Alliances, Partnering & Measured Term Contracts

Alliances, partnering & measuring term contract information Projen

Whatever term you use, Alliance, Partnering or Measured Term Contract, they all present the same idea; businesses working together over a period of time, an agreement to cooperate for a common goal, a relationship formed to bring an advantage.

In today’s competitive environment more and more businesses are adopting this idea of forming alliances, partnering or using a measured term contract for services that are peripheral to their core business. This allows them to concentrate on what they know best and buy in expertise from elsewhere for a competitive price.

The main motivation for businesses to adopt an alliance, partnering or a measured term contract approach are the cost saving benefits and expertise you gain from using a specialist, in particular a specialist that is closely aligned to your business who understands the internal systems and processes unique to your business.

Through the alliance, partnering or measured term contract, the client and the service organisation develops a long term relationship for mutual benefit. The supplier agrees to perform the service for the client, adding value to the clients operations, providing continual improvement and value for money. The client in return gives preference to the alliance or partner in providing the service, gives advance warning of work and resource requirements and provides pro-active feedback to improve the relationship between the two parties. Often the alliance, partnering agreement or measured term agreement is overseen by an alliance or account manager who manages the relationship, working out any teething troubles and ensuring the infrastructure is in place to ensure the relationship works.

The success of partnering, alliance or measured term contracts is down to both parties working together, the service provider adopting the operating procedures of the contracting business, but also challenging existing procedures where their experience/ knowledge in the field they can improve the client operations.

Businesses use partnering, alliances or measured term contracts for a number of functions within their organisation; IT, cleaning, security, catering, construction and project management are some examples of where businesses will undertake this type of relationship.

The benefits associated with alliance, partnering or measured term contracts are extensive and include:

  • Visibility of costs, allowing for greater cost effectiveness
  • Cost and documentation saving by the client
  • Combined strengths of both organisations
  • Continuous improvement of activities / operations
  • Flexibility over resources, including specialist staff and technology
  • Increased technical expertise

When a business decides to outsource a function and enter into an alliance, partnering or measured term contract/ agreement it is essential that the arrangement is documented, this will help prevent any misunderstandings.

The written agreement often called a “Service Level Agreement” should cover:

  • A description of the services to be provided
  • The deliverables
  • The Key personnel (Management and Control)
  • The facilities to be provided by the client
  • Charges and payments
  • Confidentiality agreement
  • Documentation/ Data Exchange
  • Background Intellectual Property Rights
  • Ways of Working
  • Dispute Resolution
  • Exit Strategy – ending the agreement and the penalties involved.

How to make your alliance, partnering or measured term contract work

  • A clear agreement is very important to making the relationship work, all parties know where they stand.
  • Communication is a key part to building the relationship; it’s a good idea to arrange regular face to face meetings with key personnel
  • Be transparent and share information, especially with regard to financial matters, this will aid trust.
  • It is essential that everyone knows what the aims of the relationship are and what you are trying to achieve. By outlining the performance indicators and publicising these both to the client and the service provider every one is clear on the goals and the performance indicators will act as an early warning should things not be going to plan.
  • Flexibility is also key – if the arrangement needs to be tweaked here and there by either parties as long as it is agreed and documented this will go to enhance the relationship as continuous improvement is one of the main benefits of the alliance, partnering or measured term contract.