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Changes are almost inevitable during the period of a contract, particularly in the case of large, complex construction and service contracts. They should not necessarily be seen as causes for concern but, when effectively managed, as opportunities to improve the contract outputs.
It is important to understand the implication of change for both parties. Significant changes will affect the scope and potentially the viability of the contract for either party. If a change results in a reduction in the value or scope of the contract, the organisation could be faced with claims for increases in charges and/or legal claims that there was,
for example, misrepresentation in relation to the likely volumes required over the period of the contract.
If the change results in a substantial increase in the value or scope, it is important that
the organisation continues to ensure that value for money is secured. Public sector organisations should also be aware that the requirements of the EC procurement directives may affect what changes can be made.
Change can be driven by a number of factors such as:
- Amendments to the parties’ strategies and objectives;
- Changing business needs of the organisation;
- Market changes;
- Technological developments;
- Economic trends that affect the viability of the contract;
- Legislative change.
These in turn can lead to changes in the service required, the metrics needed, service infrastructure and workload.
Changes are easier to manage when planned. Even the effects of an unexpected, externally driven change can often be mitigated through, for example, ongoing risk assessment and the phasing-in of any implementation. Changes will require negotiation with the provider and the introduction of amendments scheduled to avoid workload peaks and year-end activities where possible. Changes should be managed using change control procedures. Wherever possible, the outcome should be agreed with the supplier before instructing a change.
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