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How do software free-lancers protect from lawsuits when project fail?

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Old 27-10-2017, 06:15 PM   #1
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How do software free-lancers protect from lawsuits when project fail?

What if customer wants to sue for liquidation damages if project delay or cannot deliver to specs? What can free-lancer do to protect himself? Free-lancer develops software. Software projects is not uncommon to schedule delay.

Friend getting worried because his project going to fail soon.

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Old 27-10-2017, 07:44 PM   #2
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What if customer wants to sue for liquidation damages if project delay or cannot deliver to specs? What can free-lancer do to protect himself? Free-lancer develops software. Software projects is not uncommon to schedule delay.
Contract - specify max LD amount, in percentage to the tender price. If you cannot stomach the worst case scenario, better not take up the job. Be adventurous and expect the risk, be prudent and you might not get the job. Risks are expected in any kind of works.

Normally delays are negotiated, and you deliver partial deliverables and get paid partially (or none at all). So we also discuss on deliverable milestones and payment milestones. Draw up your assumptions during tender process. Don’t overcommit and act responsibly.

Some vendors mark up margin to cover for LD. Not insane, but just make yourself uncompetitive and may not get awarded. For freelancers, don’t be hasty and be sure of your own capabilities before you commit.

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Old 27-10-2017, 07:58 PM   #3
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Contract - specify max LD amount, in percentage to the tender price. If you cannot stomach the worst case scenario, better not take up the job. Be adventurous and expect the risk, be prudent and you might not get the job. Risks are expected in any kind of works.

Normally delays are negotiated, and you deliver partial deliverables and get paid partially (or none at all). So we also discuss on deliverable milestones and payment milestones. Draw up your assumptions during tender process. Don’t overcommit and act responsibly.

Some vendors mark up margin to cover for LD. Not insane, but just make yourself uncompetitive and may not get awarded. For freelancers, don’t be hasty and be sure of your own capabilities before you commit.
Thanks. If there is a clause in the contract that says the free-lancer is not liable for any financial damages, is it enforceable in the courts? Assume that the customer signs off on the contract.
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Old 27-10-2017, 07:59 PM   #4
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Thanks. If there is a clause in the contract that says the free-lancer is not liable for any financial damages, is it enforceable in the courts? Assume that the customer signs off on the contract.
I don’t practise law, can’t be sure. But do you think you will sign on the dotted line if you are the customer?
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Old 27-10-2017, 08:05 PM   #5
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I don’t practise law, can’t be sure. But do you think you will sign on the dotted line if you are the customer?
If it is a small value project, maybe if the value is too small to justify hiring lawyers when things go wrong. If it is a big value project, the customer is unlikely to give the project to a free-lancer. For time-critical and big-value projects, customers, particularly those who work in big MNCs or government with a corporate culture of protecting their asses, will probably find a vendor who is big enough to sue when things go wrong.
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Old 27-10-2017, 08:12 PM   #6
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If it is a small value project, maybe if the value is too small to justify hiring lawyers when things go wrong. If it is a big value project, the customer is unlikely to give the project to a free-lancer. For time-critical and big-value projects, customers, particularly who work in big MNCs or government with a corporate culture of protecting their asses, will probably find a vendor who is big enough to sue when things go wrong.
That is your rationale. The customer will want to “Reserve the Rights”. Whether they want to pursue is at their discretion. I have been working in th vendor side for more than a decade, they will put in all sorts of clauses to reserve their rights, protect their interests. Remember you are only dealing with employees of the client company, not necessarily the boss and even if it is the boss, do not be mistaken between client and samaritan. It is a commercial transaction. The most you can hope for is people are more interested in getting work done instead of dealing with vendors for the sake of a spite. Most people want win win situations and earn from businesses. So the technique is stay on the good side of your clients, be honest and be humble, for long term relationships and good wills.

Put in that kind of clauses, they might not even entertain you. If not, what do the client have over you to ensure work are done properly.
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Old 27-10-2017, 08:49 PM   #7
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That is your rationale. The customer will want to “Reserve the Rights”. Whether they want to pursue is at their discretion. I have been working in th vendor side for more than a decade, they will put in all sorts of clauses to reserve their rights, protect their interests. Remember you are only dealing with employees of the client company, not necessarily the boss and even if it is the boss, do not be mistaken between client and samaritan. It is a commercial transaction. The most you can hope for is people are more interested in getting work done instead of dealing with vendors for the sake of a spite. Most people want win win situations and earn from businesses. So the technique is stay on the good side of your clients, be honest and be humble, for long term relationships and good wills.

Put in that kind of clauses, they might not even entertain you. If not, what do the client have over you to ensure work are done properly.
You have a point. The maximum damage should not be more than the value of the contract, though. A reasonable customer should not sue for missed business opportunities caused by the delay and ask for compensation X times the contract value. That would be unreasonable.
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Old 27-10-2017, 09:20 PM   #8
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You have a point. The maximum damage should not be more than the value of the contract, though. A reasonable customer should not sue for missed business opportunities caused by the delay and ask for compensation X times the contract value. That would be unreasonable.
Well all i can say is read carefully before one sign on the dotted line. Ignorant is not a bliss in this case
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Old 28-10-2017, 10:58 AM   #9
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Interesting question.

