CONTRACTUAL CLAUSE UTILISATION IN BUSINESS SYSTEMS PROJECTS

Charl Mostert

IF ELEVATORS WERE AS RELIABLE AS IT/IS PROJECTS

• Your chances of surviving a ride in an elevator :

2010 2008 2006 2004 2002 2000

37% 32% 35% 29% 34% 28%

CHAOS

0% 20% 40% 60% 80% 100%

1994

1996

1998

2000

2002

2004

2006

2008

2010

31%

40%

28%

23%

15%

18%

19%

24%

21%

53%

33%

46%

49%

51%

53%

46%

44%

42%

16%

27%

26%

28%

34%

29%

35%

32%

37%

Failed Challenged Successful

Source: Standish Group; CHAOS Manifesto 2011, CHAOS Summary 2010, Extreme CHAOS 2001

PROJECT RISK

• “Project Risk Management includes the process of conducting risk management planning, identification, analysis, response planning and monitoring on a project. The objectives of Project Risk Management are to increase the probability and impact of positive events, and decrease the probability and impact of negative events in the project”. (Project Management Institute, 2008:273)

LITERATURE REVIEW

• Identified 42 prioritised risk factors

• Categorised in 4 categories:– Corporate management related risk

factors: 7 risk factors

– Project management risk factors: 20 risk factors

– Resource related risk factors: 11 risk factors

– Technology related risk factors: 4 risk factors

RISK FACTORS

Lack of commitment from top senior

management (Schmidt, et al., 2001)Ineffective or poorly trained project managers

Roles and responsibilities of team members

are not clearly defined

Timely review and sign off on decisions,

deliverables and documentation

Corporate instability and/or organisational

change causing instability in the project

Inadequate or non-functional change control

process

Project communications lacking or not

defined, including planning and resources

Willingness of users (end users of the system)

to be involved in and co-operate with the

project

Lack of client ownership or de-prioritisation of

the project

Not well defined or lack of defined

deliverable and associated deliverable dates

Project management methodology not

properly implemented or not being used at all

Limited user involvement due to capabilities

in new system being vastly different from

existing systems

Lack of supplier ownership or de-prioritisation

of the project

Criteria defining project success inadequate

or undefinedProject charter not created or incomplete

Support teams and users perceive new

system as a threat

Adversarial relationships and loss of trust

between vendor and clientNo business case for the project

Key project deliverables are outside the locus

of control of the project team

Motivation and maintaining morale of team

members throughout a project

No formal alignment of project with business

strategy

No project status tracking or progress

reporting

Commitment and belief of project team

members in meeting the project scope within

schedule is low

Turnover of key project team members

through the project lifecycle

Communications breakdown between parties

involved

Risk management, analysis and tracking not in

place or inadequate

Key stakeholders are unavailable or only have

limited availability for review sessions of

project

Implementation of new or latest technology

Functional Requirements not documented or

unrealistic

Delivery deadline not aligned with project

schedule or project schedule calculated based

on delivery deadline and not effort required

Skills, knowledge or experience of resources

on project team are lacking

Availability and capacity constraints on

technical communications infrastructure

Performance Requirements not documented

or unrealistic

Management of project delays, revision of

project based on delays encountered

Project resources are only part time assigned

or become fully assigned to another project

which is deemed of higher importance

Technical complexity

Reliability Requirements not documented or

unrealistic

Documentation on planning and estimation

lacking or inadequateOver scheduling of subject matter experts

Goldplating (unrealistic requirements related

to the use of the system)

Project Scope not documented or partially

documented

Significant changes to the project, including

Scope schedule or goals

Ha

ve y

ou

en

cou

nte

red

pro

ject

ris

ks

rela

ted

to

th

is

ite

m?

Y/N

We

re t

he

re c

on

tra

ct c

lau

ses

in p

lace

to

sp

eci

fica

lly

ad

dre

ss

this

ite

m?

Y/N

Wa

s th

e c

on

tra

ct a

sta

nd

ard

con

tra

ct o

r w

as

it a

cu

sto

m

con

tra

ct s

pe

cifi

c to

a p

roje

ct

or

com

pa

ny

?

(NE

C,

FID

IC o

r O

the

r, i

f o

the

r

ple

ase

sp

eci

fy i

n c

olu

mn

J)

We

re t

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co

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act

cla

use

s

sta

nd

ard

or

we

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y

cust

om

ise

d f

or

the

pro

ject

an

d/o

r co

mp

an

y?

Sta

nd

ard

/Cu

sto

m

If c

lau

ses

we

re i

n p

lace

, w

ere

the

se g

en

eri

c o

r sp

eci

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rela

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to

In

form

ati

on

Te

chn

olo

gy

/ S

yst

em

s (I

T/I

S)

pro

ject

s?

Ge

ne

ric/

IT-I

S/N

A

Wa

s it

eve

r re

qu

ire

d t

o i

nvo

ke

the

se c

lau

ses?

Y/N

/NA

If t

he

se c

lau

ses

we

re i

nvo

ke

d,

wa

s th

is a

ctio

n s

ucc

ess

ful

in

reso

lvin

g t

he

iss

ue

s

en

cou

nte

red

?

Y/N

/NA

1Lack of commitment from

top senior management

2

Corporate instability and/or

organisational change

causing instability in the

project

3

Lack of client ownership or

de-prioritisation of the

project

4

Lack of supplier ownership

or de-prioritisation of the

project

QUESTIONNAIRE EXAMPLE

OVERALL CONSOLIDATED RESULTS

Have you encountered project risks related to this item? Y/NYes No

779 229

Were there contract clauses in place to specifically address this item? Y/NYes No

388 620

Was the contract a standard contract or was it a custom contract specific to a

project or company? (NEC, FIDIC or Other)

NEC/FIDIC Custom N/A

531 344 133

Were the contract clauses standard or were they customised for the project

and/or company? Standard/Custom

Custom Standard N/A

434 377 197

If clauses were in place, were these generic or specifically related to

Information Technology/Systems (IT-IS) projects? Generic/IT-IS/NA

IT-IS Generic N/A

310 433 265

Was it ever required to invoke these clauses? Y/N/NAY N N/A

241 333 434

If these clauses were invoked, was this action successful in resolving the issues

encountered? Y/N/NA

Invoked

and Y

Invoked

and N

Not Invoked

or N/A

156 85 767

RECOMMENDATION

• From the overall correlation coefficients it is clear that there is direct and measureable correlation (r = 0.789302502) between having contract clauses which specifically address high risk factor elements and the resolution of these risk factors

• It is therefore recommended that at least the 42 risk factors evaluated in this document should be analysed for the development of IT-IS industry standard clauses which can be included in all relevant IT-IS contracts

COMPETENCE

SELF IMPOSED CONSTRAINTS

• Nine Dot Puzzle

SOLUTION 1

SOLUTION 2

SOLUTION 3

INTERPRETATION

INTERPRETATION

Although the signs says:

Please Don’t !!!

HOW MANY???

• Contract Clauses are like Laws, only implement what you are willing to enforce!

CONCLUSION

• Focus on implementing contract clauses to reduce the risk factors specific to your environment

– Increase your competency level in constructing these clauses

– Avoid self imposed constraints and interpretation mismatches

– Limit the number of clauses to important risk factors