In terms of the 8 different payment schemes I was specifically referring to what we call 'payment curves' (see attached graphic) as opposed to payment regimes such as cost+ (time and material), fixed price, cost + fixed fee, etc. In this light these are grouped into 5 main families with a couple of variations inside each. These are as follows:
- 'all or none' payment curves
- Linear payment curves
- Non-linear payment curves
- Alternative payment such as demerit point and visual payment curves
- Matrix payment curves
The intent of this discussion is to simply highlight that the choice of payment curve, similar to the choice of performance measure and level, can have a significant impact on the success (or otherwise) of the overall performance management framework. My blog (www.performancebasedcontracting.com) has 3 posts specifically on this topic including the graphics.
I hope this helps and answers your questions. However, please let me know if you have any further questions.
Hi Mark, Happy to discuss. Send me an email via email@example.com and I can talk about the principles I use.
In my view I don't believe, as a community, we have fully bottomed out all the risks associated with these types of engagement.
• Nokia Solutions and Networks Australia Limited
For a very good, concise review of the principles and issues of cloud agreements generally, covering most of your points above (my view anyway), you might also check out David W. Tollen's book "The Tech Contracts Handbook" online or via this website:
I agree with the idea, basically due to the possible huge claims that may cause extreme damage to the supplier.
sometimes the liability is capped to the total amount of the contract money value, which seems only fair to me as a professional against going with unlimited liability clause, however is there any case that this may be rejected by the client?
This is a good notion. I recall many years ago a friend of mine who had a well documented idea for a screenplay. The agent he showed stole it (allegedly) and a big entertainment company benefited (allegedly). My friend wanted to sue and he had a great case, but the other side simply put a giant pile of money on the table with a grinning lawyer sitting on the top of it and he had to back down. If he had the option to settle "a couple of hundred" I think he would have taken it.
• UK Department for Education - Education and Skills Funding Agency
the problem with limiting losses to the contract value is that in a professional services situation for example the advice given will relate to a much higher value. Eg. advice given costs £300,000 but the advice given is about the terms of a construction contract worth £10,000,000. If the works are faulty and have to be rebuilt, and the contract cannot be relied upon as a result of negligent advice, the loss to the client may well far exceed the £300,000 fee level. the client should be able to pursue the builder but here can't due to negligent advice from the lawyer. the client should be able to pursue the lawyer, but if they agreed a cap of £300k they will not get very far.
Hence you often see clients wanting a cap related to the value of the contract advised on rather than the fees paid for the advice. Insurance should be taken out but that may not cover all losses.
It creates a conflict of interest in which the other members of the joint venture could be affected negatively.
• Allianz Technology
I'm just trying to understand your position.
Considering that you are managing all contractual relationship with another company (buy and sell side) sounds actually good from your company perspective. It would mean, that your leadership can expect you to have a full overview about the contractually back and forth with this JF. Therefore I assume it's hard to change the mind of your leadership, since I would expect them to see your doublerole as positive.
However on the other side, there is your personal position, meaning being something in the middle of a sandwich, right? I'm not sure about your empowerment, but in worst case you have also very limited authority to change some company rules (discounts, penalties, payment conditions, acceptance criteria etc.). And on buy side you usually have different contractual expectation than on sell side. I assume, this is the tricky part in your situation. Fulfilling the internal requirements for buy- and sell side with the same contractual partner at the same time (and maybe also your partner asks you if you are a bit crazy, since requesting sooo different contracts when you are either on sell side or on buy side).
When the conditions your company expect in contracts are very different on sell side and buy side, this should be communicated as an issue (to your leadership). I think there are 2 options as solution: either the requested second CM as you suggest, or an escalation to the leadership to align clear buy and sell conditions between your company and the JF, which are equal to both parties. such framework conditions would make at least your position more clear. And maybe there won't be anymore need of a split of the CM roles buy side and sell side?
Since I couldn't find many information in your post, I hope, this is somehow helpful?
If your uncomfortable position has other reasons, please let me know.
• Omaha Public Power District
I probably would start collecting facts: Firstly, establish the relationship between Your Company ("Y Company") and Company X ("X Company") by looking at any specific, written agreement about the services ("X and Y Services"). Also, establish clarity around (1) Y Company's services to be provided to X Company, and (2) X Company's services to be provided to Y Company. At this point, are there any conflicts that you can see/anticipate in your ability as the Contract Manager during the provision of X and Y Services, that perhaps could result in non-performance or non-compliance? Also, how do you escalate and cure any issues of non-performance (for example)? Secondly, I would review the files documenting any legal review, if any, prior to said agreement being reviewed for signature/execution. Were there any concerns that were raised and eventually resolved (internally)? AT the very least, you could start with the resource allocation -- that is, regarding your time management and how to better allocate your skills - in developing your case. Hope this helps. Regards ~ Rose
Its an interesting role and I recommend your decision to bring in another manager to take one of the contracts.
I would recommend to present this as two different roles:
On the buy side - Contract Manager would play role of a customer and to manage Company X, need to drive and establish Vendor Management Discipline around Contract Administration / Governance / Service Performance / Financial Management / Risk and Compliance
On the sell side - Contract Manager would play role of an engagement partner to drive business relationship / Value addition to Company X/ increase revenue generation from Company X to your company / Joint go-to-market strategy if possible.
I´d strongly encourage you to raise this question also within the IACCM technology network, which is a micro-community, where you will be able to get insights to new trends in this specific field and where I am sure you´ll have the opportunity to share ideas regarding the topic you have brought:
Also, please check our library: www.iaccm.com/resources/ where, you will find some articles about 'escrow agreements' for the software arena and other topics associated with risk management in the hardware world as well. By analogy you will explore ideas regarding hardware coming from best practices and escrow programs with the goal of risk mitigation
Hi Michelle - saw your post. For hardware: having a refresh plan with your supplier following a bit of a mutual benchmark, to see how best to provision for your upcoming capacity needs, might give some assurance. For services or subscriptions-based tech: having a documented 'cookbook' of key players and tech needed to recreate the service, including a list of any solutions 'not commercially available' or not easily re-purchased in Canada updated, might also be helpful to gage the difficulty of transitioning off your current tech,if needs be.
Those two governance-type processes, along with the typical supplier obligation to reasonably cooperate with any successor and to provide some mutually-agreed orderly termination assistance, might serve you well (outside escrow for software). Hope that offers some ideas...good luck. Cheers, Robin
This is definitely something that should have greater consideration in my organisation, I have been quite vocal in pushing it. I have worked in teams where particular members have found the lack of bounds extremely stressful as they feel they are crowded out or put upon by the more vocal members, who are equally frustrated it takes so long to get things done. Clarity in defining the roles and responsibilities can often be an enabler.
• Airbus Defence and Space Limited
Agreed, this is a great article and really gets you thinking about the behaviours instilled within your own immediate team. If we cannot get the behaviours and roles clearly specified for our own team members first we are setting ourselves up to fail in the wider team and externally.
Agree - this was quite an insightful article. I've always believed that it should work in reverse - that you should set the objective and then leave it up to individuals to work out how to get there, which is what the article says except for specifying that their roles need to be clear. I believed that if roles were less clearly defined then it gave people scope to expand their remit, however I can see why this can cause confusion.
Ive had a lot of experience of very dominant Clients who are never willing to negotiate any give on their side, only improvements for them. I have found you need to identify this type of individual very early on in the process and realise that this behaviour will not change through the lifecycle. Decisions need to be made as to whether the deal that you are being faced with is worth it or not - is it good business for you or are they asking for too much. Id love to hear any specific approaches of how to deal with this type of client as its not easy.
Just in case you still need a few other pointers, consider the following:
One thing sales people understand is numbers so approach it from an accounting point of view. Since the contract is void, consider discussing the fact they will not be able to meet all the GAAP principles for revenue recognition and if your accounts folk are diligent they probably will back you up ( but run this by them - accounts - first. Companies interpret or apply GAAP revenue recognition differently ).
Since Company X no longer exists and as such has no contracting capacity, it cant assign/novate the contract which will impact collectability should the New Company choose not to follow through with what it has implied it would do re: payment
If you are required to create a new agreement using the same or similar terms and conditions, consider preparing a risk assessment analysis of the contract and let the stakeholders approve the risk they are taking on by utilizing the same Ts & Cs so everyone is on the same page. Whatever discussions or approvals were obtained for the former Company should not apply to the New Company.
the SLA should have the basic things like resolution time/ Response time, Escalation Matrix,support timimg periods,
• AVON Cosmetics Ltd
Did you manage to obtain a Contract Change Form and Process? I have one which we use for an IT Outsource Contract and could send through to you if you can provide your email address.
