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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
he
co
ntr
act
cla
use
s
sta
nd
ard
or
we
re t
he
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
fica
lly
rela
ted
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