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Successful IT project delivery – first get your new supplier contract right

by Chris Shaw

Contract

When embarking on a new public sector IT project, choosing a supplier in many respects marks the beginning of your journey. As the customer, many weeks or even months of project delivery lie ahead. Making the right choice at procurement is of course critical to the success of that project.

At Shaw, we have worked with many housing associations, local councils and other public sector organisations to make sure they choose the right IT delivery partner. But how important is what’s in your contract with your new supplier? And how close attention should you be paying to your new provider’s terms and conditions? Close attention in my view, especially if you want to reduce the risks of failure further down the line.

All too often, once a supplier is chosen, the customer will be sent the provider’s standard terms and conditions. In my experience these are often heavily weighted in favour of the supplier. Accepting them without question is not an option in my view - and customers need to question and challenge the fine print.

Suppliers’ payment terms often require huge up-front payments, and unfair staged payments throughout delivery. When presenting their own terms and conditions Suppliers will most often favour a time & materials approach to payment rather than taking risk on fixed fee and/or milestone approaches. Even where they move away from time & materials, suppliers will often expect each element of a project to be regarded as a payment milestone. And they will often insert clauses which exonerate them for any blame for delay.

We recently worked with a housing association which was looking to procure a new document management system, intranet and invoice processing system using Microsoft Sharepoint. We helped the housing provider to put together the required tender documents and ran the procurement exercise to identify suppliers who could meet their requirements.

It was only once the provider had been selected and we moved to the contract stage that we spotted what I can only call “imbalances” in the supplier’s terms and conditions. As above, upfront and staged payments were expected within unreasonable timescales. And again, the risk was all with the customer, not the supplier, when it came to project delivery. There was even a clause in the contract which stated that “time was not of the essence” from the providers’ point of view when it came to delivery. We, and the customer of course, begged to differ!

Traditionally, customers have had to resort to expensive legal firms when it comes to challenging a provider over contract failings. And usually it comes at a point where things have gone wrong. Rarely are the lawyers brought in before a contract is signed.

The good news is we are now able to offer customers an upfront and rigorous assessment of their new contract including suppliers terms and conditions. And we can do so with the all important IT knowledge required to carry our the task effectively. So it’s not only cost effective, it comes from a position of expertise which legal firms just won’t have.

With the housing association I mentioned above, for example, we were able to go through the contract and terms and conditions with a fine tooth comb and ensure everything matched to the key deliverables identified in the procurement exercise. The end result has meant the customer has had to make fewer upfront payments and avoid some potentially significant penalties from the supplier if the project changes. The provider, quite rightly, will have to deliver before they receive the majority of payment and has clear responsibility for the detailed planning and management of the project.

This is as it should be and it is in both parties’ interests to get this right early on to avoid difficulties, keep the supplier/customer relationship amicable, and most importantly ensure the project is delivered on time and within budget.

Procuring new IT systems are huge undertakings for the organisations we work with. They are difficult and complex pieces of work. But the rewards are there for the taking: improved, more efficient, ways of working which ultimately benefit your employees and your customers. Just make sure you read the small print before you sign on the dotted line!

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