Consultantsby Peter Parkes
Contracting the consultant
Once you have defined your outcomes and selected a consultant, you need to contract with them to do the work. Some form of agreement is required, even for small pieces of work.
For smaller pieces of work, you may run the entire engagement process yourself. For larger projects, you will probably be working together with your purchasing department and they should have procedures and sample agreements.
You will find that much of the material you require for the contract agreement will already have been prepared during the selection and proposal process. An example of this is the brief that describes the situation and desired outcomes, which the consultant will clearly need in order to prepare a proposal.
Statement of Work
One of the first things to do is discuss and agree any changes to the initial brief used during the tendering process. This should then be expanded so that it becomes a full Statement of Work (SoW), which can be attached as a schedule to the contract agreement.
The SoW must be signed off by anybody within the organisation who has a significant stake in the outcomes.
The SoW could include any or all of the elements suggested below.
- A summary of the problem to be solved
- A statement of the required outcomes
- A definition of what the project will be when it is complete
- A statement of the budgetary guidelines and any restrictions that must be adhered to
- A tentative project plan, with timescales – creating a detailed plan may well be one of the first jobs of the consultant. In this case you will have phases, of which perhaps only the first can be defined in any detail, since the content of the remaining phases will depend on the outcome of earlier ones.
- Any deadlines that must be met – for example, due to incoming regulations
- A list of the resources that are to be made available to the consultant, such as office space, computers, staff, access to senior people and customers, and so on
- A list of any restrictions and site rules that apply, such as hard hat rules on construction sites or which specific customers or suppliers can be contacted for information
- A statement of the signoff procedure to follow if the consultant will need to purchase anything for the project
- If more than one consultant is to be involved, what is the likely manning level for the project? How will this build up and decrease during the life of the project?
- What are the acceptance procedures at each milestone?
- What are the remedial procedures for rework or error correction?
- Who is responsible for which tasks? In other words, what are the boundaries of responsibility?
- A statement concerning the level of consultant staff, in terms of experience and skill sets, that is acceptable – you may even specify or veto certain consultants from the consulting company’s workforce.
- The channels of communication to be used
- How will you handle scope creep? This is where the client asks for little extra bits and changes to the scope of work. A system for variation orders needs to be defined.
- The reporting requirements of both parties, so that both are kept officially informed of events
- It is worth including contingency plans in case the project looks as though it will fail, or go way over budget, or way over time. What happens then?
The agreement itself will probably start from a template, which will then be modified to suit this particular engagement. If you don’t have a template, the consultant should certainly have one available.
The amount of legal help you get in will be determined by your own familiarity with legal documents of this nature, the ready availability of legal help (for example, an in-house lawyer) and also the level of risk inherent in the whole project.
- A very small project, such as a one-day training course to be delivered by a consultant, could be contracted simply via an email including some standard terms and conditions of sale and supported by a purchase order from you, the client.
- A larger project will clearly require a lot more consideration and in this case you will need to find out your organisation’s standard approach.
An agreement could include any or all of the following elements and is a much more general document than the SoW. Indeed, many companies have an ongoing agreement with a consultant, to which they then just add a separate SoW for each new piece of work.
- Who is contracting with whom? What are the legal entities involved?
- Confidentiality requirements for both parties
- Payment terms and amounts – for example, what triggers each payment? Is it an accepted milestone or is it a calendar date? These may be specified in a separate schedule or even incorporated in the SoW.
- Dispute procedure should a disagreement arise
- The legal system under which disputes would be adjudicated
- Agreement termination conditions, such as breach of contract
- Who owns any intellectual property created during the engagement?
- What are the rules around expenses incurred, such as travel and hotel costs, and what is considered reasonable? This item may also be in the SoW rather than the agreement.
- Terms around the situation of late or non delivery. This may include damages payments, payments to another consultancy to do the remedial work and so on.
- An overview of the acceptance process, which is then defined in detail in the SoW