I’ve posted two sets of notes that deal with the unspoken assumptions that govern (or fail to govern) the relationship between a client and a consultant.

Put together, those two and this last set of clauses might constitute a Services Charter that formally documents the way in which Client and Consultant work together.

Better, I firmly believe, always to write these things down than deal with misunderstandings later. Misunderstandings do commercial damage.

Services Charter – 1

Services Charter – 2

Here’s a final set of clauses that such a charter might include::

Commercial Issues

Expenses

These are the expenses typically charged to clients:

• Travel costs to and from the client’s location
• Accommodation and all meals when the consultant stays overnight at or near the client’s location
• Per-diem allowances when these have not been included in the fees charged to the client. If per diem allowances are charged then meals are usually not charged.

Travel Time

Travel time to or from the client is usually charged by the PSO to clients if it exceeds two hours, whether on a working or non-working day.

Especially in the case of travel on non-working days, the PSO itself incurs costs, either directly as a consequence of additional payments made to consultants, or indirectly through offering time off in lieu.

Account Management

Account management is distinct from project management, and concerns the commercial relationship between the client and the PSO. Usually a salesman, sales account manager, and occasionally professional staff, a services manager or project manager from the PSO’s professional services team will be appointed to oversee the relationship between the client and the PSO.

Account management does not involve the provision of professional advice. Rather, an account manager is involved in commercial issues: fee negotiations, dispute resolution, payment reminders, quality issues, and so on. In general, account management can be distinguished from other project work in that it does not, of itself, add value to the project, and for that reason is not charged, but is seen as a cost of sale by the PSO.

Cancellations

The PSO is a commercial organisation that seeks to make reasonable profits from the deployment of professional staff. Fees charged for advice are calculated on the basis of an employee’s cost to the PSO, his or her ‘utilisation’ (this being the proportion of available time that is generally spent on fee-paid professional assignments) and the extent to which his or her time is invoiced. Professional services organisations are profitable when they are busy and loss-making when they are not. It is essential that the PSO should be able to plan the deployment of its staff, and this is why project plans for long-term projects, and weekly plans for staff performing ad-hoc assignments, are carefully prepared.

Cancellations seriously jeopardise this planning process and often have a direct effect on the PSO’s income. This is why cancellation with less than a week’s notice will usually incur a penalty of up to two-thirds of lost fee value if notice is given between one week and two days of an assignment (for example if notice is given on Monday of cancellation of Wednesday’s assignment), and of up to the entire lost fee value if notice is given with less than two days.

Sometimes it is the PSO who must cancel a planned meeting with the client, due to unforeseen circumstances, such as illness or accident. When this has a serious impact on the outcome of the project or assignment, and when contractual agreements stipulate, reasonable substitution, compensatory services or recompense of some kind is appropriate.

Commercial Issues

All commercial issues relating to the PSO’s professional work should be addressed to the PSO’s nominated project manager, services manager or account manager. As far as is possible it is our policy to distance our professional staff working on a client’s project or assignment from issues of payment, or price.

Issues Arising from Non-Payment

Clients’ payment terms are contractually defined, as are terms for delivery of services by the PSO. Both parties will act in good faith to deliver the defined services and to make payments according to terms. Where failure occurs on either side, a dispute arises, which both parties will attempt to resolve amicably.

The PSO reserves the right to withdraw additional services if payments are overdue, and without prejudice to its claim in respect of existing outstanding payments.

Whilst this can be awkward in terms of the good relations otherwise built up between the PSO’s staff and the client’s staff, as well as disruptive to the project or assignment, the PSO must on occasion exercise this right, and the client should understand that in these circumstances no implication should or can be drawn as to the PSO’s overall commitment to the project or assignment, or to the PSO’s wish to work amicably and in good faith with the client’s staff.

When the PSO exercises its right to withdraw from a project or assignment until such time as a dispute over non-payment is rectified, the client will explain the situation to his or her staff so that no erroneous imputation can be drawn from the PSO’s withdrawal.

Project Issues

Projects (Scoped Fixed Price / Time and Materials / Etc.)

Projects (and assignments) are generally of several types:

• Scoped Fixed Price projects, where the PSO has agreed that specific well defined (scoped) tasks can be accomplished for a given fee (based on the PSO’s estimation of the professional services time these will take). In these cases the PSO assumes some risk, and will benefit if the tasks are accomplished in less time, and will be penalised if the tasks take more time.
• Time and Materials projects, for which the PSO charges based on the time specific tasks take.
• Time-Hire ‘projects’, where the client has engaged the PSO’s staff to provide general, usually on-site, assistance for a period.
• Outsourced ‘functional’ work, such as long-term support provision.

