What is the purpose of a performance-based contract?

• A. To shift all risk to the client.
• B. To maximize flexibility with no performance metrics.
• C. To define measurable outcomes and hold the contractor accountable for achieving specified results.
• D. To focus on process rather than outcomes.

Answer: (C)

Performance-based contracts are built around outcomes. They define measurable results, establish acceptance criteria, and tie payments or penalties to achieving those results. This structure creates accountability—the contractor must deliver the specified outcomes, and the client can verify success against the metrics. It also encourages efficient delivery since compensation depends on results. Choices that push no metrics, focus only on process, or shift all risk to the client miss this outcome-driven, accountability-focused idea.