Circular revenue models & contracting
When you are preparing a tender is important to reflect on the revenue models of the various parties involved in the project. If the financial incentives promote circular performance for all parties, it becomes much easier to achieve your circular ambitions.
Once the project has been awarded, the agreements must be converted into a contract. This contract formalises the relationship that was initiated in the procurement project. In this stage, too, you must take mutual confidence and cooperation as your starting point. What do you need to agree on to guarantee the functionality of the products supplied and to produce the circular achievements?
- A circular revenue model is never an end in itself, but always a way to stimulate the circular economy. So, you should not prescribe revenue models.
- Take the time to include a clarification stage to convert commitments into concrete agreements with the preliminary winner of the contract. You can use this period to agree on KPIs, and how they should be linked to a financial reward or renewal arrangements.
- Include KPIs in the contract that safeguard circular achievements, perhaps linked to a growth model with regard to performance on KPIs.
- Conclude a long-term contract, allowing market players to invest in the achievement of circular ambitions. The long duration shows the confidence you have in market parties.
Two Dutch provinces jointly put out the largest European call for tenders for charging points, offering a concession for 2,250 charging stations. The contract was awarded to Ecotap in combination with Allego. A 10-year period of operation and the exclusive right to install charging stations for the next three years paved the way for a low tender price.
Steps 7 and 8 from the eBook Circular Procurement in 8 Steps provide additional information on contracting (pp.123-126) and contract management (pp.129-132).