“A beautiful thing never gives so much pain as does failing to hear and see it” – Michelangelo
- IT projects and outsources are diverse, complex, and risk-intensive – some problematic contracts are inevitable.
- Today’s clients are knowledgeable, sophisticated and demanding with their IT requirements; contracts are increasingly onerous – delivery and risk management excellence is essential if the outcomes expected by the client and the supplier are to be met.
- Delivery distress is rarely caused by a single factor; culpability often resides with the combined failings of the supplier’s line, commercial, project or service management, and those of the client.
- People try to resolve difficulties themselves, regardless of how supportive an enterprise’s culture is; they leave it too late before seeking help – policies and processes in the management system need to encourage openness.
- Without good early warning of emerging difficulty across an enterprise’s portfolio of contracts there will be many expensive surprises; use experienced senior IT delivery or business leaders – ‘poachers turned gamekeepers’ – to operate effective independent early warning mechanisms and initiate corrective action.
- Macro and micro indicators of delivery distress are numerous; some common ones are:
- Poor external governance, a sour client relationship, poor chemistry between client and supplier individuals, or a ‘management for protection’ rather than ‘management for success’ ethos.
- Change in the client’s business case and need; e.g. a significant downturn in the client’s business, financial position, share price or change in strategy.
- Poor internal governance within the supplier, poor line and project/service communication, and poor or fragmented internal alignment with the contract.
- Arguments with the client over contract interpretation; lack of timely convergence in negotiations on any commercial/contract items.
- Non-alignment of the supplier’s business units/departments involved in delivery to the common objectives for overall successful delivery; siloed behaviours driven by parochial agendas leads to frustration and resentments.
- Poor, ambiguous, disputed or absent agreed baseline project or service delivery or other contracted documentation (e.g. Requirement Specification, Design, Delivery Plan, Change process).
- Poor, incomplete, or short-term plan only; plan has unrealistic timescales, does not cover all contracted items, milestones, all client and subcontractor dependencies, or run to completion of the contract.
- Plan is highly complex, difficult to understand, or does not convey a clear delivery vision or approach through to contract completion; the financial forecast to completion will not be reliable.
- Team work activities do not align with activities set out in the Plan.
- Misplaced perpetual optimism and leadership denial of progress reality.
- Late, incomplete or poor quality deliverables, and frequent failure to achieve service levels or key performance indicators.
- Perpetual re-planning, frequent milestone slips and financial reforecasting.
- Milestones declared as complete when some contracted requirements for the milestone are outstanding – common, for example, on Transition completion on outsources.
- Confusion between Transition and Transformation.
- Absent or inadequate change control; there is no such thing as an IT contract where formally agreed changes between supplier and client are unnecessary.
- Failure to address the impact of missed client or subcontractor dependencies.
- Parking of difficult or disputed delivery or commercial issues by project or Service Management for later consideration ‘in the interest of continued progress’; this normally leads to a bigger surprise than the client or supplier expects.
- Poor delivery management of subcontractors to ensure their deliveries meet the overall project plan; unless you manage them, they will not deliver on time.
- Poor quality, incomplete or non-performant deliverables from subcontractors.
- Poor quantitative or metricated project/service management monitoring and control; weak development, test and defect tracking/control (for example).
- Subjective internal and/or external formal status reporting; delivery status is qualitative only and devoid of quantitative delivery metrics.
- Difficulty with solution architecture, products found not to be a good fit with the requirements, and absent consideration of non-functional requirements.
- Solution highly dependent on specialist niche product from a very small supplier and no alternative fall-back option has been considered.
- Retrospective application or attention to security, privacy or safety; these must be addressed and built in from the outset – they are very expensive to retrofit.
- Repetition of the same service problems and incidents; slow or absent root cause analysis and technical resolutions.
- Frequent replacement of delivery leadership by line management – a sign that line management motives and judgements need to be questioned.
- Throwing people at the problem – injection of large numbers of people to address an issue; costs rise but there is no guarantee the problem will be fixed any quicker.
- Team volatility; frequent organisational changes, turnover in key leadership roles and recurrent difficulty sourcing required skills to time and budget signal a high probability of on-going delivery distress.
- Low team morale and high staff voluntary attrition.
- Perpetually rising costs, work in progress (WIP), unpaid client invoices, evaporating financial contingency, continuous financial reforecasting, missed milestone payments and frequent payment of service penalties.
- Financial engineering on service contracts; the result is only viable if real actions are taken to deliver against the financial assumptions made, and that these actions are materially tracked to completion.
- Poor client feedback, client or end user dissatisfaction, frequent client escalations to line or executive leadership, and client correspondence signalling displeasure and/or asserting rights under the contract.
- The above is illustrative rather than exhaustive. The principles of the points apply equally regardless of whether delivery is from one location, multiple locations in the same territory or from multiple geographies; any one or combination of the indicators above raise should raise alertness to the potential for delivery distress.
- Always take decisive and definitive action to address early warning signs; if help is needed ask for it – asking for help demonstrates strength and maturity not failure.
- Never let difficulty fester without attention; unaddressed delivery distress will have painful financial and contractual consequences with potentially wider impact on the overall enterprise or business as well.