Since there are no commonly agreed upon measures Span Systems can point to the metrics and claim to be within the +/- 5 days schedule boundaries, meeting the quality expectations (since “nil” is undefined), and demonstrate scope creep in terms of the size/function points. At the same time CS can point to delays to schedule and poor performance and claim Span Systems is delinquent to contract and both would be equally justified in their views and positions.
So how does one avoid finding themselves in such dire straights in the first place? Clarity, define the expectations – agreement agree upon the expectations – effective communications, discuss areas of disagreement or vagueness – and lastly measures, agree upon how progress will be measured in terms of both duration and scale. All these factors will help ensure expectations are clearly defined and understood, but they are not enough as Murphy lives! Negotiating parties should agree up-front on a review and arbitration process. In the case of Span and CS there is no entity to determine whether the scope has truly changed or if Span is simply using scope change as an excuse for poor performance. The definition of the term “ordinary changes” is dependent upon the reader and thus meaningless as a measure.
Execution of any action is measured by the holy Trinity of business – cost, quality, and schedule. Performance expectations and measures must be put in place to address all three performance aspects and the goals must be SMART – Specific – Measurable, Achievable, Relevant, and Timed. Everyone involved must agree on what is to be measured, how measures will be taken / scaled, and when the deliverable is due. An entities ability to perform is often determined during contract negotiations. “Performance of contractual obligations presents parties and courts with legal issues. The resolution of these issues often requires analysis of principles relating to formation as well as performance of contracts” (Reed et. al P.244). Performance expectations must be clearly defined during the formation of the contract or disagreements such as those demonstrated by Span and CS are almost a given. We will now continue by looking at change control.
Change control – Marilyn Waegner
Changes in the course of a contract are not unusual particularly in the development of Software. As the software is tested and used enhancements and necessary changes often become evident. Both sides in this dispute have valid reasons for their stance in this matter. Citizen-Schwarz believes that their requests are reasonable and Span Systems has made the effort to incorporate the many changes in requirements that have occurred but the result has been that the deliveries have been delayed.
The original contract contained a clause for requirements changes that reads as follows:
REQUIREMENTS CHANGE: In the event of Citizen-Schwarz AG requiring any ordinary changes to the user and system requirements originally agreed to Citizen-Schwarz AG will notify Span Systems as soon as possible during regular business hours and pay Span Systems any accruals at the rate agreed to. Any changes in functional requirements or enhancements will be handled as per the procedure outlined in information Technology Project Methodology Standards. (Contract Creation and Management simulation, 2006).
This clause address ordinarily changes but does not address the type and amount of changes that Citizen-Schwarz AG is adding to the work that Span Systems is doing.
A joint Change Control Board (CCB) consisting of representative from both companies should be put in place to monitor and evaluate any change that is proposed. No change should be implemented until approval is received through this board. This control will ensure that changes that are out of scope to the original requirements increase the cost of the software and/ or impact the timeline for delivery are documented and the appropriate compensation and schedule adjustments are made. An amendment to the contract should include the compensation parameters in terms of function and time. The amendment could read:
Any changes to the user and system requirements originally agreed will be monitored by a Change Control Board (CCB) comprised of the project manager and lead software engineer from Span Systems and Citizen Schwarz AG. The CCB will decide the changes to be accepted or rejected. The CCB will also determine the resulting change in size of the project. Citizen Schwarz agrees to compensate Span Systems for subsequent new requirements as per the following terms:
Features added 3 months after signing contract - $1,100 per function point change
Features added 6 months after signing contract - $1,250 per function point change
Features added 9 months after signing contract - $1,500 per function point change
Features added 12 months after signing contract - $1,750 per function point change
(Contract Creation and Management simulation, 2006).
By adding this detail to the contract both parties will be aware of the impacts in cost and schedule of the continued changes made to the requirements. Next, we will look at the communications and reporting of the contract.
Communications and Reporting – Kayla Stoker
Insert section here – Please submit sections to Write-Point prior to posting to team
Project Structure – Christopher Fischer
The project structure specifically revolves around the amount of programmers needed to adequately meet the demands and deadlines proposed in the initial contract. Since there were unforeseen communication and approval delays, Span Systems found themselves projecting incorrectly for the number of personnel needed to complete the project. Span Systems will need to devise a solution (along the lines of committing additional resources/manpower) to satisfy the personnel demands of the project to hit the stated goals. Since the error was on Span Systems’ side of estimating and projecting before the contract, Span would not be justified in asking for more money from C-S for this. By informing C-S of their intentions to adjust the contract requirements by adding more programmers, Span Systems can demonstrate that they are acting in good faith by fixing a detected error on their side of the contract obligations. The current contract (for project structure) called for:
“Span Systems will allocate eight (8) programmers led by a competent software engineer, who will work closely with the team of developers at C-S in relation to administration, and other matters relative to the technical activity of the project”(Contract and Creation Management Simulation, 2006).
