Thanks so much for your message and yes we are gathering lots of "good news" stories and as you say, examples of how organisations are demonstrating their agility and adaptability in times like this. Thank you for sharing the story of Meex - I will personally look this up and add it to the output that we are generating. We are indeed focusing on how IACCM supports small businesses more and more and I like your idea about a blueprint for agility. Thank you again and please do keep your ideas coming - they are much appreciated! Sally

Hi Marina, thank you for your question and of course this is a critical issue for many of us right now. You may be interested to see Tim's Blog on this very point from earlier this week:

commitmentmatters.com/2020/02/18/coronavirus-and-force-majeure/

We have also launched a survey today which has already generated hundreds of responses and we will be putting out a report on the results early next week so please watch out for that.

I hope this helps and please do let us know if you have further specific questions.

There are multiple ways to be honest, including Force Majeure clauses and Business Continuity obligations on the supplier which are regularly tested.

We have recently added a statement to all quotes to customers with regard to COVID19, namely that it is now a 'known' event and given that the environment is ever-changing that status of your order may change, including for example the time from submission of order to delivery/performance. We will use all commercially reasonable efforts to notify you as soon as possible of any change. So perhaps something along those lines? Our sales and executive teams seem pleased that we are addressing it directly.

I never saw such clauses

Dear Carrie, I have experience from pricing changes both during the negotiation process and during the contract lifecycle. Our clients have especially found this as an effective tool during negotiations to demonstrate risk/work-impact if the other party is requesting terms transferring an extensive part of the risk/work to them. By showing the cost-impact, the incentive for price increase becomes rather obvious which strengthens your negotiation position. Kind regards, Madeleine Willyams - Advokatfirmaet Negota AS, Norway.

1) This is novel to me. Reading your post, your organisation is on the supply side. If I am right, I work for an organisation on the buying side and will want to know how this can be of benefit for one on the buying side.

2) Is it possible to see a sample of just one of such clauses, to see how it was drafted?

I believe I found it. www.iaccm.com/resources/

Personally, I would say the 10 are still applicable today (Jan 2020). I also think the point about how fast the world is moving - particularly technology wise - is true and it has only sped up even more in the past 5 years.

Hi Stuart,

I suppose that this has been resolved in the meantime, however, I wanted to share My view. Your idea About a review after 3 months, or even 6 or 12 months, is quite common and would be My advice. Typically, KPIs have some specifics depending on the Environment, hence a review and Adjustment after somee time would be beneficial for both, the customer and the supplier.

Maybe, if you read this, can you share how this was finally approached and resolved?

Volker

Hi Stuart,

Clearly a lot of advice and this may get lost in the deluge. In contracts I negotiate we always a Performance Implementation Period (PIP) with the agreed aims (between the parties) of determining whether the KPIs are:
a. driving the desired behaviour,
b. measuring the the actual outcomes, and
c. are fair for both parties.
We would normally request 6 months, but this depends upon the length of the contract.
Remember that it is not in the client's interest for you to go bust.
Two things I always work towards:
1. Both you and the client have the same goal - a needed product. Both of you want the program to succeed.
2. KPIs should be output focussed - what is the client needs in the end. No more than 2 -3 KPIs.
Introduce System Health Indicates (SHI) as a tool to measure the detail.

Hope this helps

JonCB

Stuart - I am not sure a UAT (assuming this is User Acceptance Test) would fully ensure the KPI's are ideal, as the UAT could potentially only assess whether there will be compliance to sub-optimal KPI's, leading to a sense of reasonableness but not necessarily effectiveness.

So, the ideal approach really needs to rely on a process. If you do not have an end-to-end contracting process the KPI's will usually prove problematic.

Early in the process, before ever approaching the contractor/supplier market, the customer entity needs to identify the overall objectives and goals from the project and related transaction - both from a relationship and contract document perspective. For example, one might identify risk mitigation, or cost leadership, or perhaps cyber-security as the key purpose and objective. Then the customer enterprise must identify the sub-objectives that enable the broader purpose. This all needs to be performed as a team, include those who will be leading the post-award phase. The KPI's need to then be included in the RFx/tender documents, as well as negotiated.

But, it sounds like you do not have the ability to take this steps now. The option that you suggest of a three-month trial period represents a potential solution. Plus, the three months might afford you time to undertake some of the above steps as well.

