The purpose of this thesis is to examine what public sector organizations should be aware of when offering an agile IT development contract to a private company contractor. The parties have different preferences and individual risk aversion when entering into the contract. Due to bounded rationality and transaction costs, they are not able to foresee all possible contingencies that the parties may encounter in the future.
Initially, it is examined what the parties' legal position is, in the event of a deficiency in an object of the contract. The deficiency assessment can be assessed based on an obligation of means or based on an obligation of result. In absence of agreement between the parties of what obligation to use, it is derived, that The Danish Agency for Digitalization's Standard Contract for long-term IT projects (K02) and Standard Contract for Agile IT projects (K03) can be used as an interpretative aid when the parties' agreement is not comprehensive. Itis relevant to the public organization, to be conscious of to decrease the probability of failures causing the project to lose value to the public organization.
Second, it is examined how the public contractor should write a remuneration scheme, with the purpose to ensure that the private contractor has the right incentives in the contract. It is shown, that by offering the private contractor an incentive contract does ensure the public organization to gain the maximum possible value of from the contract because of the private contractor becomes willing to maximize the effort and lower the cost to the lowest possible level.
Third and last, it is examined how the parties allocate contract risk most efficient in case of breach of contract remedies. The most efficient way is to choose the specific performance remedies, where both parties are risk-averse, but where the private contractor is less risk-averse than the public organization.
|Educations||MSc in Commercial Law, (Graduate Programme) Final Thesis|
|Number of pages||82|