December 17, 2019 | Jamie Lohrungruang

Top 3 things you shouldn't forget in an IT consulting contract

Most IT consulting contracts typically include the scope of the service, high-level timeline, cost, payment terms, and general terms and conditions (T&Cs). However, including additional aspects into the contract can help prevent headaches down the time through the project lifecycle.

Potential Issue #1

I'm sure you have heard of the term "out of scope" when working with consulting companies. Most consultants are trained to examine changes and are extremely careful to agree with making those changes on their dime. Therefore, they may often say the changes are out of scope, or that they need to assess it to determine if it is in scope or out of scope. This is especially important on a fixed fee contract. But on a contract with a cap, this is also very important.

Potential Issue #2

What about dealing with a lousy IT consultant? No matter how good a consulting firm is, there are always instances where a couple of the consultants on the project are below par. There is no way that any company can guarantee that all its resources can provide excellent service. When you get to that situation, can you easily replace those consultants?

Potential Issue #3

What about travel costs? Do you see the fee for travel and think to yourself, they expensed first-class ticket and $100 dinner? Let's eliminate some of these potential issues before they even start.

So outside of the typical items you put on the contract, let's make sure you add the following language too (Note: the consulting company will negotiate these terms, so pick and choose what is more important to you and come to a middle ground with them).

Essence of the requirements - Add a condition about using a reasonable person standard to address the essence of the requirements in the contract. Not every little change is a change request. Most consultants are trained to manage the scope tightly. Often, every small change is considered a change request. You can lose sight of what the essence of the requirements is. For example, your consultant might have built something that he/she interpreted inaccurately. If you need him to make changes to correct his misinterpretation, that should not be a change request.

Replacement of resources - Put a clause similar to this on the contract: "Management, supervisory, or technical personnel committed to the Work performed under this Agreement shall not be removed or reassigned for the duration of the Work for a given Statement(s) of Work without prior notice to Client. The Client has the right to cause to reject specific personnel for any Work performed under this Agreement. The consultant shall provide the Client with an agreed-upon transition phase of at least one week for every one (1) month of service for each occurrence at no cost to the Client. If more than ten (10) percent of the Key Personnel are transitioned from a Statement of Work, Client will have the right to terminate the associated Statement of Work and this Agreement." The consulting firm will negotiate this, but this puts accountability on them to find the right resources to put on your project.

Travel Expenses - Make sure you add a clause regarding the travel expenses. If your company has an excellent travel policy, make sure they adhere to your travel policy. If you don't have one, set the expectations for what expenses are allowable and what is not. This way, you won't be surprised when you get the bill.

A tight contract will prove to be important for you when you hire an IT services firm. It provides a framework for the consulting firm, so their expectations are set early on. It also shows them that you are serious about the execution of the project and that you will stay engaged. This will help improve the partnership between you and the consulting firm.

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