In the world of project management and service-based businesses, we know a clearly defined agreement is essential to ensuring a project’s goals and outcomes are understood and successfully delivered.
Agreements form the backbone of any project or service being offered, by any business, from the get-go. Clear agreements enable all parties involved in the project to have a stronger understanding of what’s expected of them throughout the life of the project. And this alone can be invaluable.
Even as a project or service delivery kicks off and proceeds, unforeseen occurrences, which significantly affect the agreement’s conditions, may arise. And if things get really bad, there is a need for both parties to return to the negotiation table and make adjustments with the worst-case scenario being relationship breakdowns, legal intervention, and costly delays.
So, establishing a clear agreement from the start is the critical step in laying the path for success, although also having one that changes along with the ever-changing dynamics of a project. That’s even better!
Learnings from real world agreement failures
Let’s take a look at the Queensland Government’s contact with IMB.
In December 2007, IBM was hired by the Queensland Government to develop an internal Payroll Application specifically for the Queensland Health. IBM agreed with the Queensland Government that the completed project would be delivered by mid-2008 with a total costing of $6 million.
After breakdowns in the project schedule spanning several years, IBM announced that the project cost had escalated to $1.2 billion upon completion, 16,000 percent above the budget.
A review of the project showed that the Queensland Government did not communicate their full expectations of the project to IBM. And that IBM failed to review the contract details, hence the expected spike in implementation cost.
Of course, there are many unforeseen factors that can cause a project to blow out at this scale, but had the two parties had a better agreement established with clear deliverables and regular check-ins against the agreement, we can assume that Queensland Health and IBM could have mitigated these problems and changed the project’s outcome.
Another famous case where a poor agreement led to unfavourable outcomes was in America, between the US Navy and the Electronic Data Systems (EDS).
The US Navy had engaged EDS to provide voice, video, network, desktops, and system training for their personnel. In the case of Electronic Data Systems (EDS) and the US Navy, poor communications resulted in a failed project.
Four years after the project’s start, the EDS had lost $500 million dollars in assets because it failed to meet up with expectations on the project. The issue here is that EDS failed to grasp the full scope of the project before starting.
There were underlying details, which EDS failed to capture in their review, which led to unforeseen expenses and resulted in EDS absorbing the costs for tens of thousands in hardware changes.
The benefits of using Agreemi to create agreements
Gone are the days where agreements have to be long static documents filled with nothing but legal jargon, boring to read and really don’t help towards a good first impression.
From years of experience, we know that this manual approach to agreements and contracts when first onboarding clients, vendors, or new business partnerships leaves little wriggle room and does not always anticapte how projects change and grow in real time.
By using a platform like Agreemi, not only can you create and track your agreements and the milestones at any point in the agreement’s lifecycle, but your customers, vendors, business partners, and clients can too.
Agreemi also helps open and keep clear lines of communication with your clients surrounding the agreement you have created together, which is formidable when it comes to onboarding a client and starting off a project right from the start.
If your tool allows for flexibility in scope creeps and agreement changes like Agreemi does, it will give you and your clients the ability to mold your agreements as projects progress, helping to avoid project blow-outs, misunderstandings on roles and deliverables, and relationship breakdowns.
And if the project or contract is not able to be salvaged, you have full transparency through the Agreemi platform. Which gives you access to client communications, all approvals, and changes to the agreement within the platform.
Keep it stupidly simple (KISS!)
No matter the use, the importance of a simple and clear contract and agreement cannot be understated; and it should not be thrown to the side and not reviewed during its lifecycle.
An agreement should complement the work being delivered and allow for flexibility as the project progresses to help mitigate the risks of project failure. it should offer a point of connection between the parties involved, knowing that the agreement is there to have their backs when both need it.
Related: Why agreements should change as you do