An amendment could be added to compensate for the estimation error now noted in understaffing. The recommended amendment for the revised project structure portion of the contract would be as follows:
“In order to meet the software schedule originally agreed to, Span Systems will scale up the team size by at least ten (10) additional programmers within ten (10) days of the effective date of this contract. The costs of training the new team members will be paid for by Span Systems” (Contract and Creation Management Simulation, 2006).
It is important to note the wording of the amendment. The key conditions are: the number of additional programmers to be implemented to the project, the date/deadline the programmers will be implemented, and that fact that C-S will not incur any additional costs for this adjustment. Since the additional manpower was not needed due to any change in schedule or demand from C-S (but rather Span Systems’ error in estimating the project manpower requirements), it would not be feasible to have any changes that would be detrimental to C-S. In contracts, it is important you estimate manpower needs sufficiently. Scope and correct estimation of that scope is paramount. “Since a project schedule is closely tied to the delivery time line and the scope, a little variation in the scope can affect delivery and in turn affect the success of the project” (Suresh, 2005). Underestimating manpower for a project can lead to a lower and more attractive price to the consumer in the contract plus help to secure the contract. On the opposite side of the argument, one has to be careful to not underestimate too much because it will lead to the contract not being fulfilled, increase in costs on the provider’s end (determined along the way), or defects in workmanship because the jobs are not being completed correctly. All the before mentioned problems were seen in the scenario with Span Systems and C-S because of Span Systems error in underestimating the personnel requirement to meet the demands and deadlines of the initial contract. Moving forward, we will now look at the dispute resolution portion of the contract.
Dispute Resolutions – Ahmed Elsayed
Alternative Dispute Resolution (ADR) represents a variety of processes through which potential litigants may resolve disputes. Many disputes involve people who have known each other for some time, like neighbors, relatives, acquaintances, coworkers, or friends.
Advantages of using ADR:
Save Time: A dispute often can be settled or decided much sooner with ADR; often in a matter of months, even weeks, while bringing a lawsuit to trial can take a year or more.
Save Money: When cases are resolved earlier through ADR, the parties may save some of the money they would have spent on attorney fees, court costs, and experts’ fees.
Increase Control over the Process and the Outcome: In ADR, parties typically play a greater role in shaping both the process and its outcome. In most ADR processes, parties have more opportunity to tell their side of the story than they do at trial. Some ADR processes, such as mediation, allow the parties to fashion creative resolutions that are not available in a trial. Other ADR processes, such as arbitration, allow the parties to choose an expert in a particular field to decide the dispute.
Preserve Relationships: ADR can be a less adversarial and hostile way to resolve a dispute. For example, an experienced mediator can help the parties effectively communicate their needs and point of view to the other side. This can be an important advantage where the parties have a relationship to preserve.
Increase Satisfaction: In a trial, there is typically a winner and a loser. The loser is not likely to be happy, and even the winner may not be completely satisfied with the outcome. ADR can help the parties find win-win solutions and achieve their real goals. This, along with all ADR’s other potential advantages, may increase the parties’ overall satisfaction with both the dispute resolution process and the outcome.
The current contract between Span Systems and Citizen-Schwartz is written to cover a one-year time frame. Citizen-Schwartz AGE user and system requirements have grown, especially in the software arena. The original contract should have addressed “out of the ordinary” changes, but it did not. Span’s Change Management office is responsible for reviewing, approving and scheduling software changes. When Citizen-S began requesting major software changes, Change Management should have escalated Citizen-S’ requests to upper management for disapproval.
Terms for “out of the ordinary” additions and changes needed to be negotiated before Citizen-S’ requests. In the beginning, almost to a fault, Span placed more priority on meeting milestones and less on quality control. In an effort to reduce conflict and come to amicable terms, Span will suggest a proactive approach to resolution. Span is looking at future business opportunities with e-CRM. Citizen-S needs to be convinced that Span will fulfill its end of the contract.
Conclusion – Laura Kuderick
References
Contract and Creation Management Simulation. (2006). University of Phoenix Online rEsource. Retrieved on May 13, 2007 from:
Lax, Alexandra. (June 1, 2006) WEX Contracts Overview. Cornell School of Law webpage. Retrieved 5/11/07 from http://www.law.cornell.edu/wex/index.php/Contracts
Office of Procurement and Assistance Management. Contract Performance and Completion. Department of Energy website. Retrieved 5/11/07 from http://professionals.pr.doe.gov/ma5/MA-5Web.nsf/WebPages/Performance+and+Payment?OpenDocument
Reed, Lee O., Shedd, Peter J., Morehead, Jere W., Corley, Robert N.(2005) The Legal and Regulatory Environment of Business. The McGraw-Hill Companies N.Y. New York. University of Phoenix resource page, Retrieved 4/30/07
Suresh, Babu. (2005) Scope Creep Management. Project Perfect. Retrieved on May 13, 2007 from:
