Solution of technical, commercial and legal problems in a complex contractual relationship. Successful transfer of the contract to the residual value to a subsidiary of the contracting party
Manager:
Dr.M. K.
-
Customer:
Confidential
-
Role:
Program Manager
-
Location:
Germany
-
Turnover:
ca. EUR 60 Million
-
Time frame:
11 months
-
No. of employees:
50
About the Customer
The customer was the subsidiary of a large German-based group. The company’s main focus is on electronics and electro-optics (hardware and software) for security and defence products.
Testimonial from Сustomer
The company management and the group management have positively assessed and valued the result and the process that led to the success. After the successful completion the entire team was invited to a celebration. Each team member was awarded a gift as recognition for the performance.
The former program manager, who was initially unsure and frustrated about the appointment of an external manager, explained that he never had so much fun in his works life as in this crisis. He was immediately entrusted with the management of another complex project.
Situation (Challenge)
The customer had sold a business segment with several programs / products to a subsidiary of another group. This group, however, was itself the customer for some of the programs under this segment.
For one of the contracts, the takeover by the new contract holder was subject to complex technical and commercial conditions, and without a fixed purchase price (contract residual value). The contractual arrangements for this were interpreted differently by the contractual parties and led to a conflict of interests, open tensions between the contracting parties and, consequently, a delay in the transfer of the contract.
Dr. M.K.’s customer, however – prematurely having assumed the contract transfer had been accepted -, had reduced the entire program management (technology, support, supplier management, etc.). He was now vulnerable and faced technical and contractual attacks by his customer. At the same time, he was also in a bad position for the takeover negotiations to be held.
Solution (Achievement)
Dr. M.K. was engaged as program manager in the middle of January 20xx with a direct reporting line to the Board.
First, the program management team was rebuilt, in which the former program manager was also involved in a constructive and motivating manner. The necessary tasks and functions of the program were resumed on all open issues. The necessary technical and contractual activities were re-established.
In almost daily meetings, the necessary work was coordinated as well as the tactical approach to the client and the acquiring company were discussed.
In parallel, the commercial and contractual situation was analyzed in detail with a team of lawyers and commercials, and a negotiation strategy was developed.
The negotiating Managing Director and the responsible member of the Group Management Board were regularly informed about progress, risks, and the further strategy.
Dr. M.K. was directly involved in the contractual and legal discussions with the other side and was able to support them directly and effectively.
After 11 months, the newly negotiated contracts were signed and the project was transferred in a proper state at the end of the same year.
The negotiation result (residual value of approx. EUR 60 million) exceeded the target value assumed in the business plan by approx. 10%, which resulted in an additional annual profit at the level of the GmbH and the group respectively after the release of commercial risk provisions.