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    Vân Hồ
    Writing good contracts is increasingly important for companies to manage risk and improve outcomes. Poorly specified statements of work and service level agreements can lead to higher prices and non-performance issues. To write better contracts, companies should define objectives, link payments to performance, anticipate changes, and specify standards, milestones and governance. Following these rules when drafting contracts can help companies avoid issues down the line.

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    Writing good contracts is increasingly important for companies to manage risk and improve outcomes. Poorly specified statements of work and service level agreements can lead to higher prices and non-performance issues. To write better contracts, companies should define objectives, link payments to performance, anticipate changes, and specify standards, milestones and governance. Following these rules when drafting contracts can help companies avoid issues down the line.

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    Writing good contracts is increasingly important for companies to manage risk and improve outcomes. Poorly specified statements of work and service level agreements can lead to higher prices and non-performance issues. To write better contracts, companies should define objectives, link payments to performance, anticipate changes, and specify standards, milestones and governance. Following these rules when drafting contracts can help companies avoid issues down the line.

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    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
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    12 views3 pages

    Reading 4

    Uploaded by

    Vân Hồ
    Writing good contracts is increasingly important for companies to manage risk and improve outcomes. Poorly specified statements of work and service level agreements can lead to higher prices and non-performance issues. To write better contracts, companies should define objectives, link payments to performance, anticipate changes, and specify standards, milestones and governance. Following these rules when drafting contracts can help companies avoid issues down the line.

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    of 3

    Writing Good Contracts Matters a

    LOT!
    I have been having a lot of interesting discussions recently with both
    procurement and legal executives who are increasingly concerned with the
    state of their contract management processes. This is occurring for several
    reasons.

    1. The exposure of many companies to greater risk is heightening the focus


    on contracts.
    2. The need to write better statements of work (SOW’s) and Service Level
    Agreements (SLA’s) is recognized as key to improved outcomes. You get
    what you ask for. Don’t expect platinum service if you specified silver.
    3. As Tom Linton stated in a recent Procurement Leaders interviews,
    PRICE = SPECIFICATION. You can directly throttle the price of a
    product or service by limiting it’s specification, or alternatively, prices
    can be allowed to escalate if proper specifications are not effectively
    collected and identified ahead of time.
    4. Managers recognize that contracts, once written, become literally filed
    away until something bad happens. Contracts should instead be a living
    document, as things will change, and measurements need to be
    embedded in them that allow individuals to understand if the
    relationship is going on track or not. Of course, if you aren’t measuring
    something, than you have no leg to stand on if things go wrong and
    there’s nothing in the contract that says anything about how to handle
    unexpected issues. There should at least be an agreed on procedure to
    deal with unexpected surprises.
    5. Litigation is escalating. More companies are seeing non-performance
    issues arise, and are going back to their contracts. Intellectual property
    is at the top of the list. It costs a lot more to get out of trouble once
    you’re in it, then to spend the time earlier and write a better contract.
    To become better prepared to a) write better contracts, and b) manage them
    appropriately once they are written, Paul Humbert and Robert Mastice have
    developed a great list of simple rules to follow in preparing a SOW and a
    contract. Here they are. Additional insights can be gleaned in their book
    “Contract and Risk Management for Supply Chain Professionals”.

    Define what is to be performed


    Learn from and do not repeat mistakes
    Link payents to performance or progress
    Develop a well-organized table of contents
    Clearly specify the objectives to be achieved
    Anticipate changes in needs or circumstances and decide how these will
    be addressed.
    Seek input from the right people at the right time
    Specify the project plan, schedules and milestones
    Specify where the deliverables will be performed
    Avoid making any unintended (implied) warranties
    Specify the standards of performance requirements
    Specify the applicable testing or acceptance criteria
    Avoid incorrect, inconsistent or contradictory statements
    Develop an order of precedence for the contract documents
    Anticipate the need for interpretation and who’s judgment will govern

    That’s it! If you follow these rules, you probably won’t get into TOO much
    trouble…

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