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Under what circumstances might I need this Contract Negotiation service?

Complex systems are not always acquired on good commercial and contractual terms. This issue is exacerbated when projects go wrong in one way or another. Typical symptoms of this include:

  • The project taking longer than anyone expected
  • the project cost more than had been budgeted
  • The client’s expectations turned out to be significantly adrift of the suppliers’
  • Major differences in functionality supplied over what was expected
  • Suppliers unexpectedly charge large extra sums for facilities that the customer thought would come as standard
  • Demands for payment when the system has yet to work to your satisfaction
  • Suppliers lose interest in the project once the contract has been signed
  • These common problems can be avoided by ensuring that all aspects of the commercial, legal and practical relationship are identified and clearly set out at the start of the process.

To get the best results contractual negotiations should be considered an integral part of the system acquisition process, not left as a last-minute hurdle.

You might find that the approach adopted and the degree of flexibility and willingness to take shared risks offered by the suppliers differs widely. Given the potentially long-term nature of IT agreements, this information might well alter your perception of which supplier should be selected.

What does Contract Negotiation involve?

The process is about achieving clarity. All aspects of the project need to be incorporated into the agreement thus ensuring that both parties are fully aware of their obligations up-front.

First, it is necessary to identify and prioritize the issues that really matter. For example, sometimes the price is the most important issue whilst on other occasions functionality, payment terms, or indeed the implementation timescale might take precedence.

Once these priorities are clear it is necessary to ensure that the important aspects of the contract are debated and negotiated with the supplier. Merely discussing these issues in-depth often uncovers other aspects which are easier to sort out pre-contract than later on.

These issues, once negotiated, will cover all of the services to be supplied, the price, how and when the system is to be delivered, warranties, remedies, and many other legal and commercial terms.

Once these contract issues have been fully clarified your legal advisors can be briefed to draw up the actual contract.

What are the benefits of Contract Negotiation?

  • A properly prepared contract secures the potential benefits identified during the system acquisition phase.
  • Aspects that are less than transparent can be identified at an early stage; with no unpleasant surprises.
  • The client’s own obligations are made clear at an early stage and can be planned accordingly
  • Effective price negotiations (based upon a sound knowledge of what the market will stand for) can often deliver substantial cost reductions
  • As a client you will demonstrate your awareness of all these important issues and you will be seen by the suppliers as a wise buyer