Aveva's ProCon solution contains a Post-Award module which supports the contract execution process from the contract award stage, through processes such as general correspondence, management of change, management of payment, and dispute resolution, to management of closeout. To your point, you need to protect yourself from contract variations and scope changes with the ability to manage these effectively and have a clear path to understand these and approve as necessary. ProCon can help with these vital challenges. Feel free to contact me for more information.
I cannot suggest any template, but can advise the following points to be taken care of while agreeing the Contract -
1) Overstay compensation or rate revision formula
2) Discount factor for scope increment or compensation factor for reduction.
3) % of Liquidated damages, in case of delay attributed to Contractor's end.
4) Try to negotiate with some grace period even after original contract completion date keeping the original rates valid.
There are a lot of aspects to consider here, for example:
are you buying a replacement service from another vendor? if so, do you need the current vendor to support transition to the new vendor?
does the current vendor need to return any confidential documents?
are all payments up to date?
are any contract penalties (service credits, LDs) outstanding?
Irrespective of the above, you need to formally terminate the contract, confirming that neither party has any liability to the other following termination, except, perhaps, confidentiality provisions and, potentially, any latent defect/warranty claims. Simply 'allowing' the vendor to walk away seems odd: you spent time (and therefore money) on-boarding them and agreeing a contract, it seems strange to end the relationship in this way.
• Neptune Marine Service Ltd
What contract states with regards to email communication and authorized representative. If the contract only states that communications shall be in writing to the authorized representative. The next question that will arise is Governing Law of the contract. As some countries have adopted the United Nations Commission on International Trade Law (UNCITL) published its Model Law on Electronic Commerce in 1996 which states that actions will not be invalidated or discriminated against merely because they were conducted electronically and emails are considered as a message in "Writing"
So, make sure the message in "Writing" based on the governing law is communicated to the Authorised Representative.
For the balance checks, I agree with Steve Grange and that shall suffice.
I agree with Steve Grange. Create a formal Exit plan with the company to close off any outstanding liabilities to both parties. Regardless of each others 'mutual consent' to this. At the end of the that process formally close it off with a document. This will prevent anything coming back to bite you in the future.
• Siemens Pte Ltd
I agree with Steve, Gaurav and Phil, They have covered multiple aspects which we have to look at before letting the vendor walk off as I believe in this case Vendor has no financial impact on them so easy for them to walk off without formal termination/closure of the contract. But from the moment you accept or let Vendor walk out all the responsibilities more of liabilities fall on your company.
• Resolute Corporate Services Pty Ltd As Agent for Société Des Mines de Syama S.A (SOMISY S.A)
I think you should prepare an official document signed by both parties to legally and lawfully end this contract by a mutual agreement by both parties.
• Resolute Corporate Services Pty Ltd As Agent for Société Des Mines de Syama S.A (SOMISY S.A)
I think you should prepare an official document signed by both parties to legally and lawfully end this contract by a mutual agreement by both parties. your message
The first item to consider is to ensure to review the Services Agreement and review the Termination and Notices Section and any others that may come in to play when terminating an agreement. Are there a certain number of days after written notification that the services agreement will terminate? Are you terminating a master agreement and any ordering documents or SOWs or either or both? Do you need to provide notice to the contractor via email, mail, certified mail, overnight delivery? Does your agreement allow for electronic transmission communication as an acceptable method of communicating to make it legally binding in a notices provision?
I then also check to see if there are provisions such as Confidential Information/Materials or any other security items that need to be returned to your company that would need to be mentioned in a termination agreement or letter. Is there any confidential information, materials, laptop/pc, security badges and property that need to be returned and when, how and to whom? These are a few of a number of items may need to be addressed in a termination agreement along with ramp down services and whether there are any fees apart from standard fees that would need to be paid to considered. I have seen termination agreements be very simple with little to no instruction since the Services Agreement was simple straightforward agreement with little to be exchanged by way of CI, materials, goods, security, property and others that can run a few pages of negotiated ramp down services, transfer of services to another contractor or training and payment of ramp down costs at stake.