative contract and it’s a separate thing from a professional contract in which we agree, what we’re going to achieve and with what methods.
And it’s also separate from what we call the third level of contracting, which is the psychological contract, and we’ll talk about that later.
Questions you can ask when you’re making an administrative contract:
- Who are the contracting parties?
- What is the agreed upon goal?
- When will we do it?
- What is the end point?
- What are delivery times?
- How do we compensate?
- What resources are involved?
- What money is involved?
- What do we do if we disagree, and what do we do if we want to end the contract?
- When and how will payments or resource planning take place?
Those are the things you have to really watch out for when you’re creating an administrative contract.
And as I said, it’s the foundation or the structure of your cooperative relationship.
In the next videos we’ll take a look at the other levels. Follow me to find out more.