Saving an IT consortium from collapse
Facilitation of sessions for 4 technology companies working together on an ERP system implementation. A new profit-sharing model was developed.
Four IT companies were stuck in a deadlock during the implementation of an ERP system worth 1.2 million PLN. Lack of agreement on the margin split from additional work threatened to break the contract with the main client at the end of 2023. We conducted mediations that allowed avoiding penalties and signing a new annex to the consortium agreement.
The challenge
The Net-Tech Group consortium consisted of two software houses, a server provider, and a consulting firm. The project had been running for 7 months, but during the second stage settlement, a conflict arose over 142,800 PLN profit for unexpected code modifications. Partners stopped exchanging documentation, which halted work for 19 business days.
Each day of delay generated 3,400 PLN in losses due to technical staff readiness. The atmosphere was so bad that the board of one partner had already prepared a lawsuit for the district court in Poznań. A lack of clear provisions in the original agreement about the split of work exceeding the specification led to complete decision-making paralysis.
Our approach
Our team of mediators (3 people) entered the project in the second week of October. We started with separate sessions with the CEOs of each of the 4 companies to separate emotions from financial facts. We applied our proprietary architecture of compromise building method, analyzing the real costs of man-hours incurred by each side.
The main joint session lasted 11 hours and took place in our office at Roosevelta St. We focused on looking for touchpoints, i.e., shared interest in maintaining the contract with the end client. Instead of looking for those responsible for the delay, we recalculated the actual work contribution of senior developers in the disputed modules of the system.
The solution
We prepared the content of Annex No. 4, which introduced a profit-sharing model of 40/30/20/10 instead of the original equal split. This arrangement better reflected the technical involvement in the ERP module. The document also included a fast-track response path for budget changes exceeding 15,000 PLN.
We introduced a system of weekly financial reports, which are approved by all partners every Thursday by 15:00. We also launched a joint reserve fund in case of errors in estimating work time. Thanks to this, money disputes are now resolved on an ongoing basis, not at final invoicing.
Results
The consortium regained operational liquidity in 9 days after the end of mediation. The ERP project was delivered 4 days after the original deadline, which the client accepted without charging contractual penalties. All 4 entities continue to cooperate on the next stage of system maintenance.
Timeline
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05.10.2023Analysis of financial documentation and original consortium agreement
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09.10.2023Individual meetings with boards of 4 partner companies
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12.10.2023Mediation session at the Chodkiewicz & Partners office
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16.10.2023Signing of the annex and resumption of programming work
"We were a step away from court, which would have blocked our funds for years. The mediators brought us down to earth with hard calculations. It wasn't a nice conversation, but it was concrete and effective."