What if there is a difficult customer who keeps insisting something is not done, completed or delivered even if it has been?

For example in IT project, we can describe in detail each hardware asset, software feature, that are to be delivered as part of the contract. Especially the software portion where custom development is done, if the customer argues that it is not the way it was described or what he/she expected and would not sign off and pay, what can be done?

The argument can be for any vague reasons. For example, the performance not good/fast enough, the design doesn't look as nice as he/she imagined it would be. Unlike a finished product with a sample to show the customer what they ought to receive before they commit to the deal.
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Old 28-10-2017, 03:06 PM   #10
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Interesting question.

What if there is a difficult customer who keeps insisting something is not done, completed or delivered even if it has been?

For example in IT project, we can describe in detail each hardware asset, software feature, that are to be delivered as part of the contract. Especially the software portion where custom development is done, if the customer argues that it is not the way it was described or what he/she expected and would not sign off and pay, what can be done?

The argument can be for any vague reasons. For example, the performance not good/fast enough, the design doesn't look as nice as he/she imagined it would be. Unlike a finished product with a sample to show the customer what they ought to receive before they commit to the deal.
Your concern is not limited to just software development, it can also be applied to things as simple as a plate of noodle. How salty is salty? The taste of the customer is personal. You can always quantify the salt amount, but still it can be subjected to the taste buds of the customer. Likewise is for creative design, the aesthetic value is hard to quantify too.

At the end of the day, what entails is your negotiation skill set. Businesses while are pretty much black and white on paper are filled with tons of grey areas during execution. If the vendor can’t work in an amicable manner with your customer, then there will normally be more for the vendor to lose. The issues goes beyond just this project.

After all, dragging a project is not something the customer would like too. The execution team will also need to answer to their own bosses on the delivery of this project and not able to manage the vendor well also looks bad on themselves, so using this as a reason, normally without being personal, customers may not go this far.

As a vendor, your job would be to close the project asap, so the norm is under situations which there are differences, always start negotiation instead of taking out on the contract. The contract is where all things failed, otherwise you will want to work around the problem instead of going deep into it. If the tender spec are too vague, then negotiate with the customer and quantify on things can both can agree on and proceed.

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Old 28-10-2017, 06:38 PM   #11
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A relevant read

Hold IT firms to higher standards

Over the past four years, I have had a difficult journey in dealing with IT firms while trying to build an effective online business.

I have owned eight websites. Each time, I am given lots of promises by the IT firms, but these are followed by mediocre work and no accountability.

In one case, less than a year after being set up, my business' membership subscription system failed to detect expiry dates and lost thousands of dollars.

During a fund-raising campaign, the website was slow to load and customers could not pay online.

Explanations given by the IT staff were full of incomprehensible technical jargon, but ultimately boiled down to "temporary glitch".

Another common response from these firms is "feature is not in because you didn't say you wanted it".

But how would a first-time buyer know what options there are and the differences between them? When I insisted on making improvements, the only choice I was given was to set up another website.

These problems keep recurring.

IT firms tend to use the Productivity and Innovation Credit (PIC) subsidies to justify their high costs. They do not take the initiative to show their portfolio or similar works done in the past.

In fact, in one case, when I insisted on seeing the firm's past work, it admitted to having no experience in what I wanted.

In truth, I am relieved that the PIC scheme is ending and that IT firms will have to set their prices according to their skills.

IT companies need to take a hard look at themselves. It is high time we had stricter regulations and standards in the IT industry. Business owners who are not tech-savvy need to be protected and have a proper channel to seek help.

Maddy Lim Kah Hoe (Miss)
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Old 28-10-2017, 07:08 PM   #12
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Interesting question.

What if there is a difficult customer who keeps insisting something is not done, completed or delivered even if it has been?

For example in IT project, we can describe in detail each hardware asset, software feature, that are to be delivered as part of the contract. Especially the software portion where custom development is done, if the customer argues that it is not the way it was described or what he/she expected and would not sign off and pay, what can be done?

The argument can be for any vague reasons. For example, the performance not good/fast enough, the design doesn't look as nice as he/she imagined it would be. Unlike a finished product with a sample to show the customer what they ought to receive before they commit to the deal.
From the aesthetics POV that's where wireframes and mock ups come in. They should have a pretty good idea of what the UI will be like. Expect some specifics like wording/color/fonts to change but should still be manageable. Speak to them often.

Performance-wise it can be harder to nail down, but at least you should safeguard yourself by specifying the constraints and assumptions and the passing criteria, eg XXX% of transactions should not take more than YYY seconds on ZZZ hardware, need to handle NNN transactions per minute etc.

