SDPM - Lecture 10 - Contract management
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SDPM - Lecture 10 - Contract management Presentation Transcript

  • 1. Leiden Institute of Advanced Computer Science System’s Development and Project Management – Contract management Prof. Dr. Thomas Bäck 1
  • 2. Leiden Institute of Advanced Computer ScienceOutsourcing Benefits: Remaining risks: !   Potential time reduction !   Outside transfer of !   Cost savings – expertise economies of scale !   Loss of control over !   Risk reduction future development !   External expertise: !   Compromise of !  Specialized developers confidential information !  Library of resuable code !   Loss of progress visibility and control 2
  • 3. Leiden Institute of Advanced Computer ScienceOutsourcing (cont‘d) !   Management plan incl. risk management !   Contract management !   Regular vendor communications !   Count on using some of your own technical resources !   Be leery of unstable requirements !   Retain sufficient control to pull work back in- house if needed !   Avoid double standards 3
  • 4. Leiden Institute of Advanced Computer ScienceOffshore outsourcing !   Communication !  Language !  Problem of lines and bandwidth !   Time differences !   Travel time and expenses !   Characteristics of vendors’ country !  Copyrights/patents/intellectual property laws 4
  • 5. Leiden Institute of Advanced Computer ScienceAcquiring software from external supplier This could be: !   A bespoke system - created specially for the customer !   Off-the-shelf - bought ‘as is’ !   Customized off-the-shelf (COTS) - a core system is customized to meet needs of a particular customer 5
  • 6. Leiden Institute of Advanced Computer SciencePayment methods !   Time and materials contracts !   Fixed price contracts !   Fixed price per delivered unit Note difference between goods and services Often license to use software is bought rather than the software itself 6
  • 7. Leiden Institute of Advanced Computer ScienceTime and materials contracts Advantages to customer !   Easy to change requirements !   Lack of price pressure can assist product quality !   Preliminary estimate of overall cost 7
  • 8. Leiden Institute of Advanced Computer ScienceTime and materials contracts (cont’d) Disadvantages !   Customer liability - the customer absorbs all the risk associated with poorly defined or changing requirements !   Lack of incentive for supplier to be cost- effective 8
  • 9. Leiden Institute of Advanced Computer ScienceFixed price contracts Advantages to customer !   Known expenditure !   Supplier motivated to be cost-effective 9
  • 10. Leiden Institute of Advanced Computer ScienceFixed price contracts (cont’d) Disadvantages !   Supplier will increase price to meet contingencies !   Difficult to modify requirements !   Upward pressure on the cost of changes !   Threat to system quality 10
  • 11. Leiden Institute of Advanced Computer ScienceFixed price per unit delivered D esign   Implementation   FP  count   Total  cost/FP   cost/FP   cost/FP   to  2,000   $242   $725   $967   2,001-­‐  2,500   $255   $764   $1,019   2,501-­‐3,000   $265   $793   $1,058   3,001-­‐3,500   $274   $820   $1,094   3,501-­‐4,000   $284   $850   $1,134   11
  • 12. Leiden Institute of Advanced Computer ScienceFixed price/unit example !   Estimated system size 2,600 FPs !   Price !  2000 FPs x $967 plus !  500 FPs x $1,019 plus !  100 FPs x $1,058 !  i.e. $2,549,300 !   What would be charged for 3,200 FPs? 12
  • 13. Leiden Institute of Advanced Computer ScienceFixed price/unit contracts Advantages for customer !   Customer understanding of how price is calculated !   Comparability between different pricing schedules !   Emerging functionality can be accounted for !   Supplier incentive to be cost-effective !   Life cycle range 13
  • 14. Leiden Institute of Advanced Computer ScienceFixed price/unit contracts (cont’d) Disadvantages !   Difficulties with software size measurement - may need independent FP counter !   Changing (as opposed to new) requirements: how do you charge? 14
  • 15. Leiden Institute of Advanced Computer ScienceThe tendering process !   Open tendering !  Any supplier can bid in response to the invitation to tender !  All tenders must be evaluated in the same way !  Government bodies may have to do this by local/ international law, e.g. GATT (UNO, General Agreement on Tariffs and Trade) 15
  • 16. Leiden Institute of Advanced Computer ScienceThe tendering process (cont’d) !   Restricted tendering process !  Bids only from those specifically invited !  Can reduce suppliers being considered at any stage !   Negotiated procedure !  Negotiate with one supplier, e.g. for extensions to software already supplied 16
  • 17. Leiden Institute of Advanced Computer ScienceStages in contract placement Requirements analysis Evaluation plan Invitation to tender Evaluation of proposals 17
  • 18. Leiden Institute of Advanced Computer ScienceRequirements document !   Introduction !   Description of existing system and current environment !   Future strategy or plans !   System requirements !  Mandatory/desirable features !   Deadlines !   Additional information required from bidders 18
  • 19. Leiden Institute of Advanced Computer ScienceRequirements document (cont’d) !   Requirements will include !  Functions in software, with necessary inputs and outputs !  Standards to be adhered to !  Other applications with which software is to be compatible !  Quality requirements, e.g. response times 19
  • 20. Leiden Institute of Advanced Computer ScienceEvaluation plan !   How are proposals to be evaluated? !   Methods could include: !  Reading proposals !  Interviews !  Demonstrations !  Site visits !  Practical tests 20
  • 21. Leiden Institute of Advanced Computer ScienceEvaluation plan (cont’d) !   Need to assess value for money for each desirable feature !   Example: !  Feeder file saves data input !  4 hours a month saved !  Cost of data entry clerk £20 an hour !  System to be used for 4 year !  If cost of feature £1,000, would it be worth it? 21
  • 22. Leiden Institute of Advanced Computer ScienceInvitation to tender (ITT) !   Note that bidder is making an offer in response to ITT !   Acceptance of offer creates a contract !   Customer may need further information !   Problem of different technical solutions to the same problem 22
  • 23. Leiden Institute of Advanced Computer ScienceMemoranda of agreement (MoA) !   Customer asks for technical proposals !   Technical proposals are examined and discussed !   Agreed technical solution in MoA !   Tenders are then requested from suppliers based in MoA !   Tenders judged on price !   Fee could be paid for technical proposals by customer 23
  • 24. Leiden Institute of Advanced Computer ScienceEvaluation of proposals !   Management considerations: !  Vendor ability to meet budget and schedule commitments !  Project management capabilities !  Confidentiality issues, e.g. serving competitors !  Supply of product support 24
  • 25. Leiden Institute of Advanced Computer ScienceEvaluation of proposals (cont‘d) !   Technical considerations: !  Evaluation of software-development capability !  Expertise in application area and implementation environment !  Support of further enhancements !   General considerations: !  Financial stability !  Contract development as primary line of business 25
  • 26. Leiden Institute of Advanced Computer ScienceHow would you evaluate the following? !   Usability of an existing package !   Usability of an application yet to be built !   Maintenance costs of hardware !   Time taken to respond to requests for software support !   Training 26
  • 27. Leiden Institute of Advanced Computer ScienceTypical contract terms !   Definitions !   Form of agreement !  Sale/lease/license !   Goods and services to be supplied !   Environment – defining responsibilities !   Customer commitments !   Standards and acceptance procedures !   Timetable !   Price and payment method 27
  • 28. Leiden Institute of Advanced Computer ScienceContract management !   Contracts should include agreement about how customer/supplier relationship is to be managed, e.g. !  Decision points - could be linked to payment !  Quality reviews !  Changes to requirements 28
  • 29. Leiden Institute of Advanced Computer Science This is the End ! Thank you ! 29