"Dig For Victory" - The Intranet Portal Guide

 

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Intranet Portal Guide > During > Commercial Management
Image of Contracts and Seals - reminding you of the importance of contracting properly for your Intranet Portal project

Let me not to the marriage of true minds admit impediments – Sonnet 116, William Shakespeare (1546 - 1616)

How often does one hear the words 'long term relationship' or 'partnership' where system integrators are discussed at the early stage of a project. And yet all too often, this 'marriage of true minds' seems to end in acrimony and divorce!
 

Words of Warning

So let me tread where Shakespeare dared not, and 'admit impediments' as you embark on this key relationship with your third party developer(s).

A supplier's main objective is to make profits (just like you!) and that means making as much money out of you as they can - at the lowest risk - whilst keeping you happy if possible (in the hope you might use them again).

There! It is said. The sooner you realise this, the better. Invest in the marriage - but make sure you have a pre-nuptial agreeement and a good lawyer!

The Pre-Project Agreement

At the early stages of your work (and particularly pre-project), you will not have a clear scope for delivery against which to contract. As such, the best approach is to negotiate a Framework Agreement for Consulting Services. This will define a standard set of hourly and daily rates for the external resources you need and handle over-arching issues, such as ownership of intellectual property.

You may then establish a Work Contract under that Framework, on a Time & Materials basis, where you are buying a certain team of people for a certain amount of time to produce a certain set of deliverables (or 'products').
 

The Project Contracts

In the Design of your first release, you may use another time & materials based work contract (against the original consultancy framework) just to get you to a defined scope for delivery.

However, once that scope is set, you should negotiate a separate (and new) Framework for (Detailed) Design, Build & Test. This framework covers issues like what the supplier will need to do in the event that there is a problem with the delivered portal; what will they do at their own cost to rectify this and will you get your money back if all else fails?

The Work Contract for subsequent phases will be against this new framework and (ideally) will be on a Not-to-exceed Price basis or (better still) a Fixed Price basis. This permits you to guarantee delivery against your 'approved pot' and to limit
your risk (of failed delivery).

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Staged Payments

Ideally, you will have set up the work contracts in such a way that payment is made to the third party in stages, based on certified work (i.e. the delivery of agreed products to original specification plus any agreed changes). There should
(ideally) be an upside for the supplier if they exceed on time, quality or cost.

Remember, your objectives are to deliver business benefits through the portal by creating bold (and therefore risky) step changes in the way you do business. Your supplier does not share these objectives! However, by setting up decent contracts and (in particular) a well-designed payment schedule, you can begin to align the interests of the supplier to your own (and therefore ensure the right results).
 

Steady State commercial considerations

You may be tempted to require your supplier to also take on certain steady state responsibilities for supporting and perhaps developing the portal, post go-live. If so, my advice is to make sure this is covered off during the initial project negotiations and not as an afterthought later (when you are 'over a barrel').
 

What if it all goes wrong?

As I have indicated in the Project Team
section, if you have built commercial management skillsets into your team, then problems should be minimised.

However, if they do arise, do make sure that you have a decent 'exit strategy' that covers how you would (a) disengage from the supplier, (b) find an alternative one and (c) keep the show on the road during the inter-regnum.

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An Overview of the Contracts (ppt)
Explains the approach I have proposed.

The Certification Process (ppt)
Outline of the steps to certify a set of products & approve supplier payment.

Contractual Change Note (doc)
Template for changes to an original work contract (to be added as an addendum).

CIPS
Articles & tools from the UK Chartered Institute of Purchasing and Supply.

Beware of Blended Rate bids
Good article from META about why you should negotiate rates by resource type.