Rebooting The Relationship: Rebuilding Trust In IT Projects

Roses are red, milestones are due, building trust in IT projects, always takes two.

Rebuilding trust after a failed or nearly failing IT project can feel a little like getting back with an ex. This stage of the relationship is marked by a mix of hesitation and hope at the potential of a better relationship, underpinned by the familiar question of "what will be different this time around?". Relationships, whether romantic or commercial, have a history and sometimes carry hard learned lessons and moving on from past mistakes and failures requires both parties to be intentional about the success of the relationship going forward.

How did we get here?

In any IT project, trust between the service provider and customer is the glue holding all the components of the project together. The customer relies on the service provider to deliver effectively, while the service provider depends on the customer to clearly express its needs and expectations (and of course, pay!).

Trust rarely breaks down because of a single incident. The customer's trust in its service provider typically fades slowly through repeated misalignment between an expectation and a reality – for example hidden costs, poorly scoped projects, missed milestones, technical failures and a general lack of accountability for failure. Following a failed project, parties often become risk-averse and defensive.

It is against this backdrop that we hear (and yes, sometimes use) the cliched expression: "We are contracting for the divorce". The customer goes into the negotiation with excessive penalty and liability clauses, wide termination rights and onerous indemnities that service providers view as unreasonable. Service providers, in turn, want to include open-ended scope exclusions and payment notwithstanding ongoing disputes or disapprovals in their pricing.

How do we get back to our happy place?

Not every struggling project needs to become a dispute or end in a break-up. Both parties have a shared interest in making the project work. Termination and dispute resolution are expensive and disruptive. So how do you start rebuilding?

Step 1: Read your contract to see what remedies you have at your disposal to save the relationship. Most well-drafted IT contracts include mechanisms such as rectification or cure periods (giving the service provider a defined window to fix defects or breached warranties), service credits (sometimes referred to as penalties) for missed service levels, milestones or deliverables, step-in rights allowing you to bring in third parties to remedy critical failures, escalation procedures requiring senior management engagement before disputes escalate, and audit and benchmarking rights to verify what is actually being delivered. Your lawyer negotiated these provisions for a reason - use them!

Step 2: If your contract does not help, or the formal remedies feel disproportionate, then consider a collaborative reset. This might involve a joint "lessons learned" workshop to clear the air and identify root causes, agreeing a revised baseline, timeline, or commercial terms through a variation, introducing new governance arrangements such as more frequent steering committees or independent assurance, or resetting the relationship at a personal level. Sometimes a change of project manager on either side can work wonders. But please make sure that you document any agreements carefully. A well-drafted memorandum of understanding or contract variation protects both sides and demonstrates good faith.

Step 3: Maintain collaboration. Collaboration is part of the nature of the IT projects, and rebuilding trust requires the parties to view the relationship as no longer a purely transactional engagement but rather a collaborative relationship. This will require the parties to regularly revisit the project priorities, and perhaps even jointly develop a roadmap that reflects both parties' interests. The goal is to create a relationship in which both parties are genuinely invested in the project, and both ultimately benefit from its success.

Is it time for me to move on?

Not every relationship can be saved. If you have exhausted your contractual remedies, attempted a reset and the fundamental problems persist, it may be time to consider termination. Warning signs that the relationship is beyond repair include repeated failures to meet rectification milestones, a breakdown in communication or good faith, evidence of serious misconduct (fraud, data breaches, or material misrepresentation) or strategic misalignment where the service provider simply cannot deliver what you need.

Ideally, the contract includes broad termination rights that will allow you to terminate immediately without liability. Before pulling the trigger, work with your legal counsel (whether internally or externally) to understand these termination rights and how to exercise these in a way that best protects your organisation both commercially and legally. Wrongful termination can result in exposure to significant liability, so ensure you have followed the contractual process to the letter and documented your reasons thoroughly.

In IT projects, you must plan for transition – does your contract contain rights to transition assistance (also referred to as disengagement or termination assistance services)? Does your contract provide for how such assistance will be priced (ideally it was negotiated for you as a right without additional cost!) How will you extract your data and migrate to an alternative provider? What intellectual property rights do you have in work completed to date?

Lessons learned: How to use your baggage

Every failed project or relationship is a learning opportunity. When you are ready to move on, invest time in getting the foundations right.

1. At procurement: Be realistic about your requirements and ruthless in your due diligence. Check references, probe the service provider's actual experience and do not be dazzled by their sales team.

2. At contracting: It is essential to have an IT contract that is fit for purpose and has been prepared by subject matter experts. Build protection that gives you early visibility and meaningful remedies. The contract needs to allocate risk between the parties fairly. A good IT contract includes, at the very minimum:

• clear descriptions of each party's roles and responsibilities, required inputs, identified dependencies and support needed to ensure timeous delivery;
• data protection and security requirements, as they form an integral part of the trust framework in IT projects. The increase of cyber incidents paired with strict data protection regulatory requirements requires providing assurance that a party has robust security measures in place and a commitment to comply with data protection laws;
• intellectual property ownership provisions that address ownership, licensing, and rights to the work that has been created during the project as well as the derivative works. This is particularly important where there is bespoke development being done;
• service warranties;
• clear and realistic service levels and related metrics, with the right to impose service credits for failures;
• robust acceptance testing criteria tied to objective benchmarks, milestone-based payments that keep commercial pressure aligned with delivery;
• clear change control procedures that fairly allocate risk for scope changes;
• ongoing assurance rights so that you can regularly review your service provider's performance;
• audit, benchmarking, and step-in rights;
• governance and escalation processes;
• cure periods for breach; and
• and for when things become irreparable: comprehensive termination rights including for convenience and for cause with appropriate notice periods and transition assistance rights.

3. Throughout the relationship: Do not treat the contract as a document to be signed and forgotten. Appoint a contract manager, diarise key dates and use your governance rights proactively.

The success of an IT project can hinge on a seemingly minor issue and the ability to move on from these issues is critical for ensuring the success of the project. Rebuilding trust in IT projects is not achieved through contracts only, it requires collaboration, good governance and intentional effort. When these elements come together, they create a partnership that delivers genuine value and benefits both the customer and the service provider. Should you need guidance on how to achieve this, our team can assist by providing advice on how to structure your projects, develop effective contracts and establish governance mechanisms that reinforce trust with stakeholders.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.