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Help with a contract


NotVeryTechie

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Hi all

I hope someone can help me! I have an IT supplier building a database for us at the moment. This supplier has been tardy with the project and we are now running about 9 months behind schedule.

He is putting together a new contract for the job and has included many and varied safeguards for himself (e.g. if we ask for additional features they will be charged in addition to the agreed price, etc). But there is no safeguard at all for us. He could take another nine months to do the first task of the list, and there is nothing we can do about it.

Now, I know this kind of thing is very difficult in IT projects as delays can be due to clients not getting back with information, or various other things. So I want to be fair, but my boss is not going to sign that contract without some kind of safeguard in it for us.

Does anyone have any wording that can be used? And what kind of penalties would be fair?

We will be paying in monthly payments for the job, rather than half on signature, half on completion.

Hope you can help!!

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NotVeryTechie

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That is a very good point. Thank you again for all the input!

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Forum Editor

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are wary of penalty clauses because there may well be reasons beyond a contractor's control why a delay occurs. You acknowledge this possibility, and if such an arrangement isn't acceptable to your contractor a better way is probably to set out a payments schedule which allows for a fairly substantial sum to remain as a final payment.

In other words, weight the scales in your favour, so that you are always holding more than the value remaining in the contract for the contractor.

You obviously trust this man to deliver,what you need to do now is to give him the incentive to complete within an acceptable time frame.

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NotVeryTechie

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Thanks so much for the replies. I think some serious discussions will be needed at this stage and the project will have to be managed tightly from here on out. The only way I can see to do this is to tie payments to deliverables, so that we some way to 'incentivise' the contractor to get the work done on time.

This guy has worked with us on a previous project and his work is of a high standard, so we trust that he will do a good job. He has been expanding his business and I think things got away from him a bit.

On the issue of a financial penalty for late delivery, he is absolutely not willing to include this in a contract. I have been trying to find a wording for this that would include clauses like - if a delay is our fault it would not penalise him, and so on - but he is very worried about this kind of clause in the contract.

Thanks again for the help and advice
NotVeryTechie

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Forum Editor

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not to make regular monthly payments. That system removes a good deal of incentive as far as the contractor is concerned.

A contract that is already running nine months behind schedule is already in trouble, and some serious discussions need to take place between you and the contractor at this stage. I fail to see why it's necessary for the contractor to put together a new contract - was there not already a contract document in existence?

It's difficult for me, or anyone else, to comment on specifics because we don't have all the facts, but in general terms I think you'll need to tell this man that you are not prepared to make any further payments until you see some indication that the project is likely to be brought to completion at an early date. There's no need for a new contract, the one you have should be adequate - assuming you have one - and unless you have materially altered the project description it's perfectly reasonable for you to expect the work to be completed for the agreed sum as rapidly as possible.

Was there a specific time frame to completion included in the original contract, and if there was, has the contractor given you any reason why he hasn't complied with it?

If the facts are broadly as I've outlined, and if you haven't done anything to warrant a nine-month delay, you might want to consider writing to the contractor, telling him that at this juncture 'time is of the essence' as far as completion is concerned, and that you will make no payments until you have his written undertaking that he will complete by a specific date. Failure to complete by the agreed date should carry a financial penalty, and that would normally be set at a fixed amount for every day/week/month of overrun.

I can't advise in more detail because I don't have the necessary information. It sounds to me that the time has come for some plain speaking however.

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Chris the Ancient

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Glad to see that you're looking for a more robust system with payments by results!

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NotVeryTechie

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Thank you Forum Editor. We are now considering that the monthly payment option is just not going to work and that we need something tangible to sign off at each payment point. Otherwise there is no way to ensure that the project is moving forward.

Would still appreciate any advice you have!

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Forum Editor

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and I have to leave shortly, so please accept my apologies. I'll try again tomorrow.

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Forum Editor

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on a regular basis, and can help you with this, but I'm a bit pressed for time just now. I'll come back to your thread later tonight and offer advice if you still need it.

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NotVeryTechie

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Sorry Chris! I meant to thank you, not myself!

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NotVeryTechie

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Thank you NVT. We have worked with this supplier on a previous contract and he is very good, if a little slow. On this particular project he has had some business issues that got in the way and fell behind badly on timing. I have no doubt that he will do an excellent job.

We have agreed a cost for the job, but for cashflow reasons in both businesses have agreed to pay the amount divided into monthly payments, rather than just a few phased payments. I am not unhappy to go ahead, but I know that my manager is not going to sign the contract without some 'safeguard'for us, just to avoid another long delay in the implimentation. I just can't find any wording that an IT person would be prepared to include in a contract. I was hoping someone would have come across this somewhere before.

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