Building trade offers lessons for IT in avoiding costly contract disputes

The IT industry could learn lessons from the construction trade on how to avoid expensive legal disputes over contracts, a BCS Thought Leadership debate has heard.

The IT industry could learn lessons from the construction trade on how to avoid expensive legal disputes over contracts, a BCS Thought Leadership debate has heard.

One participant said, "There are areas where building and software development projects are similar. In both industries a supplier provides services in order to meet the requirements of a customer. The service is provided over time, and delays may occur for a number of reasons."

He said a lack of effective change control procedures may result in substantially increased costs. Also, customers may lose patience with their supplier and terminate the contract, often giving rise to a dispute about who is to blame for delays and cost overrun. To deal with these issues, the building trade commonly uses:

● Industry-­negotiated standard form contracts

● A contract administrator who is not an employee of the customer or the supplier

● Adjudication to provide quick and relatively inexpensive decisions on disputes by an independent third party.

Standard contracts enable greater familiarity with their contents and with related procedures, the debate heard. The contractor can have tried and tested systems in place for administering projects and, as the contract has been negotiated on an industry wide basis, it is more likely to be fair to both sides and not contain ambiguities or points which are not adequately covered.

The BCS debate was told that the building trade had the Joint Contracts Tribunal, an independent body which formulates standard forms. It was suggested that the lack of an equivalent in the IT industry may explain the lack of standard contracts.

Some felt that because the IT industry is so diverse, boilerplate contracts would not work. However, they could be useful for small businesses that do not have in-house lawyers and cannot afford to spend a lot of money on legal fees.

Several participants thought that BCS could propose the terms for such contracts, with incremental forms to test the water, saying that without a central co-ordination body it would be difficult, if not impossible, for the industry to agree terms.

The potential benefits of having a contract administrator were identified as projects being more likely to be implemented on time and to budget. However, administrators would have to be neutral. One solution to this would be for the BCS to maintain a database of approved, independent administrators that companies could use.

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