How to write a contract
All contracts are different, but take a look at our handy checklist to make sure your contract is a success
How to write a contract
Contracts can range from a single, ad hoc agreements to long term and complex agreements for larger projects. It’s clear that a ‘one size fits all’ approach to contracts will be ineffective, but where do you start? It’s important that whatever form of contract is drawn up that it reflects the size, nature, value, and complexity of the project, but also the relationship required with the potential supplier.
Considerations for your contract
All contracts are different, but there are many important issues that you’ll need to consider when drafting the contract up. The below acts as a checklist when thinking about what to include in your contract.
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1. Define the scope of the need:
Define in detail the scope of the need, including the essential or core requirements, optional and desirable needs
2. Establish sources of information about the need from:
- Business owners
- Customers and users
- Other stakeholders
- Technicians
- The supply markets
3. Gather information on:
- Background to the need
- Future developments
- Detailed requirements
- Metrics required for performance measurement
4. Decide the type of specification to be used and then prepare draft:
In large, complex contracts the document could include the following:
- Introduction
- Scope of the requirement
- Background to the requirement
- Detailed description of the functional requirements, classified as essential, optional, and desirable
- Description of the performance requirements including input and output details
- Timescale/timetable
- Performance measurement requirements, for example volume, accuracy, availability, including damages and incentives/ service credit details
- Other requirements, for example security, access, standards, training, personnel, disaster recovery, data archiving, data protection
- Constraints, for example, time, interface with other parties, IT issues.
- Contract management requirements, for example management information, project management and risk management methodology, and processes
- Contractual requirements, for example terms and conditions, roles and responsibilities of personnel, opportunities for submitting alternative proposals
- Procurement procedures including timetable, evaluation and acceptance criteria and process, contact information, format, and content of responses.
- Appendices providing background data, statistics, organisational information
What does a successful procurement contract look like?
As discussed, contracts vary depending on the type and scope of the project. A successful contract should:
- Set out the requirement fully, clearly, and logically, leaving no unanswered questions
- Focus on the outputs and how they are to be met
- Contain sufficient information for potential suppliers to submit credible and realistic offers
- Ensure that all information needed for effective evaluation is requested
- Permit offers to be evaluated against the declared criteria
- Set out the acceptance criteria
- Provide a fair opportunity for all potential suppliers to submit offers
- Not discriminate against or be biased towards any supplier.
Who signs off the procurement contract?
The contract should be reviewed and signed off by a person with the necessary knowledge, experience, and authority. The review should ensure that the specification is:
- Complete and accurate
- Meets stakeholders’ needs
- Addresses future requirements
- Addresses identified risks
- Complies with and addresses the issues identified by the original business case
- Is capable of being met by the market
- Complies with EU Procurement Directives (Public sector organisations only).
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