David - you face a challenge experienced by many in the Aerospace/Defence sector, as well as the Engineering/Construction, Oil and Gas, Pharmaceutical and other sectors. All of those sectors have utilized the training content provided by IACCM, as it represents leading and innovative practices in this domain.
I'd be interested to know more about how you define the role. I'm assuming - but perhaps wrongly - that the focus is post-award, but is it then dealing largely with contractvmanagement, or more broadly with performance management? To what extent is this a combined project and contract management responsibility?
• Abu Dhabi National Oil Company (ADNOC)
An organisation like yours has what it takes to develop sub-contract programme managers internally due to the criticality of the service you provide. It was not clear if you tried to employ(source) the sub-contract managers or you tried outsourcing sub-contract management.
You would consider it great to employ these managers as staff for long-term rolling programmes rather contractor employees; except you need them for short-term tasks. You will need individuals with experience project, programme, commercial and contract excellence
You would prefer to contact each of the professional bodies you mentioned directly to make your enquiry. However, from my experience with CIPS and IACCM, both bodies are excellent in their area of specialisation. You won't go wrong partnering with them. APM and RICS would also have a specific focus that you would best explore reaching out to them.
The governance and framework for outsourcing service on-boarding and general service contractor on-boarding would be largely applicable here. The key here is that the SOW's, SLA's and KPI's are clear and complete - but that holds true in any services contract. From what I have seen, SIAM principles are highly relevant here.
Hi Ashley, this service is exactly what my company, ABiz Corporation, does, among other things. Speaking from experience based on our client base, what works well is when the outsourced team understands the goals and objectives of the company and of the function, as well as good integration with the in-house team. In the beginning it is important to have a complete knowledge transfer of the outsourced function, a small period of overlap and then regular checkpoints set up after transition is complete. If the outsourced support consists of simply a task, the knowledge transfer is relatively short. If it consists of the full function, knowledge transfer would be a bit longer. Depending on the number of activities and types of contracts, the service may or may not come with technology, but it also depends on whether the client company has their own technology. Feel free to contact me if you would like to discuss further or compare notes.
Hi Mohammad, we have studied quite a few systems recently as part of our services to clients. The only software product that I have come across specifically focused on the oil and gas industry is Aveva ProCon. This is by no way an endorsement for this product. In fact, we have not had the opportunity to do an in depth assessment of the tool, but we have reviewed it at a very high level. As you go through your identification of different tools. trade market
ABiz Corporation provides this service at very competitive prices. We have done this for many very large companies for very large contracts. If you would like to discuss this further, please contact Nancy Nelson at email@example.com.
Hi Keith, this is a very interesting question and I am glad you are undertaking the exercise.
I haven't come across a dynamic tool that would support the sort of pre-analysis you suggest, although it may be that you could adapt one of the systems used by marketing to undertake customer segmentation. Another approach could be to build relevant questions into whatever requirement definition tools you use, cuasing the business to consider the points you make regarding issues such as innovation, likelihood of change etc
In working with another IACCM member, we have developed a model that looks at three core levels of relationship and then overlays the extent to which there is potential uncertainty which would impact the nature of the relationship / terms required. I'll be pleased to discuss with you and share ideas..
Hi Keith. I'm also unaware of the existence of such tools.
My suggestion (assuming you haven't done so already) is to align your organisational objectives with the business cases, service specifications that were developed during the tender process, justifications for contract variations, etc. Once this has been done, identify the commonalities across the service spectrum and then compare against the performance of each contractual arrangement including the extent to which the service is being successfully delivered and then how this may relate to the business activities of the individual business unit. No mean task!
Understanding contract management within broader organisational strategy and commonality that exists between contracts is likely to yield insights into what you're trying to achieve e.g. innovation, appropriately skilled staff, etc. And by taking such an approach, it may increase the likelihood that decision-makers outside of your own business unit who may also benefit from this work will support your efforts more readily.
