Recognizing Contract Risk and Opportunity

|University of Phoenix | |Memo

To:

From:

CC: Recognizing Contract Risk and Opportunities Memo

Date: 12/16/2009

Span Systems and Citizen-Schwartz AG entered into a contract for the delivery of transaction software for Citizen-Schwarz AG. The contract is worth six million with the opportunity to secure the contract to build a bigger program for Citizen-Schwarz AG. When the contract reached the eight million mark, Citizen-Schwarz became dissatisfied with Span Systems performance and delivery and asked for rescission from the contract. Both sides started identifying their needs and risks and negotiations were begun with each side working toward contractual agreements.

Span Systems Needs and Risks

1. Maintain a working relationship with Citizen-Schwarz

2. Deliver a successful software product

3. Develop a dependable, reliable software product

4. Customer questions regarding performance on deliverables which is affecting quality and the schedule of software.

5. Scope creep: Span Systems has witnessed growing requirements.

6. Turn Around time on the approval and review times at Citizen-Schwarz AG.

Citizen-Schwarz AG Risks

1. Span Systems deliverables are behind schedule

2. Quality of the code delivered substandard

3. Citizen-Schwarz has a deadline for release of the software.

4. Demanding immediate transfer of all unfinished code and asserted rescission of the contract

5. Need to address schedule slips and quality issues

6. Do not agree scope of project has changed and does not recognize any breach of contract.

Both parties agreed that the following five areas needed revisions. The five areas area: performance, dispute resolution, change control, communications and reporting, and finally project structure. If these areas had been addressed prior to the initial contract, no revisions would have been...