Project Selection Process S310

S310 - Prepare and Agree Contract(s)

DEFINITION

Finalise the precise terms, conditions and wording of the contracts with vendors and effect the contracts.

SUMMARY

The final details, terms, conditions and wordings for the formal contracts need to be agreed with the vendor.  This will often involve the negotiation of revisions to a standard form of contract suggested by the vendor or, in some cases, by the client organisation.  It is common for the client organisation to seek specialist legal advice regarding the contracts, either using internal legal specialists or external lawyers.  The decision to take such advice is entirely the responsibility of the client organisation.

Once the full details have been agreed, the contracts should be formally put into effect in whatever manner is proper given the constitution, procedures and rules of the client organisation.

The project team’s role in this process is normally limited to making sure the activities are being considered with an appropriate level of priority and monitoring their progress.  Note that the finalisation of contractual clauses between lawyers can take a long time and appropriate allowances may be required in the project plan.

PATH PLANNING GUIDANCE

This process is optional.  It is normal practice that this work should be undertaken, but it is optional whether this involves the Application Software Implementation  project team.

DEPENDENCIES

Prerequisites (Finish-Finish):

• Negotiate terms with the vendor(s) (S300)

Dependent procedures (Finish-Finish):

• Selection Segment termination paths:
• QA review and
• review of path plan

Dependent procedures (Finish-Start):

• Install software - see Delivery Segment

RECEIVABLES

• details of terms as agreed in principle
• vendor’s standard contract / terms and conditions
• client organisation’s standard contract / terms and conditions
• vendors’ proposals as modified by any subsequent correspondence
• reports / questionnaires from vendor demonstrations
• report from Package Fit tests (if any)
• findings from the final evaluation of marks and issues
• findings from Benchmarking
• Selection Report

DELIVERABLES

• Finalised and enacted contract(s)

TOOLS

• Guidelines: Software Contract Checklist

DETAILED DESCRIPTION OF TASKS

Note that this process concentrates on the final negotiation of contractual terms and conditions with the vendor(s).  The negotiation in principle of required terms and other details was covered in Process S300.

Contractual negotiation is often conducted by specialist staff within the vendor and client organisations, and is often performed after the details have been negotiated in principle.  Client organisations will often elect to seek external specialist legal advice.  It should be left entirely to the discretion of the client organisation whether specialist or external advice is appropriate.  It is not normally appropriate for project team staff to participate in the legal aspects of the negotiations.

Contracts regarding the provision of computer equipment, software and services are a specialised area of contract law.  It may be appropriate to use lawyers specialised in this area.  It may also be of value to take business advice from a Consulting Company who can advise in terms of the business and technical details of the underlying requirements (but who cannot act as legal advisers or express any opinion concerning the precise wording of contractual clauses).  The client organisation’s contract negotiators might also benefit from a Software Contract Checklist which should be treated as a guideline to some of the relevant issues, but not as an exhaustive list of issues, nor as a statement of good practice.

Role of the project team

The project team members and the project sponsor will typically have the following involvement in the process of finalising the contract:

• initiate the formal negotiation of the contract using the appropriate procedures within the client organisation,
• explain the project’s needs and the details agreed in principle with the vendors,
• hand over the relevant documentation (but keep copies) regarding the proposals, amendments, associated documentation for inclusion, details of other statements by the vendor to be incorporated, etc
• define and agree the required timescale within which the contract needs to be finalised,
• monitor that the vendor and the client organisation’s contract negotiators are making good progress and that the final agreement is likely to be within the required timescales,
• respond to any queries from the contract negotiators, particularly where changes are proposed in the items to be included or previously agreed terms are to be amended,
• signify that the overall deal should still go ahead before the contract is formally put into effect.