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IT budgets blown on lawsuits

Legal action accounts for 15% of spend

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IT projects are being held up and money is being wasted because of a fear of litigation, particularly when a project is outsourced.

IT consultants at Cutter Consortium estimate that 15 per cent of the budget for an IT project is spent, in one way or another, on dealing with legal action.

Another big problem with getting IT projects moving, is fear of a law suit. Tom DeMarco, a technology fellow at Cutter, says that because people are so afraid of being sued, they are careful not to write things down anywhere. "This is great during litigation, but not so good when you are trying to get things done," he remarked.

Information Week reports that during the '90s, legal fees relating to outsourcing contracts increased 40 per cent, an increase DeMarco has also seen. "The average cost of litigation fees [are] greater than the cost of coding, which is the bulk of a typical IT budget," he told the paper.

Given that the legal wrangling tends to be about projects never completed, going over budget and final results that look nothing like the original plans, DeMarco's recommendation that the contract be written so that everybody can understand it may seem a little obvious.

However, he also suggests including a master agreement that defines all the legal terms and lays out the service level agreements and so on. He recommends that the company prepares a user's guide to the contract, and confirm that the contract states what was agreed by the negotiators.

All this may seem like overkill, but don't forget the Darwin Awards. ®

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