Petzer, Du Toit & Ramulifho

A service level agreement is usually drafted within the context of the information technology environment. However it is not limited to the specific industry as more industries are discovering the many benefits of this type of agreement. The object of such an agreement is to maintain and continuously improve business service quality through a constant cycle whereby all parties come to an agreement on various issues relating to monitoring, reporting and reviewing achievements through various actions in order to establish quality and effective levels of service.

A service level agreement is an agreement which is entered into between two or more stakeholders in order to provide a management tool and framework on which to base, evaluate and assess the performance criteria of the involved parties. In the case of State Tenders such criteria are usually specified in the applicable tender specifications in the Tender Documents. A typical Service Level Agreement will include items such as:

Project structure, in the case of private Companies and Government spheres it will be indicated under whose department leadership a project is running from.

Performance duration and starting date, under this category services are to be performed in accordance with strict time frames and conditions.

Logistics and schedule of assignment, under this category it is important to ascertain before hand the location where a service provider will be performing his/ her assignment to avoid delays to access information required in order to complete an assignment.

The most important aspect that the service level agreement (SLA) aims to achieve is to provide a clear indication of the roles and responsibilities of all parties involved in the implementation of the project. The subsidiary role that SLA’s play is that it provides a platform to monitor, review and identify areas of improvement and provides a tool of strengthened communication between all stakeholders. The typical SLA would usually cover services to be delivered, performances, tracking and reporting, problem management, fees and expenses and customer duties and responsibilities.

The various stakeholders’ duties and responsibilities must be defined. It provides detailed specifications on exactly what is to be delivered. It is a well known business principle that you cannot manage something that you cannot measure. Therefore it is important to set benchmarks and targets as every service must be capable of being measured and the results must be analyzed and reported. The financial aspects of the agreement must also be clearly defined. Budgets are specified and monetary targets must be set out.

WHAT TO DO WHEN ASKED TO SIGN A SERVICE LEVEL AGREEMENT?

Our advice to clients would be to view the SLA’s in a positive light. In fact if the SLA is drafted correctly, it would create an environment of protection for each party involved in the specific project since it would clearly tell you what your role is, what your milestones are and how your work will be reviewed so that you are aware at the outset of the project what is expected from you and all the other stakeholders.

Our advice is to read the agreement carefully and see that it clearly reflects your role in the envisaged project and whether the goals, monitoring and review mechanisms are realistic and achievable. You should also pay careful attention to the manner in which the agreement sets out problem management and problem resolution. It would be advisable to enter into discussions with the necessary stakeholders so that all these issues can be resolved prior to signing and all aspects can be clearly explained.

Should you require further or more detailed information on how to draft and interpret service level agreements, please do not hesitate to contact our Lesley Ramulifho at 012 342- 9895 or e-mail him at lesley@legaledge.co.za.