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It is important to ascertain the needs of your organisation when selecting a contract because both contracts have their advantages and disadvantages:
| ADVANTAGES | DISADVANTAGES |
|---|---|
| Budget certainty | Risk premiums are built-in |
| Clear simple Billing | Not transparent |
| Easier to forecast spend | No advantage from lower third part costs |
| Protected against legislative changes | Unsuitable for dynamic response products |
| Easy to manage | Limiting benefits for demand management |
| ADVANTAGES | DISADVANTAGES |
|---|---|
| Greater transparency | Risk of higher third party charges |
| Benefit from actual third party charges | Complex billing |
| No Risk Premium | Costs are not secured |
| Able to take advantage of triad avoidance | Commonly miss-sold |
| Suitable for dynamic response products | Budget forecasting difficulties |