Download Software Development Contracts and Legal Issues

Software Development
Contracts and Legal Issues
Cost plus
Fixed price
Combined
Cost-Plus Contracts
Cost plus
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Is a contractual relationship in which the
developer is paid for the cost of the services
provided and in addition is allowed an agreed
profit margin.
Total only known after the project is completed
Appropriate for small, undefined projects, for
which it is difficult to identify the project’s
requirement in advance.
Used when the customer wants to retain control of
the development process.
Cost-Plus Contracts
The cost-plus should cover the following
issues:
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List of persons to be assigned to the project
Work definition
The percent of time each person is assigned to the
project
Administrative overhead
Authorized expenses to be reimbursed
Billing procedure
Payment procedure
Termination procedure
Cost-Plus Contracts
Provider
Advantages
Disadvantages
No financial or business risk
Low business profit
Acquisition of knowledge and
experience at the client’s expense
Contract continuity is not
assured,
Staff discontent
Customer
Retention of control over
development
Increased development cost
No commitment needed for full
project contract
Assumption of development
risk
Reduced risk ( no termination
cost)
Increased involvement
Lack of well defined goals
Software Development
Contracts and Legal Issues
Fixed Price Contract
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There is a commitment by the developer to
provide an agreed product or service for an
agreed fee, within an agreed schedule.
Fixed price contract must be well defined.
Fixed Price Contracts
Provider
Advantages
Disadvantages
Full control of the development
process
Assumption of development risk
Potential higher business profit
Potential friction with customer
due to requirement changes and
interpretation of requirements.
Commitment for a complete
project
Customer Fixed budget for the project
Minimum involvement in
development
Most of the development risk is
transferred to the developer
Increased development cost
Potential friction due to
requirement interpretations
Software Development Contracts and Legal
Issues
Combined
Joint Venture
Long-term commitments
Outsourcing
RFP
Request for Proposal / Invitation to Tender
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Before sending out RFP the following issues need
to be considered
What are the objectives of the project?
Which organization are to be considered for the job
What type of contract will be offered
What responses must be received from developers so
that they can be considered
 When should the developer selection process be
completed
 When must the project be completed
 Who, within the organization, will be assigned the
responsibility of selecting the developer
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RFP
Preparing the RFP
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Statement of problem and project objective
Technical requirements
Administrative information
Cost requirements
Referenced documentation
Required deliverables
Required proposal format
Submission schedule and decision schedule
The Proposal
Proposal board
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Locate suitable RFP that are within the company’s
line of business
Within required size
The proposal Preparation Team
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Technical knowledge
Project management skill (estimation and
planning)
Financial knowledge knowledge (budgeting and
financial planning)
Familiarity with customer’s organization
Experience in writing proposal
The Proposal
The Proposal should address
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Who
What
Why
How
When
How much
The Proposal
Proposal components
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The technical proposal (What, how)
The management proposal (how, when)
The pricing proposal (how much)
The statement of work (what, when)
Executive summary
Supplements
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Company background and experience
Qualifications of key personnel
Exhibits and relevant documents
The Proposal Review and
Selection
Vendor Selection
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Socio-political factors
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The selection board
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Evaluation Method
 Variation of weighted techniques, whereby a number of
factors score points that are then weighted and
combined to provide an overall grade for the proposal.
The Proposal Review and
Selection
Evaluation Method
Item
Weight Rating Score Description
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Technical
35%
Manageme
nt
Cost
25%
30%
Company
10%
background
Total
100%
X
Ratings: 9-10 superior; 7-8 Good; 5-6 fair; 3-4 poor; 0-2 rejected
Legal Issues
Contracts and agreements
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Software contractors, vendors, and
suppliers
Exchange of information with codevelopers
 Nondisclosure agreement (NDA)
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Employment agreement
 Ownership of original ideas and software
inventions, information disclosure,
Software Development Cycle
Conception
Software requirements
Top level design
Detailed design
Implementation
Integration
Testing
Maintenance