Before engaging in a formal business relationship, system integrators and custom computer/software programmers need to protect their business interests with appropriate legal contracts.

During the initial stages of project development, IT professionals often keep informal records by hanging on to e-mails sent back and forth with the customer. While e-mail does provide a written record of correspondence between you and your client, it's no substitute for a signed project agreement that clearly states the "who, what, when, where, how, why and how much" behind a project.

As part of a good project risk management strategy, it's especially important to have a consulting contract or project agreement in place before any money changes hands.

A Good Project Agreement Is Good Project Risk Management

Whether your business is focused on systems integration or custom computer/software programming, having a signed project agreement before you begin an engagement will reduce or eliminate potential complications that could arise during a project. Most consulting contracts clearly spell out:

• Each party's duties

• Compensation

• Terms

• Expenses

• Written reports

• Confidentiality

• Termination rules

Solid project agreements or contracts are a critical first step in project management, as well as an important element in a project risk management plan to protect your business. Defining all project elements up-front and in writing could help prevent legal trouble later, keeping you from spending thousands of dollars in legal costs and countless hours in a courtroom.

A good project contract also helps to ensure that you receive the payment that you and your client have discussed. Too often, a project is well under way when a client suddenly decides not to pay, tries to lower the price of your work, or changes the terms. If any of these things happen and your client relationship is not governed by a contract, you could lose a lot of time and money, and your good relationship with your client could quickly turn sour.

Consulting Contracts for System Integrators

For systems integrators, a typical consulting services agreement identifies the work you are to perform and specifically defines the terms of your working agreement with the client. It sets the limits of your responsibilities to the client, as well as the terms for price and payment.

The agreement also protects your intellectual property rights and establishes confidentiality standards to protect both you and your client. It limits any losses for the work you perform and prohibits your client from hiring away your key employees. This type of project agreement also limits your liabilities in the event the client should suffer losses due to your errors or omissions.

Other, separate contracts that systems integrators may need include:

• Employment contracts

• Network installation and maintenance agreements

• Staffing and placement agreements

• Subcontractor or independent contractor agreements

The latter are particularly important because they govern the relationship between you and any subcontractors you may bring in on a project, clearly outlining who owns licenses and intellectual property. This type of agreement can also prohibit your subcontractor from taking your client's business away from you, or from being hired away by the client.

Consulting Contracts for Computer Programmers

For computer/software programmers, a typical custom software development agreement is designed to govern the relationship between you and your client.

A custom software development agreement protects your intellectual property rights whenever you are hired to develop software and applications for a client. It sets the terms of use, price and payment for your work, and gives you the right to collect payment for work performed to date, in the event the client should terminate the agreement.

This type of project agreement generally limits warranties and guarantees related to your work, and caps your total liability to the client. Such contracts can also be used to prevent your client from hiring your employees away from your firm.

In addition to the custom software development agreement, computer/software programmers might need additional project contracts in certain situations, such as:

• Custom software maintenance and support agreement

• Employment contract

• Software customization agreement

• Subcontractor and independent contractor agreement