Chapter 21 - Performance-Based Contracting and Service Level Agreements

21.2.1 Developing a PBC contract

In a PBC relationship, the contract must include:

• Everything you are buying (covered by the contract).
• Volume assumptions for the service (particularly if there are large variable costs involved).
• Reliability, availability and performance (RAP) requirements, methods of dealing with operational problems (escalation, help desk, hot line and severity levels) and conditions of use or change of use conditions/restrictions.
• Any dates/deadlines where specific deliverables are due at initial switch on, ramp up, ramp down, or upgrade of service; e.g. year end, implementation dates, delivery of upgrades, legislation changes.
• The method of delivery (e.g. paper/fax/personal delivery/electronic means/source or object code).
• Time after which the deliverables must be consumed or tested and still supported (obsolescence limits).
• Documentation/manuals and standards.
• Definition of what is considered a service failure and what is considered an enhancement to the service; e.g., what is a software bug and what is an enhancement.