You may also find as a result of using this type of analysis, the requirement for knowing whether the relationship is growing, etc becomes less relevant as an end in itself - assuming of course that the appropriate aspects of organisational strategy are being delivered as intended through its contractual arrangements and that risk appetite for further value / profit-seeking under each or multiple contract(s) is not being exceeded, and is being properly managed.
I guess you need to establish key assumptions and/or minimal functionality or license metrics you need to achieve before you have anything you can benchmark against. Once that is established, you can ask for alternative software solutions which solves your need and then incentivize the best price found. Further you could measure the fulfillment of the key assumptions and have a payment attached to each of them. If the solution is going to introduce a certain workflow you could set pricing according to how fast it is implemented or how much money is saved/earned. If there is a license price and a T&M project, you could say have a differentiated discount scheme based on the number of hours spent. I.e the first X hours are paid at 140%, hours between X -Y are paid at 100% and hours after Y are paid by 50%.
I recommend you look at this article "Time and material vs Fixed price: hot discussion of the best pricing model" - www.cleveroad.com/blog/time-and-material-vs-fixed-price--hot-discussion-of-the-best-pricing-model
Firstly, I suggest to draft a SWs Portfolio document, which will list all the required SWs. SW portfolio will consist of details like SW name, description, area of application, criticality, user applicability, SL% requirements and other optional technical details like program language etc. Each of the listed SWs may be given a percentage split of charges between various applications, summing up to 100% (in this case DKK 0,5 M is 100%). This document can be kept open for addition/deletion for SWs.
Whenever Supplier adds/removes a SW this % split can be used for commercials/invoice purpose. For eg: a SW which falls between 10-25% will have 2% incentive, SW with 25-50% will have 5% incentive etc.
Secondly, SLA is completely depends on how you want specific SW to work for you. In the portfolio, for eg: if some SW is impacting critical users or functions you may set the SLA to required higher percentage and flow-down those SLAs to OEM as well. Also, I would suggest to a research on Pass-through charges, in which the supplier charges a fixed % incentive, but this is possible only if the SWs are fixed.
An arrangement that I have seen work in this type of deal is to amortize the value of the investment over the life of the contract as you plan. If the contract were to be terminated prematurely, the residual value of un-depreciated assets would form the basis of an early termination fee.
I hope this approach helps you find the right deal.
It actually looks pretty standard. The contract should specify what the provider's and the client's respective responsibilities are with regard to the assets, including intellectual property protections.
You could propose placing orders for assets as an authorised agent of the customer through a contract which the customer directly holds with one or more suppliers.
The customer would receive the invoices directly from the supplier with the result that you do not take on the risk of holding additional cost. You could get involved with invoice validation if necessary / integrate with your service offering.
As per your other comments, you can easily protect yourself from commercial liability in the event of termination.
As Tim Cummins states, it is not uncommon for outsourcing agreements to incorporate provisions that reward continuous improvement or innovation. These are in general some form of 'gainshare' provision. There are also examples of 'shared savings' contracts, especially in the energy and health sectors (I suggest a Google search - it will deliver a wide variety of articles and examples).
There are several difficulties with such clauses and contract models:
- they depend on an ability to accurately measure the improvements achieved
- those improvements need to be of real value to the client and capable of being tied to specific cost reductions or revenue increase
- the improvements need to be 'beyond the normal course of business' e.g. not something that simply happened across the industry in general
- there has to be a mutually beneficial approach to the allocation of the savings (experience shows that many times, customers are not inclined to pass on them on and this can then lead to dispute)
Many times, these factors prove difficult to establish so such an approach may be abandoned. Often it is best to establish an agreed forum where improvement opportunities will be discussed and rewards established. This is typically not within the standard performance reviews where, as you say, it is more typical to discuss things like service credits and to allocate fault. The people you need to be involved in improvement initiatives are often very different from those who monitor performance.
This article from FM World is helpful - www.fm-world.co.uk/good-practice-legal/explainer/contractual-gain-share/