One of the primary functions of the outsourcing contract is to describe what will happen during the life of the project. Most outsourcing transactions last for many years and in any complex agreement over this length of time the services will evolve, as changes occur in requirements, technology and the parties’ businesses.

Obvious though it may be, it bears repeating that the contract should always reflect what the parties have agreed. That means not just on day one, but throughout the life of the relationship. A contract which is put in a drawer and forgotten about will quickly become obsolete. If the parties agreed x when the contract was signed but have since decided they want y, this may be the right answer but chances are it will not be enforceable unless the documents have been revised accordingly. 

This is the primary function of change management.

Handled correctly, change management will ensure that changes are documented, agreed and implemented coherently and with minimal risk. Handled incorrectly, suppliers will deliver work which the customer will not pay for, or the customer will pay more than budgeted for work which may not even meet its requirements.

Worse, both parties risk depriving themselves of contractual remedies which were meticulously negotiated over many months before contracts were signed, only to be thrown away as a result of ‘agreements on the ground’ which are not properly thought through and documented.

Change management itself is relatively simple. It usually requires a written request; detailed proposals in response about the impact on cost, timelines and services levels; periods for review and refinement; and finally, documented authorisation.

From the customer’s perspective, the most important points are to have a clearly documented scope of work (because vague specifications lead to unbudgeted cost) and agreement on how changes are priced, ideally based on previously agreed metrics (because negotiating new rates with an incumbent supplier who effectively has a monopoly is not good business).

For suppliers, the key is who pays for administering the process. I will explore this last point in a future post.