Customer and supplier perspectives on contracting for GIS services

Schedule
The schedule in a conversion contract should define not only the starting and ending dates for the services but all of the key interim milestones as well. The schedule should address the timing of performance by both the supplier as well as the customer. Some key items that should be included are: specification and model development, source provision, pilot or prototype delivery, interim batch deliveries and final delivery and timing of acceptance.

Buver’s Perspective - Typically, the customer will have several major concerns related to the schedule for the project. It’s important for the customer to know when final product will be flowing back, so that they can plan and schedule their own internal resources to veri~ the quality of the product and to deploy the system within the organization. The sooner the final data is delivered back to the buyer, the sooner the organization can begin to get the benefits from the system. This in and of itself can put significant pressure on accelerating the schedule as much as possible.

Another important issue that relates to schedule is the credibility of the conversion project and its manager within the buyer’s organization. If key dates are consistently missed, and the schedule keeps slipping accordingly, then the project will lose credibility. This will result in other people and groups within the organization being less receptive to the potential benefits that the project can ultimately provide. Upper management support can also quickly fade if schedule creep occurs.

Additionally, there is an important relationship between posting backlog and the conversion schedule. In most cases the customer’s records are “frozen” during conversion, and the longer the conversion takes, the greater the posting backlog that will build up. Overcoming a large posting backlog can be a significant challenge to the project’s resources.

Sutmlier’s Perspective - Its very important that the conversion vendor have an opportunity for input into the conversion schedule, since they have such a direct impact on it and are also directly impacted by it. The supplier will want the customer to realize that in many respects, the pilot is the most difficult portion of the project, and needs to be allocated an appropriate amount of time. The supplier’s ability to deliver will also grow significantly throughout the life of the project, as their process becomes more refined and their personnel become more proficient with the project specifics. The project will fail against the schedule if this ramp is not taken into account.

The supplier also needs some things from the customer in order to do the work. Before any real progress can be made, the project specifications and data model need to be defined and finalized. The vendor is also dependent on the buyer for a consistent stream of source documents and data, since in these types of projects, the customer is also the supplier of “raw material” to the project. A well-planned conversion schedule will take these considerations into account.

Specific Contracting Mechanism - The following paragraphs addressing project schedule are taken from the contract for conversion between MidAmerican Energy Corporation and Intelligraphics International, A Division of ASI.

In their proposal, the supplier shall provide an overall conversion schedule that identifies the following milestones for the designated conversion area:

l Initial release of source materials
Initial completed incremental delivery
Final completed incremental delivery
Conclusion of the acceptance period

In addition, information regarding the proposed staffing levels for the project shall be provided. Upon completion of the first incremental delivery and prior to subsequent deliveries to the customer, the supplier shall provide a Detailed Delivery Schedule for the conversion area. This schedule shall include the expected total number of workset deliveries, expected units per delivery and the expected dates of delivery of each workset. The schedule shall also include a delivery mid-point date with the expected number of units delivered. This date will be used to determine schedule incentives and penalties. Schedule incentives or penalties will be implemented based on the supplier’s ability to meet or exceed scheduled conversion deliveries. Each designated conversion area will have two key performance dates: the expected delivery mid-point, as measured in the expected number of units to be converted, and the final completion date.

On the delivery mid-point date and the final completion date, the number of units delivered on-site to the customer will be compared against the targeted quantities identified in the Detailed Delivery Schedule. Rewards or incentives will be implemented according to (a table in the contract) The milestone schedule delivered by the supplier as described above is reviewed by the customer and refined until mutually agreeable. Staffing levels are included as one measure of the supplier’s commitment to the level of resources to be dedicated to the job.

The Detailed Delivery Schedule is provided based on experience gained in the pilot, so it is as accurate as possible. It must, however, work within the context of the previously committed to milestone schedule.

The level of reward or incentive as described above can certainly vary. The important point is that two key performance milestones are established (the schedule midpoint and end date) to monitor the supplier’s performance. This provides enough measurement ability as well as some flexibility as the project progresses.