Contract execution

Contracting is designed for organizations that have selected a system and supplier and need support negotiating and finalizing purchase and implementation agreements.

Several contract paradigms are used in the market, including VIRK23, ERP12, public-sector IT contracts (K01, K02, K03, K04), as well as proprietary agreements developed by major law firms. In practice, the key is to identify an agreement model that reflects the scope, risk, and business criticality of the project.
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For smaller projects with limited risk, a supplier’s standard agreement can often serve as a starting point, though such agreements are naturally designed to protect the supplier’s interests. For larger and business-critical initiatives, such as ERP implementations, more comprehensive and balanced contracts are typically required.
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Contracting is often closely integrated with the procurement process, allowing organizations to leverage competitive dynamics to achieve acceptance of critical contractual terms. In some cases, however, contracting may also be carried out as a follow-on phase once procurement has been completed.
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In collaboration with Nicolai Dragsted, HNCO has developed a standard contract specifically tailored to the unique characteristics of ERP projects: VIRK23. If you would like to learn more about the contract, please contact us.

"Unclear agreements often lead to disagreements and disputes between customer and supplier, and significant cost savings can typically be achieved by negotiating a well-structured and balanced contract."

The contract process typically includes

The first part of the contract process typically includes

Choosing the Optimal Contract Paradigm
Choosing the pricing model that best suits the current project and your preferences — fixed price, target price and T&M or combinations thereof are commonly used pricing models
Identify whether software and implementation services are to be procured under the same contract or whether they are separate agreements
Clarification of whether the contract should cover the entire planned project or only selected phases
Clarification on whether operational services or application management agreements are also concluded
Preparation and adaptation of relevant draft contracts

When a supplier is selected to enter into a contract negotiation, we typically assist with

Identification of commercial bargaining points
Determination of the desired outcome of negotiations and BATNA
Ensuring that contract terms are in line with the market
Conducting commercial and legal negotiations
Preparation or review and review of contract documents

As can be seen, there are both legal, systems professional and commercial aspects of contract negotiation and contract conclusion.

HNCO has extensive experience in all these areas and has cooperated with virtually all leading law firms in the IT legal field. However, we always recommend that your company use specialized legal assistance in connection with the conclusion of the contract.

Unclear agreements in most situations lead to disagreements and disputes between customer and supplier, and there is therefore a lot of money to be saved by having concluded a good agreement. In general, therefore, the importance of aligning expectations with the supplier and establishing a solid contractual basis can only be underestimated.