Consulting Contracts: Performance, Performance, Performance

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Many consulting engagements hinge on the terms of the contract you sign with your providers. Even if you find someone with the right skills and the personal fit for your project, signing a bad deal still imperils the relationship and your ultimate success.


Last week, we introduced you to the Guide to Effective Consultant Selection and Contracting from our partners at gantthead.com. The detailed 4-page document, which is available free to IT Business Edge members here in the IT Downloads library, offers a wealth of pointers on how to vet your needs and potential consulting candidates.


Today, let's look at some advice on how to craft the consulting contract once you have decided on a provider who best meets your needs. The guide includes 14 tips on negotiating the most effective consultant contract.


Tip #1: Don't use a vendor's standard contract, or sign an incomplete contract.


The "incomplete" contract warning probably falls into the "well, duh" category, but the warning to not simply sign a boilerplate contract merits consideration. Every project is a little different, and the demands of your business simply are not going to be exactly the same as anybody else's. Your service-level agreement (SLA) needs to be very specific to your circumstances, and it should be tied to the contract.


Plus, if a provider has a boilerplate contract, you can be sure that its terms favor the provider. That's just business.


Other pearls of wisdom included in the guidelines:


Include incentives along with penalties for going beyond requirements. Over-engineering is always a risk with any IT project, and it can be amplified in situations where folks are billing by the hour. At the very least, you need to protect yourself from the most obvious from of overrun: the engineer delivering functionality that you simply did not ask for.


Describe probationary period, and how contract will be terminated immediately without penalty to hiring organization if consultant fails to live up to expectations and performance levels. This one can be a little tricky, since the consultant (reasonably so) is going to want to be assured of revenue from the project, even if you decide to go another direction. Even in "at-will" arrangements, a post-notice period where the hiring organization must honor the contract is typical. So, you will need to make the performance expectations for a probationary period crystal clear, and measurable.


If working with a consulting group, require highest-level representatives appropriate to the project. Again, this one can be tricky. A consulting group might well just respond that all their team is of the "highest level" and that it will staff the project as it sees fit in order to meet your requirements and expectations (which, as we've said, should be very detailed). Still, it can't hurt to ask for veteran team leaders or PMs, if the project requires that level of sourcing.


The gantthead guidelines include a wealth of this kind of information. It's a great resource you should give a look.


If you are at the point of crafting an SLA for a project, you should also check out this SLA Template from our partners at Info~Tech Research Group. This document is specifically tailored to internal projects, but its outlines for deliverables and expectations are applicable to any initiative. After all, once you hire a contractor, they become part of the team.

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