The 5 Most Common Contracting Mistakes

1. Not knowing who you're dealing with

Sounds obvious but most people just don't do this. Failing to undertake a basic due diligence is one of the most fundamental contracting mistakes. Who are you dealing with? What is the legal structure of the entity you're dealing with?

Often these questions are key to understanding who it is your contracting with and getting your contract documentation accurately described from the outset. Due diligence is important because it not only ensures you are dealing with the right contractual entity, you might also get an insight on your financial risk exposure if your due diligence raises anomalies.

2. Focusing on price and not skills & value adds

We all know that price and budget generally dictates contract awards. But, let's be clear. You get what you pay for.

Don't just focus on price, focus on the true capabilities and reputation of the service provider.

You don't hire staff without a CV, background checks and references. So do the same thing with your contractors.

Track records of completed projects and testimonials can help with this process but knowing which Key Personnel will provide the services can also be imperative if you're looking for specialised expertise. And understanding operational capabilities is also critical.

3. Unrealistic deliverables expectations

Most organizations fail to accurately scope their contract requirements before going to market. If you haven't done this, then expect pandemonium. If it's in your head (or someone else's head), but not articulated clearly on paper and not understood by your service provider, you've failed before you've begun.

Being realistic about what you want, the amount of time things will take and the proven skills of the service provider must be at the forefront of every contracting decision.

Most organisations rush this process only to suffer with months of delays later down the track because they failed to do the ground work.

4. The "my way or the highway" approach

Let's face it. No one likes to feel second best or like they're being ripped off. Most organisations protract contract negotiations by stomping their feet and insisting on their terms and their terms alone. This approach might have worked when you were 5 and wanted mummy and daddy to get you a new bicycle but in the real world it can only be described as unhelpful.

Take a conciliatory approach, have regard to your counterparty's concerns and comments and always work towards a mutually acceptable solution.

Having this positive approach only strengthens the spirit of cooperation between the parties.

5. Not showing the love

Ok, so maybe you don't need to get all loved up and cosy with your provider. But once you've got a contract you have to do the work to maintain that relationship. That means speaking regularly and meeting regularly to fine tune or sort any issues. If you nurture the business relationship, you'll be more likely to nip issues in the bud before they become significant issues that manifest into bigger problems.

Happy contracting!

Nadia Mansour
Director
ELISIAN

www.elisian.com.au