In the world of business contracts bind one company to another. Through the years many changes have been made to minimize the amount of personal interpretation needed to understand the contract. Unfortunately, the nature of a contract does not allow complete elimination of interpretation. For this reason it is very important that both parties review the contract in its’ entirety together to avoid misinterpretation, or any form of contract breach. The contract creation and management simulation offered a hands on experience of how contracts can throw a curve ball when one least expects it.
This simulation involves a six million dollar one year contract between Span Systems and Citizen-Schwartz AG (C-S). Span Systems is a software company providing software support for Citizen-Schwartz AG (C-S) which is a large German bank. The two companies are in a major dispute over quality and timeliness of deliverables. As the project manager of Span Systems one must intervene in an effort to save the contract. Contract Changes The original contract between the two companies agreed to “ordinary” change requirements.
As problems developed the change requests became quite demanding. In an effort to meet ones demanding changes a decline in quality developed. Keeping the contract is very important to Span Systems. One must decide how to address the continual changes to the original contract. One would propose a contract amendment requiring both parties to agree. If Citizen-Schwartz AG (C-S) continues to make changes, Span Systems could subsequently adjust the schedules. This amendment would ensure that compromising quality would not result.
In addition one would follow up on the suggestions proposed in the simulation. These include the following; inviting a C-S project manager to be a member of the quality control at Span, appointing a change control panel to review change requests flagging any that may cause changes to the schedule, and providing daily updates to C-S. By keeping the gates of communication open, everyone would be on the same page avoiding further conflict. Positional Bargaining vs. Interest Based Positional bargaining strategy is strictly based on cost and quality.
This type of bargaining would not allow for any negotiation with the schedule. This type of negotiation is not always the best because all issues are not being addressed. Cost and quality are important; however changes in the expected completion dates are also being affected. Therefore this type of negotiation would not address all issues at stake. If only a portion of the problems are resolved, ultimately the problem still exists. Interest based strategy seems to work better for most negotiations.
This strategy involves communication, relationships, interests, options, legitimacy, alternatives, and commitment. (Reed, 2005). This multi-faceted approach allows for more tweaking to ensure the support of both parties. Additional Strategies Using concepts from both position bargaining and interest based strategy would be optimal for the situation presented in this simulation. Considering cost as you work through the interest based strategy will help ensure that the negotiations do not only keep the train going, they keep it going until it reaches its final destination.
In this simulation the final destination would be two satisfied parties, without remarkable cost to either party. Cost not only referring to monies exchanged, but also time. Future Business Ensuring that agreed negotiations are made and abided by is very important for the integrity of Span Systems. If the contract is swept under the rug, and SS is simply doing what needs to be done to keep the contract their integrity will be lost. This could negatively affect the way that future business opportunities are foreseen.
In the business world, companies talk recommending businesses for different reasons. Span does not want to be the company recommended simply because they are a pushover. Initially the returns may be good, however eventually the respect and dignity needed to run a successful business will vanish. On the same token, proving that one will stick to their word when negotiations are decided upon, ultimately ending a happy ending for both parties will build respect and dignity. Conclusion In the end of the simulation the contract was saved and the integrity of Span Systems remained.
The simulation allowed for some risk taking, that one may or may not have the ability to take in the real world. Remembering that individual contract holds a chance to make or break a company is key for company success. Take every opportunity as if it were your last, creating a working relationship will help the business world continue to turn.
Reed, O. L. , Shedd, P. J. , Morehead, J. W. , ; Corley, R. N. (2005). The Legal ; Regulatory Environment of Business. New York: McGraw-Hill Irwin.
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