A contract, sometimes known as a service agreement, is a legally binding document that specifies the conditions under which a contractor or vendor would provide products or services. If your organization gives services to another organization for a specific project in the public sector, you usually sign a different sort of contract, such as a memorandum of agreement (MOA) or an interagency agreement. Some businesses have specific staff to develop and evaluate such contracts; nevertheless, if they are providing consultation on their own, it is probable that they will be responsible for understanding the contract. Typical technology product and service contracts include the following:
- Identification of the customer or buyer, as well as the party delivering the goods and services;
- Contract validity period with rules governing contract extension or cancellation;
- A precise specification of the scope, deliverables, quality requirements, and performance measurements for services;
- Identification of appropriate make and model numbers and data deliverable content for items (e.g., computer hardware, data products, etc.); and
- Legal terms and conditions that are meant to be included in a contract with the chosen contractor.
Most firms have individuals in charge of contract creation and negotiation to guarantee compliance with all applicable rules, laws, and regulations. One will need to get familiar with the organization’s procurement regulations, policies, and standard language for procurement documentation and contracts as a technology project or program manager. Contracts often include provisions for invoicing and payment, which are typically handled in one of the following ways:
- fixed-price contract
- cost-reimbursable contract
- time and expense contract
- unit price contract
Fixed-price contracts specify a price for certain items, deliverables, or services. This is a frequent strategy for technology contractors’ services in which deliverables are delivered for an agreed-upon monetary sum.
Cost-reimbursable contracts are intended to reimburse suppliers for project-related expenditures in both cost-effective and cost-ineffective methods. These are referred to as direct and indirect costs.
Time and expenditure contracts define invoicing and payment for itemised reporting of labour time and rates (in person-hours or person-days) for project workers, as well as costs directly related to project activity (e.g., travel expenses). Time and expense contracts sometimes have a price cap that cannot be exceeded without a formal contract revision.
Unit pricing contracts specify the price at which the supplier will be compensated for a certain unit of service. Furthermore, the overall value is specified not in terms of dollars, but of the entire number of units necessary to perform the contractual task. A unit pricing contract may be most suited in a contract to give individual GIS training courses to all new employees in a company over a set period of time.
When a corporation cites a “billable rate” as an hourly or daily dollar figure for project workers, it is most typically given as a “burdened rate,” which means that it includes the employee’s cost (pay and benefits) as well as corporate overhead and profit.
