When we look at the clauses and provisions within a contract there are some which are designed to cover situations that we hope will rarely or never materialise. At the other extreme there are some that are almost certain to materialise. Change management is one such clause yet in World Commerce & Contracting’s ‘Most Frequently Negotiated Terms’ survey it rarely maked it to the top 10 and in the most recent research overall it sat at 29th.
In most contracts, the change management provisions are written in legal prose, often ‘cut and pasted’ from a previous document, and rarely designed to be practical and workable.
In other articles we have spoken about the opportunities offered through the use of enhanced Ricardian contracts. If we take the change management provisions as a practical example, then we have to question why an operational provision that is almost certain to be used is written purely in legal prose.
Provisions that are operational in nature, that have a high probability of use, and are likely used repeatedly have to be ripe for both simplification and automation where possible.
Simplification is important as operational provisions such as change management are likely to involve multiple users, most of who won’t necessarily comfortable with contracts and legal prose. Simplification involves both articulating the provisions in a way that matches the reality of the process that will be followed, and also in a way that maximises understandability for users which may include visualisation techniques such as flow charts and diagrams. In doing this we are likely to increase the efficiency of the process, increase flexibility, and reduce value leakage for the parties.
Automation represents a real opportunity when applied to provisions that are frequently used. Imagine a scenario where the variation and optimisation of required quantities, delivery dates, payment, etc… could be caried out between machines and only when certain parameters are not met is it escalated to a human to human relationship. Such an approach would potentially enable a more dynamicly optimised value creation model for all parties.
So we come back to the title of this article – why are change management provisions written in legal prose? – or is there a different approach that enhances value creation?
