Project contracts can never be lopsided in any group’s favour

In a recent project engagement, I had to deal with a case that was thought-provoking. The escalation was intriguing, especially in the context of aligning all the stakeholder’s goals on the project.

There were emphatic demands from employees who were to be retained around their benefits and perks. It is obvious for employees to expect requisite benefits, however, there was an apparent effort to extort add-on privileges citing them as genuine demands.

These add-ons did not meet the merits from various perspectives. Firstly, its financial impact on the contract was significant as it was awarded with the intent to achieve cost efficiencies. Secondly, the add-on benefits were not even aligned to any employee welfare standards, including global norms. Even as per the corporate real estate occupancy benchmarks, its commercial impact was too steep to meet the larger goals embedded in the contract.

What did this issue indicate? It was the stakeholders’ misalignment of the contract’s goals - a common challenge we see. In this specific case, since it was an employee-centric issue, it bewildered me to deep dive as I always consider employees’ alignment being paramount in accomplishing contract goals. This also refers to a larger issue and the need for employees, companies, and clients to build with a unified goal than with lopsided aspirations. Such unilateral goals must prevail and not self-interests overriding the contractual aspirations.

Oversized benefits

What upset me here is that these employees were driven by a myopic viewpoint with an eye on a selective perk rather than their holistic interests. None of them in their pre-engagements investigated their opportunities for learning and development and career progression. And they stuck to rigid postures on how to get the additional benefits overlooking the greater good.

My contention - collective goals should supersede, and where add-on benefits to any contracting party should accrue from results of extra profits to the contractor or additional cost savings to clients. The guiding principle of this shared goal is that, none can benefit unless all interests are aligned.

In the context of facilities management contracts, the client’s goal is to maintain the facilities to standards and at the necessary cost. However, if these contracts try to employ service providers at a minimal cost, it would undermine the intrinsic cost of service and fail the objective. In this situation, the unified goal of contracting parties will conflict, resulting in the employer undercutting employees’ cost or ending up in losses.

A contractual give-and-take

We need to balance between expectations and aspirations of each stakeholder. In the current economic landscape, it is arduous to ensure this balance. The survival of the fittest theory does not always rule, as sustainability demands each must accomplish respective goals as we build cohesive contract engagements.

Covid did teach us to build resilient organizations, whereas innovation and transformation helped us manage constraints. If clients are looking for savings or employees are seeking perks rather than innovation, business growth and efficiencies can provide these. But each needs to forge a partnership, not a self-centred approach.

My objective is to encourage contracting parties to work collaboratively to bolster mutual interests, promote innovation with a collective resolve and go the extra mile to achieve efficiencies powered by everyone sharing its gains. These gain-share models are the way forward for all stakeholders in a contract. Work in tandem for strategic and long-term partnerships.