Foundations of Contracts and Outsourcing

Name: Foundations of Contracts and Outsourcing
Rating: 4.5 (12 reviews)

Contract Management, Outsourcing, and Supplier Relationships - from Classical Theories to Strategic Models and Tools.

Created bySergii Dovgalenko, FCIPS

Last updated 1/2025

English

What you'll learn

Establish foundational knowledge of contracts and outsourcing by relying on classical economic theories
Explain the Rational Choice Theory and Bounded Rationality and how they affert our decision-making
Introduce Transactional Cost Economics and Incomplete Contracts and suggest practical ways to overcome the Hold-up Problem and make outsourcing decisions.
Explain the spectrum of outourcing and contractual relationships, types of contracts, and evolution of relational contracting
Show how formal and relational contracts coexist and add value to each other
Segment the supply base for better outsourcing and supplier relationship management
Discuss parties' expectations under outsourcing contracts
Set the basis for further professional development in contract management, outsourcing, and Supplier Relationship Management (SRM)
Provide the visual and practical view of outsourcing strategy

Course content

5 sections • 30 lectures • 1h 11m total length

Introduction1:33
Welcome and introduction to the course.
A copy of the presentation and a separate file with narrations for each slide is provided along with the video content.
Ground Definitions of Contracts and Outsourcing1:13
We will provide ground definitions of economic exchange, contract, and outsourcing.
Case Study: Pros and Cons of Outsourcing12:46
In-house Delivery vs. Insourcing vs. Outsourcing2:45

Rational Choice Theory1:30
This lecture explains what it takes to make rational decisions and what makes people the perfect economic actors, i.e., Homo Economicus. We introduce the Rational Decision Model.
Practical Excercise in Rational Decision-Making1:51
We discuss examples of rational decision-making in real life.
Bounded Rationality Theory2:01
An overview of the boundedly-rational decision-making process and the Theory of Bounded Rationality.
What is Satisficing?1:33
A practical explanation of "satisficing."
Heuristics in Real Life1:30
Examples of heuristics and their use in real life.
Rationality in Negotiations2:17
How to define which rationality mode you are using?
Thank you for Studying!0:07

TCE and Incomplete Contract Theory4:13
An overview of the Transactional Cost Economics and Incomplete Contracts theory.
Outsourcing decisions explained by the TCE1:13
TCE suggests the choice of governance for the given economic exchange. Thus, the outsourcing decisions can be explained.
Hold-up Problem Explained by the Game Theory1:43
An Incentive as a Solution for the Hold-up Problem2:01
Practical case: The Way to Resolve Hold-up Problem1:23
Case study of Toyota and Orocobre: Relational governance in action.

A Theory of Social Contracts by Ian Macneil3:45
A theory of social contracts by Macneil and the contractual relationship spectrum.
The Agency Theory2:18
The Agency Theory introduces behavior- and outcome-based contracts.
Types of Contracts2:15
Typical types of contracts with their key attributes and areas of application.
The Evolution of Relational Contracting2:02
The evolution and five ground rules of relational contracting.
FORT Model to segment outsourcing providers by the relationship types.2:12
The FORT Model segments outsourcing providers by the relationship types and suggest appropriate contract and supplier management tools.
Applied FORT Model Exercise.1:46
Students will have to apply the FORT Model to five examples of outsourcing deals.
Outsourcing services and applicable contract types2:42
Which types of contracts apply to which outsourcing service?
The Co-existence of Formal and Relational Contracts1:38
How do formal and relational governance co-exist within the same contract?
Contracting Parties' Expectations under the Relational Contract1:34
The human side of contractual relations.
The Practical Treatment of Relational Contracts by English Law1:35
How to Build the Successful Outsourcing Relationships.2:23
The right mix of management and dynamic capabilities is the prerequisite for successful outsourcing relationships.

Types of Outsourcing Services2:47
We will explain the attributes of Staff Augmentation, BPO, Managed Service, and As-a-Service.
Outsourcing Locations2:28
We will cover onshore, nearshore, and offshore outsourcing locations and suggest a practical example for all these combined uses.
Outsourcing strategy2:28
We will provide a multi-dimensional view of the outsourcing strategy and use it for InfoSec services (an example.)
Final Course Quiz

Requirements

Basic undersdanding of contracts and outsourcing
Awareness of basic rules and attributes of economic relationships

Description

This online training course suits beginners and highly-skilled experts who must develop core competencies for contract management, outsourcing, and vendor relationships.

It provides compulsory basic knowledge of ground economic and psychological theories that set the foundations of outsourcing business and contract relations.

Our course explains the benefits of outsourcing as a blend of decision-making, heuristics, incomplete contracts, relationships, and trust. We will wear our BPO vendor's shoes to understand their business objectives and risk-mitigation methods incorporated into different types of contracts.

We will leverage Behavioral Economics - an elegant synthesis of psychological, cognitive, emotional, and cultural aspects that explain the human side of contract management and the outsourcing process.

With the help of Rational Choice Theory, Bounded Rationality, Transactional Cost Theory, Agency Theory, and Incomplete Contracts, this course will tell you a story of business needs, relational norms, and mutual dependence in the modern world of opportunism and irrationality.

We will teach ways to apply conscious outsourcing decisions (e.g., using the FORT model) and develop trust-based relations with our contractors.

We will promote back-office functions as creators of business value and relationship capital.

We will synthesize all course materials into a multi-dimensional outsourcing strategy for our students to test and apply in practice.

Who this course is for:

Future and present professionals in contract management, outsourcing, and Supplier Relationship Management (SRM)
Keen researchers who want to know more than consultancy whitepapers
Rational and boundedly-rational economic actors
Decision-makers and negotiators

Foundations of Contracts and Outsourcing

What you'll learn

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Course content

Introduction4 lectures • 18min

Behavioral Economics7 lectures • 11min

Transactional Cost Economics and Incomplete Contracts5 lectures • 11min

Formal and Relational Contracts. Outsourcing relationship types and contracts.11 lectures • 24min

Outsourcing Strategy3 lectures • 8min

Requirements

Description

Who this course is for: