IACCM Contract Management Forum

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2020-06-09 16:16:56

Change Management - Absence of a clause to time bound negotiations on Work Orders

Is there a risk in a change Management clause drafting for IT Service Provider/ Supplier, if the scope does not explicitly mention the number of days in which parties would respond and finalize the change order.
 •  World Commerce & Contracting  •   2020-06-10 08:46:21
Hi Devendra
Yes, there is!

Both parties should have an interest in ensuring that change requests are handled in a timely manner. Sometimes customers try to leave this unspecified because that way they can ignore any change which may cause an increase in time or cost.

Being too specific on a number of days can also be problematic because the nature of the change may vary in its complexity. There are several ways you might approach this:
1. Specify a number of days within which the change must be acknowledged and a date for resolution agreed, with a proviso that the resolution must be within a period no longer than x days or the change will be deemed effective.
2. Specify that all changes take effect 7 days from notification unless the other party makes a counter-proposal within that period.
3. Categorise changes into, say, three different classes, probably based on the nature and complexity of the change. Class one might have a requirement to resolve within 7 days, class 2 within 30 days and class 3 to be agreed case by case between the parties.

You may also want to consider a provision related to the consequences of failing to agree a change in a reasonable or specified period. For example, does the change simply become effective? Or does failure to agree result in permissible delay or suspension of work / service? Perhaps you want a clearly defined escalation process to support resolution; this could include referral to an independent expert to resolve disagreement.

I hope these ideas help!
 •  TRADING AND AGENCY LTD  •   2020-06-14 15:26:39
The Standard language in Oil & Gas Contracts is that no Change shall be performed unless executed through a Change Order (CO). However, in order to allow for events where Parties are unable to agree on a Change, Clients include a provision in the Contract to issue either an Instruction to Proceed (ITP) or a Disputed Change/Variation Order which obligates the Contractor to perform first and negotiate later. Still, it is worthwhile to include a maximum response time which obligates the Client to acknowledge Contractor's Change Request either by issuing a CO or ITP within the agreed timeframe.
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