Making Contracts
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issue 2 April - June 1993
Making Contracts The OR Section of British Gas South Eastern draws up contracts with project sponsors before work gets under way.
Farahnaz Ashouri with the client and stated in the contract.
For some years the Operational Research Section
of British Gas South Eastern has operated a
system of contracts between themselves and their
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The contract should be formally presented. This should overcome problems of the client
project sponsors. This article explains the reaSons for introducing this system, describes the
taking time to agree a written document
alone and should also help avoid any misunderstanding of the scope of the
contents of the contracts, and examines the
benefits that these contracts have had in the OR
project.
Section.
Background
Objectives
In 1988 a group of five operational research analysts in the OR Section looked at various
The objectives of introducing project contracts in the OR section were the following:
issues relating to the role of Operational Research
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with British Gas South Eastern and how it could
be enhanced. The group used soft systems
methodology to carry out their analysis. One of their recommendations was the introduction of a project contract, which would be produced during the early stages of a project. The purpose of the
To make the client aware of their responsibilities and hence ensure that the client will be available for consultation when the need arises.
To improve communication between the OR section and the client regarding objectives and responsibilities of the project.
soft systems analysis was to consider what an 'ideal'
project contract should contain. The main points identified were as follows:
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Project contracts should assist with the
To provide a common reference for the project both for the OR section and the client.
identification, definition, and prioritisation of projects, advising on benefits, methodology,
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resources and timescales required. They
To provide continuity if a client leaves. The
new client will be made aware of the
should ensure that the 'final product' identi-
project's objectives and his/her responsibilities regarding the project.
fies the optimum usage of company's resources and assists clients in improving business efficiency.
The project contract should be drawn up after some resources for the initial investigations have been used in order to enable the
OR section to determine what is appropriate.
A statement should be drawn up about the
required level of client's resources and responsibilities, thus increasing the client's commitment to the project.
The OR section should charge the clients for their services. This charge would be agreed
Copyright 0 1993 Operational Research Society.
¡t was thought to be worthwhile to draw up and agree a project contract with the sponsors as a project commences. The OR team working on a project prepare an associated draft contract, which is then negotiated with the sponsor.
The project contract is not a new idea in project management. For
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