for party autonomy, process & outcome fairness
Cart 0

Contracts define customer-service provider relationship. Do your contracts set the right tone?

Martin West

Are you frustrated by having to select between time & materials (T&M) or fixed fee (FF)? I am. 

    are you also frustrated with a choice between fixed fee and T&M?    

    Choosing between the following is no choice:
    • service provider AND customer for contracting delivery risk;
    • fixed scope AND flexible scope in a contract;
    • committed project plan AND best efforts commitment; and
    • competitive on scope AND competitive on resourcing to ensure value.
    The requirements:
    1. joint accountability - to have joint accountable for overall performance with individual accountabilities. Where the service provider (SP) is under the same pressure to complete on time within budget as me. i.e. if I have to pay more for the committed scope and I want SP to feel the same pain I do. AND if I pay less for committed scope, SP increases their profit margin;
    2. agility - to introduce learnings as part of the project journey. But have hard delivery commitments for that journey. For example to be able to use a narrow build test to inform the design and the rest of the project. Then make a hard joint commitment to deliver that informed scope;
    3. dependable plans - to have planning predictability from joint commitments. i.e. for project scope. Also to have short-term operational high predictability for smaller batches of work; and
    4. value - to have competitive pressure on pricing for project scope and resources.

      What are the key features of the contracted relationship you require?

      The other requirement is a collaborative frame for contracting rather than an adversarial one. Please see posting: Adversarial nature of traditional contracting - this discusses why traditional contracting (T&M and fixed fee) considered part of an adversarial system. It explores why we need a system that drives collaboration. 

      See other postings to discover more:

      when to use traditional and collaborative contracting methods? 

      introducing collaborative contracting 
      - we outline key features of collaborative contracting. 

      Older Post

      Leave a comment

      Please note, comments must be approved before they are published