How to avoid frustration and resentment with suppliers

Contract or no contract, agreements with suppliers need transparency

Contract or no contract, agreements with suppliers need transparency

It is easy to assume that the Co-operative Wholesale Society made only one major mistake in dealing with ICL: not signing a contract. But in fact another, earlier mistake would have had a more significant effect. When work commenced, neither the Co-op or ICL had established how problems would be managed should they prove too difficult to resolve within an agreed timescale.

As a result, the Co-op had two alternatives when regularly confronted with unsatisfactory work. It could continue or it could terminate. And as both sides should have known, it is difficult and embarrassing to terminate a project; few IT directors will do so until they think a project is absolutely unrecoverable.

However, the project will actually "die" before that point, when the customer-supplier relationship has deteriorated to the point where practical problem-solving is impossible.

So how can anger and resentment be avoided? Before the project begins, agree the cost that can be recovered for delays caused by the supplier. To reduce the amount of arguments, the agreement should ideally be written into a contract. But while I would never recommend that an IT director starts work without a suitable contract, should this be the case, there should at least be an agreement with suppliers on any costs for failing acceptance tests, missed deadlines or missed key milestones.

In addition, a time limit must be agreed for how long intractable problems will be worked at before costs are paid or when problems should be escalated to a higher power such as senior supplier or customer staff.

This may sound like contractual nitpicking. If you are negotiating cost recovery, why not go the whole way and simply write a full contract? But this is not a purely contractual issue. It is a way of creating a workable, less stressful way to resolve arguments with suppliers. It ensures that you do not get into any arguments in the first place - as was the problem faced by the Co-op. The company had only one way to express dissatisfaction and that was by terminating the project.

The majority of problems affecting the day-to-day running of IT projects simply do not deserve such a drastic response.

Allan Watton is managing director of Best Practice Group, which has published a guidance note, 10 mistakes everyone makes with IT projects,

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