Transcript Negotiating a Service Level Agreement

Negotiating a Service
Level Agreement
Douglas Westwater with input
form Midlothian Council
29th April 2008
Welcome
Welcome and Introductions
Case Study
You look out of your window onto your back
garden. It is a mess and you decide to get a
gardener in to sort it so put a small advert in the
newsagent.
Gary Gardiner phones you and comes to visit at an
specified time to sort out how the job will get
done to both your satisfactions.
What are the key elements that you need to put in
place to ensure this relationship works well and
the work is completed so you are both happy with
the outcome?
Contract
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A contract is a legally binding exchange of
promises or agreement between parties that the
law will enforce. Almost everyone makes
contracts every day. Sometimes written
contracts are required, such as when buying a
house. However, most contracts can be and are
made orally, like buying a loaf of bread, or a
coffee at a shop.
a contract is an agreement creating and defining
the obligations between two or more parties
Service Level Agreement
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A contract is not an SLA, but an SLA is a
contract.
A Service Level Agreement (SLA) is a
service contract where the level of service
is formally defined. In practice, the term
SLA is used to refer to the contracted
delivery time (of the service) or
performance
Service Level Agreement
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Definition of service to be delivered
Cost
How is service measured, and outcomes
analysed and monitored
Problem management (what systems do you
have in place)
Customer (ie Midlothian Council) responsibility –
SLA is a 2 way process
Warranties and insurances
Termination of contract - why
Full Cost Recovery
Project B
Core Costs
Project A
CEO / Admin staff
Rent
etc
Project C
Break
Even
PointPoint
Break
Even
Case Study
Midlothian Council have entered into
discussion with you to establish an SLA
that will provide afterschool places (3pm
– 6pm) 5 days a week for a year to help
50 parents back to work.
1.
2.
What is the unit cost (cost per placement
per day) and what is the total cost?
What will you offer to do it for?
Pricing the SLA
Month 1
Project Cost
Can be split into variable and fixed
Rent of premises
Insurance
Staffing costs to match ratio
Holiday / sick cover
Care commission reg
Equipment
Consumables (art stuff etc)
Food and Drink
Sundries
Staff training and induction
Core Cost Allocation
% Manager / staff time
% Running costs
Total
Assumptions
1. 10 children over 5 sites
2. 2 staff per site @ £10 per hour
3. food and drink = £1 per child per day
Cost
Unit cost per child per year = £2221
Unit cost per child per day = £9.20
Total Cost of SLA = £111,045
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Month 2
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111045
Negotiating
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Midlothian Council link officer come back
to you and, after an amiable chuckle asks
your real cost as they have allocated 25%
less than you budgeted for to pay for this
service.
If it works there may be a chance to scale
up in forthcoming years.
What do you do?
Negotiation Skills
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know your business
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Have all the information at your fingertips about your proposal
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Plan and prepare
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Be friendly but formal
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Know the business of the other party (MLC)
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Know your top and bottom (relating to service delivery, money, quality etc). What is
your walk away point?
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Think of implications. Is holding out for full cost recovery worth losing the contract?
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Realise that the other party is under pressure to get something and needs you
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Equally they can go to another provider
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Keep your eye on how to get a win-win
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What additional benefits to you can this contract bring – access to other contracts? /
a good relationship with local authority?
Negotiation is not Competition
Thanks – Any questions