7/29/2019 08 Implementation Contracts and Warranties
1/19
CONTRACTS AND
WARRANTIESBSMH 3093 HUMAN RESOURCEINFORMATION SYSTEM
7/29/2019 08 Implementation Contracts and Warranties
2/19
Objectives
At the end of this topic, you should be able to:
discuss the role of contracts;
explain the service contracts;
discuss the financial options in service contracts;and
determine the provisions for an adequate softwarewarranty.
7/29/2019 08 Implementation Contracts and Warranties
3/19
7/29/2019 08 Implementation Contracts and Warranties
4/19
The reasons why we need a goodcontract are (Meade, 2003)
It tells what the software is going to do
It specifies what the product is going to cost
It spells out the support that the client will receive
It spells out any exceptions or special requests the client may havemade
It gives the client a basis for a formal grievance
7/29/2019 08 Implementation Contracts and Warranties
5/19
Contracts Contract is a formal
written agreementbetween twopeople/organizations oncertain business
agreements (Ceriello &Freeman, 1991).
It is a binding agreementbetween two or moreparties for performing, orrefraining fromperforming, somespecified act (s) inexchange for lawful
consideration.
7/29/2019 08 Implementation Contracts and Warranties
6/19
The main role of contracts
it clarifies responsibilities and limits for individualsor entities involved in a business relationships.
some rules apply:
1. the contract cannot encompass all eventualities, butit should cover the major risks involved and clearlyset forth the intentions of both parties;
2. the contract should be written, executed and filed;
and3. the project team should use legal counsel indeveloping and negotiating contracts because of thehigh value of the software purchase and the evenhigher cost of failure.
7/29/2019 08 Implementation Contracts and Warranties
7/19
Types of clauses in contracts
indicate the overall
business relationshipandGeneralclauses
cover the objectives,responsibilities, andlimits of the project.
specificclauses
7/29/2019 08 Implementation Contracts and Warranties
8/19
Software Contracts
A typical software contract must deal with avariety of interrelated issues such as the qualityof the system, timeliness of delivery, the effortand cost of the project, the contract payment andthe post delivery of software support.
It is not an actual purchase of software but more
to the license of using a certain number of copiesat a certain number of locations.
7/29/2019 08 Implementation Contracts and Warranties
9/19
Software Contracts: Key negotiating
points1. Defining clearly the functions of software,2. Defining the operating characteristics of
software,
3. Software vendors may not have the requiredassets and resources, and
4. The risks to consider when buying HRISsoftware (for example, non-performancesoftware package, vendor solvency,infringement, progress payments, productquality, excessive resource usage, and staffqualifications.
7/29/2019 08 Implementation Contracts and Warranties
10/19
Issues relating to HRIS contracts
Negotiating with theconsultants
Financial options in
service contractsa) Fixed-price contract
b) Time-and-materialscontract
c) Cost reimbursementcontract
d) Retainer contract
7/29/2019 08 Implementation Contracts and Warranties
11/19
Fixed-price contract
the simplest and classic contract
The consultant/service provider and client(project team) must agree on the price to be paid
for the HRIS project. This price cannot be changed unless the scope of
work is changed, and the consultant/serviceprovider is entitled to payment only if thecontract is completed successfully
7/29/2019 08 Implementation Contracts and Warranties
12/19
Time-and-materials contract
The client (project team) and consultant/serviceprovider agree on the amount to be paid forHRIS services.
The total amount paid depends on the numberof hours worked plus material at cost.
fees-and-expenses contract.
used when it is not possible to estimate theextent or duration of the work or to anticipatethe total costs.
7/29/2019 08 Implementation Contracts and Warranties
13/19
Cost reimbursement contract
Has some characteristics similar to both time-and-materials and fixed-price contracts
The consultant/service provider is reimbursedfor the costs it actually incurs.
A total cost estimate will be determined at the
beginning of the cost-reimbursement contract,to allow the project team to budget for the HRISproject and to establish a maximum amount forreimbursement.
7/29/2019 08 Implementation Contracts and Warranties
14/19
Retainer contract
used when the project duration exceeds sixmonth.
The consultant/service provider will fix number
of days per month in order to charge a lower rateover the period.
The project team needs to guarantee that the
consultant /service provider will remain on theproject throughout the period.
7/29/2019 08 Implementation Contracts and Warranties
15/19
Factors in choosing a financial
arrangement for consulting services
High
Retainer
Cost
Reimbursem
ent
Project
Uncertainty
Low
Fixed Price Time and Materials
Low Medium
Risk
High
Figure 5.1 Factors
7/29/2019 08 Implementation Contracts and Warranties
16/19
7/29/2019 08 Implementation Contracts and Warranties
17/19
Warranties
Refers to a contract thatprotects the client in theevent of certain types ofproblems, defects, or
deficiencies in theproduct or serviceprovided.
describes the conditionsunder, and period during,which the vendor willrepair, replace, orcompensate for thedefective item withoutcost to the client.
7/29/2019 08 Implementation Contracts and Warranties
18/19
Some of the provisions for a good software
warranty (Ceriello & Freeman, 1991, p.246)
The vendor agrees to replace defective disks or tapeson which their software is shipped.
The vendor guarantees to fix any bugs that occur
within a given time period. The vendor will make updates and revisions
available at nominal or no cost. The vendor states in writing that the HRIS software
will run in the clients computing environment. The vendor warrants that the software conforms to
the vendors own specifications for performancecriteria, such as run time, response time, andmaximum downtime.
7/29/2019 08 Implementation Contracts and Warranties
19/19
QUESTIONS???
Top Related