Procurement & Contract for IT Projects
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The document discusses modern procurement in IT projects, examining expectations between clients and vendors and the importance of proper contract management. It emphasizes valuing relationships and collaboration over strict adherence to processes, while also addressing risk management and performance metrics tied to project success. Key takeaways include the shift toward agile models and the need for flexible pricing that aligns with both parties' goals.
Procurement & Contract for IT Projects
- 1. Modern Procurement: Beyond IT Project Contract Ray Rizaldy - GITS.ID
- 2. I am Ray I might be biased ● Co-founder of GITS.ID - a Google Certified Agency for Apps Development ● Developer ● Project Manager ● Salesman
- 3. Which sides are you? Clients Users Sponsors Finance - Procurements IT PMO Vendors The Salesman The “Expert” Project Manager The army that will involved later
- 4. If you are a client, what do you expect from your vendors?
- 5. If you are a vendor, what do you expect from your client?
- 6. What clients want from their vendors? Source: SoDA Forrester Research - Global Digital Outlook 2019
- 7. Hypotheses: Procurement Cycle Time > Development Time
- 8. Procurement KPI ● Procurement ROI & Benefits ● Supplier Defect Rate ● Rate of Emergency Purchase ● Supplier Lead Time ● Purchase Order Cycle Time ● Vendor Availability ● Price Competitiveness
- 9. Manifesto for Agile Software Development We are uncovering better ways of developing software by doing it and helping others do it. Through this work we have come to value: Individuals and interactions over processes and tools Working software over comprehensive documentation Customer collaboration over contract negotiation Responding to change over following a plan That is, while there is value in the items on the right, we value the items on the left more. BUT...
- 10. ...There’s Too Much at Stake to work with just verbal agreement Does the right contract guarantee success? No. But it makes life easier
- 11. Purpose of Contract ● Drive both parties to achieve the project goals ● Set basic playing rules ● Risk management and reflect trust between parties
- 12. ● Set the incentive right. What motivates the vendor (and also stakeholder) ● Rewards and penalties can drive certain behaviour ● Be clear with what your goals, KPI, OKR, metrics. Focus on that without getting too much on details Contract aligns stakeholders to achieve goals
- 13. Set basic playing rule ● Client-Vendor is not competitive game ● The process ● Who’s in charge
- 14. Risk Management & Trust Reflection ● What happens if something goes wrong? Mitigate risk as often as possible ● Who pays if project gone south? ● Who benefits if the project is finished earlier
- 15. Contract Forms Fix-Contract Time & Material Agile-Contract?
- 16. Hypotheses: Stakeholders are happier with Time & Material > Fix-Contract
- 17. Fix-Contract The problem is not the fix budget, or fix time. The problem is fix-scope ● Fix is not fixed ● My fixed is not your fixed ● Obvious is not that obvious Both parties tend to hesitate to confirm the scope
- 18. MVP another point of view
- 19. What information should included in contract? ● Objective of the project ● Outline of the project structure ● Key personnel ● Payment & billing, bonuses, penalty ● Termination clause ● else?
- 20. Detailed “Requirement” are actually solution design, it’s responsibility of solution designer (vendors) - Mary Poppendieck, 2011
- 21. Andy Grove Modes of Control
- 22. Key Takeaway ● Clients already seeking for better pricing models & more flexible/nimble working models -> more opportunity to use agile ● Procurements have KPI for maximising ROI & benefits, usually it turns to number of features -> Focus on project objective (HEART metric might be helpful) ● Don’t just see the price/benefits, partners with vendors who has the same value with your company
- 23. Further reading ● http://agilecontracts.org ● http://www.flexiblecontracts.com ● Peter Steven, Scrum Breakfast
- 24. Thank You! www.gits.id @gitscreative gitscreative