Still, some customers are capricious and do expect all their whims and fancies to be catered to, like below:


'Unfair' to expect suppliers to agree to unlimited changes: MOF
SINGAPORE: The Ministry of Finance (MOF) has said it is "unfair" to expect suppliers to agree to unlimited changes in creative services, in a Facebook post on Wednesday (Feb 17).
MOF was responding to uproar against a tender document posted on Government procurement portal GeBIZ asking for "unlimited changes" for "creative concept, creative design, typesetting, layout, high resolution scanning, image enhancement, artwork."

Designer Kelley Cheng had on Feb 15 shared screenshots of the document on Facebook, asking those in the industry to share the post if they are against unlimited changes. As of Wednesday night, the post had garnered nearly 2,200 shares.
"MOF has looked into the matter, and has verified that there indeed was such a requirement contained in the posted documents, sourced to a local school," it said in the post.
It added that the Education Ministry agreed that the number of iterations should be "reasonable and cannot be unlimited". "This specification has been removed from the school’s Invitation-to-Quote," MOF said.
The Finance Ministry also said it would issue a circular to remind all Government agencies of standing procurement principles, which includes ensuring that all procurement specifications are "reasonable and fair".

It added that the DesignSingapore Council, which was established to develop the local design sector, is working with MOF to advise Government agencies on guidelines of best practices for Government procurement of design services.
Another point to note is that the person who is liaising with you on the project may not have the authority to sign off the project, it happens quite frequently. Get in touch with the right person and keep them updated.

If you have customers who cannot make up their minds (which is quite common), the best is to do something like Scrum and keep your sprints short.
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Old 28-10-2017, 08:35 PM   #13
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Regarding using Agile as a way to control a flicker minded customer is IMO a big No No. In fact what will actually happen is your customer will expect that things can keep on changing with fixed cost, or low cost changes, especially when dealing with the public sector. That is what I would deem as SDLC cost with Agile execution. Worst combination.

So far, I have not seen sufficient proper execution of Agile which can put a constraint over an ever changing mindset from the customer. Customers that I have come across will use MVP like they truly understand what it means, except they will keep adding features until it is almost the same as their eventual goal, which is what SDLC is. The only time they will settle for something less is when they know those items are already plan for latter phases, or not already mentioned in the tender spec or totally superfluous with no intended budget for. For a flicker minded customer, I would advise SDLC because there is something in words to fall back on. The word “Agile” is too often misinterpreted so often than not.

In short, “Flicker minded” customer with a slim budget are the best recipe to ruin your Agile project Such combination is often witness in this part of the world

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Old 28-10-2017, 08:54 PM   #14
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Regarding using scrum as a way to control a flicker minded customer is IMO a big No No. In fact what will actually happen is your customer will expect that things can keep on changing with fixed cost, or low cost changes, especially when dealing with the public sector. Is that what I would deem as SDLC cost with Agile execution. Worst combination.

So far, I have not seen sufficient proper execution of Agile which can put a constraint over an ever changing mindset from the customer. Customers that I have come across will use MVP like they truly understand what it means, except they will keep adding features until it is almost the same as their eventual goal, which is what SDLC is. The only time they will settle for something less is when they know those items are already plan for latter phases, or not already mentioned in the tender spec or totally superfluous with no intended budget for. For a flicker minded customer, I would advise SDLC because there is something in words to fall back on. The word “Agile” is too often misinterpreted so often than not.
What Ken Schwaber advocates is to keep sprint shorts, which sort of makes sense.
If the sprint is short enough, there is less opportunity for the customer to change their minds.
It forces them to break up the system deliverable into something smaller.
It forces them to prioritize what is important.
It forces them to say they do not have the information for what the system should do if they are unsure.
If they regret at the end of a short sprint, too bad the story points are already used up. Changes will go to the product backlog.
If the sprint is unprotected as it is often the case, at least what the user wants to change is at the end of a short sprint, rather than a long one.
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Old 28-10-2017, 09:03 PM   #15
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What Ken Schwaber advocates is to keep sprint shorts, which sort of makes sense.
If the sprint is short enough, there is less opportunity for the customer to change their minds.
It forces them to break up the system deliverable into something smaller.
It forces them to prioritize what is important.
It forces them to say they do not have the information for what the system should do if they are unsure.
If they regret at the end of a short sprint, too bad the story points are already used up. Changes will go to the product backlog.
If the sprint is unprotected as it is often the case, at least what the user wants to change is at the end of a short sprint, rather than a long one.
Short sprints are not just an impact to customer. In the ideal scenario of Agile projects, we can have sprint of any length, but in a vendor-customer relationship, short sprint while in your rationale presses on the customer to be firm and precise in their decisions will also be pressure on the delivery team to rush throughout the project. They are neither beneficial to both parties. You are looking at story points like they are indivisible, but I look at them elastically. One(1) story point is how many mandays? Soon you will find your customers asking you to justify every single story and discuss why you think it justify the story points your teams come up with. The shortage of points will in the end be a pressure on the vendor side because there will be more effort require to answer and justify. When that happens, you will start to doubt if the intention to use story points as a way to rein down on your customer is a good idea. My personal advice is never use story points as your measurement to control anything. They are vague in the first place.

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