Hi Stuart, just a few of thoughts building on the below - They may not commit to any change of the KPIs as these are often standard for all customers - the below are just observations around the theme that may or may not be useful, and their strength will depend on what the software does, how much you've spent on it, how core to your business is etc.:

1) They'll be most open to discussions when annual maintenance renewal time comes around, as that's when there's normally money on the line - so if the user community can be corralled into speaking with one voice, they could be a powerful ally in helping review whether the KPI's are useful in the first place and then challenging those that aren't
2) Also consider whether there are other potential purchases or expansions into your business - the person who originally sold you the software will probably have some sort of target to sell you more (even if via an audit...), so if it turns out that you can use the opportunity of future sales to sharpen up their performance then that might help
3) My cynicism is that a number of vendors will deliberately sell software that hasn't been fully tested, and then their customers essentially complete the testing through raising support tickets and the supplier improving the software through trial and error. See if the supplier has a user support community where you can compare the number of tickets you're raising vs. others, and whether root causes of any issues that arise are training or software-based
4) Maybe compare the functional specification with performance in reality - given that vendors typically warrant that the software will perform with the documentation, the argument most likely to drive change is more likely to be whether the system isn't performing against spec rather than they're missing KPIs

Hope this is in some way helpful, let me know if there are aspects you'd like to follow up on.

Stephen

Stuart, Agree completely with other's comments/ideas posted. Really think the key will be in communicating and documenting your overal objective. It doesn't sound as if you are certain that a clear overall objective has been communicated to your software provider,. If that i truly the case, would get to work on detailing it as soon as possible (at the time of the RFP would be best). Be prepared to have a conversation with the software provider after you're comfortable that the overall objective is clear. It may be that an amendment to the agreement will be needed.
Would also consider creating a process for determining your overal objective prior to your next RFP going out. For example, create a cheat sheet of gemeral key topics to be covered; legal entities to the agreement, key contacts, pricing, payment terms, purpose of the agreement, etc. Find that when a process has been defined and I follow the process everytime, there are fewer of those UhOh moments.

Hi Stuart, All great comments to consider. having been in exactly the same position 1 year ago, these were some of the key lessons learnt.

1) Keep it simple - don't unnecessarily overcomplicate it.
2) Inputs or outputs based KPI's
3) What is your customer's / business key requirements - requires alignment
4) What's more important the KPI's or SLA's (there is a difference)
5) determine if the urgency to get the agreement signed outweighs the importance of fully developing the KPI's/SLAs.

While we don't have the full details, your proposed solution to this can be a way forward and can have teeth; provided you clearly articulate the review criteria in the agreement. But as mentioned before, vendors typically have standard SLA/KPI's and anything bespoke usually costs a premium especially after the fact. So I would urge you depending on the importance of this implementation and the impact on the business, to resolve this before you sign.

Hi Stuart,
Perhaps this has resolved itself already, but perhaps consider looking at the 10 Pitfalls in the IACCM resources and working WITH the Contractor to identify (perhaps 5) KPIs that relate to the work being undertaken in the first calendar year. Then evolve those based on experience/needed improvements.

It is essential that measurement criteria be established and agreed up-front (documented in a Guide signed by both parties) and that measurement timelines are adhered to. Have experience with payouts against a x% holdback on a periodic basis based on a sliding scale scoring of measurement criteria - (significantly below expectation = full retention of holdback by Owner, significantly above expectation = 1.5 x holdback paid out, on par with expectations = holdback paid out.)

At least agree that some form of Perf Measurement will be undertaken (jointly developed) at the time of signing the contract. Implementation can follow asap thereafter.

What about asking for some reference customers and reaching out to them?

In principle, your response sounds correct. Altering the terms unilaterally after award may indeed represent a material change, though of course you will need to make a prompt assessment of the nature and impact of the changes.

From your post, I get the impression that the Ts&cs are being driven by the consultant - but is that the case? Does the owner mandate the 'standard' and have they made the alterations - perhaps a result of current market conditions and experiences? Understanding the source and rationale behind the changes may be important in determining how and where you push back.

Of course you may want to revert on specific impact - for example, does this affect your price or delivery commitments? You may also want to negotiate some of the altered terms - for example, if risk allocation has shifted. But another response could be to take the position that this opens up more general negotiation and that if there are terms they want to change, you also have some changes you'd like made.

If these alterations were inspired by the consultant, they may back down because they will perhaps not want to explain to their client why this delay is occurring (especially if they made a mistake in the initial terms that were attached). But if the origin is the customer, you may need to be more cautious, especially if you do not have an existing or strong relationship.

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!

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.