Different provisions may apply to these:

Scoped Fixed Price projects

In assuming risks associated with fixed price projects, the PSO does so on the understanding that the client’s involvement in and commitment to the project is such as never to impede progress. These and other assumptions are contractually binding:

• Changes to the agreed scope will involve additional charges. Discussions and investigation of ideas beyond the agreed scope of the project will also be charged separately. In general the PSO’s staff will request that changes to the scope be discussed only at project management level and will resist discussion during the execution of tasks within scope.
• The client will ensure that no delays in the provision of information, or designs, or relevant infrastructure result in the PSO’s staff waiting unproductively. In the event of the PSO’s staff waiting unproductively the PSO reserves the right to charge for this time
• Arrangements made for meetings and any other service time on site which are cancelled at short notice will also be charged separately, since such cancellations make it difficult for the PSO to switch to other productive work.

Breaches of this understanding by either party will be handled formally. See Disputes.

Service reports and other forms of detailed accounting for time are not provided by the PSO to clients on fixed price projects or assignments.

Time and Materials projects

Time and Materials projects are more simple, in that all time spent by the PSO’s staff will be charged unless there are specific agreements otherwise, and unless it is clear that through the PSO staff’s fault his or her time is unproductive and cannot reasonably be charged. Delays that render staff time unproductive due to the action or inaction of the client are charged at normal rates.

Time-Hire Projects

In these instances it can sometimes seem as if the PSO’s staff are temporarily employed by the client, working to the client’s direction. However, it is important that both parties clearly understand the scope of the engagement and its limitations.

Outsource ‘Functional’ Work

In these instances the PSO’s staff are usually working from the PSO’s offices providing services to a distant client. The scope of the work is usually defined in terms of service level or delivery, and there is rarely a need to account for time.

Training

Training is an important aspect of many projects. The time set aside for it is usually determined at the outset of a project and depends on assumptions made at that time concerning the complexity of what must be conveyed during training, and the ability and eagerness of trainees to learn.

Training courses should contain exercises or assessment sessions that can enable measurement of their success.

Training is a specific skill and the PSO will endeavour to provide staff who are skilled in training as well as in other professional areas. Where training skills appear inadequate to the client the issue should be raised immediately (see Disputes).

Unfortunately the success of training does not always and only depend on the skill of the trainer. If the trainees have not understood the material this is not always a measure of the skills of the trainer. It is essential therefore that issues such as:

• Non-attendance
• Inattention
• Lack of engagement or interest
• Failure to learn

be raised immediately by the trainer to the client. The success or failure of training may have a serious impact on the success or failure of the project or assignment.

Acceptance

Some substantial projects are broken down into phases, and contracts with clients will often refer to these phases when defining the criteria that allow the PSO to invoice the client for services performed for the phase. Sometimes a formal ‘acceptance’ is required before the PSO may invoice, this meaning that the phase is accepted as complete. Defining ‘completion’ of a phase can be complex and there is often room for argument.

Does completion mean that every single detail must be complete and correct (for example, ‘font size for headings on a report’)?

No.

On the other hand does completion mean that PSO has simply declared the phase complete?

No.

In general completion means this: that all work defined as being within scope for the phase (including any agreed change requests for the scope of the phase) is substantially finished and working. In this case ‘substantially’ means that further phases of work within the project may be begun and are not impeded by any minor details that remain to be finished or corrected (which the PSO may nevertheless accept liability to complete), or that work completed in the phase has passed into production use.

When a phase is declared as ‘complete’ but with unfinished minor details, it is essential that what remains to be completed is clearly and precisely defined and that responsibility and timescales for completion are agreed (in written form) by both the PSO and the client.

Projects are structured into phases in respect of project management and often in respect of contractual terms for invoicing and payment. It must be understood that these are sequential phases, and that later phases will not be begun unless earlier phases are completed and formally accepted as completed.

Project Management

Project management is an essential element of substantial projects. The skills of project management are rare and highly valued and the PSO provides project management as a paid professional service. Project management involves establishing with the project sponsors the priorities for the project, breaking down the project into manageable tasks, determining the dependencies between these, establishing the optimal deployment of staff (PSO and client staff), estimating the duration of tasks, establishing project budgets, monitoring actual against budgeted costs, dealing with unexpected events that require rescheduling, redesigning, correcting work already done or planned, as well as advising on ways to work around problems if the project’s objectives are to be met. The skills required of a good project manager are acquired over many years, and usually only senior staff at the PSO are qualified to perform this role. The value of good project management is immense, and in virtue of this the time spent on this is charged.

Disputes

All disagreements or claims by either party arising in respect of the PSO’s services will be handled:

• at project management level (when a specific project manager has been assigned by both parties),
• or at service management level (when staff have been assigned to work on a client’s assignment by the PSO’s service manager on the request of a qualified client employee),
• at a more senior level if a dispute concerns the attitudes, policies, behaviour or judgements of the project manager or service manager.
• Escalation levels within the PSO will be provided to the client but typically disputes should be resolved within seven days at the first level, 30 days at the next level, and beyond that either party may seek independent arbitration.
• Disputes and claims should not be discussed with individual professional staff, or raised by staff with clients, unless they are of a trivial and uncontroversial nature capable of immediate and friendly resolution.