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Financial Challenges with [Advanced] Service Contracts

This survey assesses the financial challenges of (advanced) service contracts. What do we mean by “advanced” services? We have defined advanced services as services with significant risk transfer, lasting longer than 18 months or where alternative revenue models have been used (i.e., Product-as-a-Service or pain/gain sharing).
 
Your perspectives are invaluable in helping us understand how organizations navigate, control, and manage financial aspects of service contracts. This survey forms part of a wider research project with Lucerne University of Applied Sciences and Arts, the University of the West of England, Sant’ Anna School of Advanced Studies, and the University of Bergamo.
 
The insights obtained through this survey will serve as building blocks for identifying the challenges firms encounter and the existing best practices. Your input supports us in shaping the future of financial management within the advanced service contract domain. This survey forms part of the input to a practical handbook for the financial management and control of advanced service contracts. We will share the findings of the survey with you in December 2023.
 
The survey will take approximately 5 minutes, and all data is kept confidential.

Please get in touch with us if you have further questions (our email addresses are given below).
 
Thank you for your input.
 
 
Prof. Dr. Shaun West (shaun.west@hslu.ch) – Lucerne University of Applied Sciences and Arts
Dr. Kyle Alves (kyle.alves@uwe.ac.uk) – The University of the West of England
Prof. Andrea Tenucci (andrea.tenucci@santannapisa.it) – The Sant’ Anna School of Advanced Studies
Prof. Paolo Gaiardelli (paolo.gaiardelli@unibg.it) – University of Bergamo
Lorenzo Montaruli (l.montaruli@studenti.unibg.it) – University of Bergamo
1.Challenges during the contract development phase
Strongly Agree
 Agree
Neither Agree nor Disagree
Disagree
Strongly Disagree
N/A
We have a clear understanding of the contract scope.
We have the tools and models for effective cost estimation.
We understand the impact of import/export taxes on the costs.
We understand the impact of other taxes (i.e. withholding) on our costs.
We consider the cost of capital (or WIP) within our cost estimations.
We consider the impacts of exchange rates in our cost estimations.
We work with procurement to ensure that our input costs are clearly understood.
We can model the risks of pain/gain sharing accurately.
We integrate risk management into cost structures.
We develop prices based on value for the customer.
We develop prices based on market norms for the customer.
We use cost-plus for pricing.
We use pay-per-use for our fees.
We use pay-per-performance (or output) for our fees.
We always apply performance commitments to our contract (i.e., pain/gain sharing).
We build a cash flow model that considers the costs and the revenues.
We aim to say ‘cash-positive’ in our cash flow from day one of delivery.
We understand the impact of the cash flow on our balance sheet.
We confirm the financial solvency of our counterparty.
2.Challenges during the delivery phase
Strongly Agree
Agree
Neither Agree nor Disagree
Disagree
Strongly Disagree
N/A
We manage costs to stay within budget.
We understand the impact of import/export taxes on the costs.
We understand the impact of other taxes (i.e. withholding) on our costs.
We are able to manage unexpected changes to costs.
We are able to deal with long-term contracts and price escalation.
We manage currency risk.
We are able to monitor performances.
We are able to monitor client satisfaction.
We ensure the cash flow is positive every quarter of the contract.
We proactively identify and mitigate financial risks.
We can manage the recognition of sales based on percentage of completion (i.e., IFRS 15).
Basic data
3.Which segment are you active in?
4.You are active mostly in?
5.What is your position?
6.Would you be available for an interview?
7.Would you be interested in joining the workshop in December where we will explore the topic in more detail (physically or virtually)?
8.Would you like to receive a copy of the final report? Remember if you do you need to leave your email address!
9.What is your work email address?
Many thanks again for your time

Prof. Dr. Shaun West (shaun.west@hslu.ch) – Lucerne University of Applied Sciences and Arts
Dr. Kyle Alves (kyle.alves@uwe.ac.uk) – The University of the West of England
Prof. Andrea Tenucci (andrea.tenucci@santannapisa.it) – The Sant’ Anna School of Advanced Studies
Prof. Paolo Gaiardelli (paolo.gaiardelli@unibg.it) – University of Bergamo
Lorenzo Montaruli (l.montaruli@studenti.unibg.it) – University of Bergamo