Product documentation
Service Contracts define the commercial and operational agreements between a service organization and its customers. Within HSO Service Management, contracts determine which Service Objects are covered, which services are included, how Service Calls are handled, and how contractual revenue and planned maintenance obligations are managed.
Introduction
A Service Contract defines the rights and obligations associated with providing service to a customer for an agreed period. It combines covered Service Objects, Coverage Types, a Service Level Definition (SLD), a Contract Type, pricing arrangements, invoice schedules and, where applicable, planned maintenance schedules.
Contract lifecycle
Service Contracts are created through Contract Proposals. A proposal allows the commercial and operational details to be prepared and reviewed before the agreement becomes active. Once approved, the proposal is promoted to an active Service Contract. Subsequent changes are managed through proposals and addenda, preserving the history of the original agreement and its amendments.
Operational and financial integration
An active Service Contract provides the contractual context for Service Calls and Service Tasks. It influences the applicable Call Types, coverage, Project Integration and chargeability of service transactions. Contracts can also generate periodic invoice schedules and planned maintenance visits, connecting customer agreements with operational execution and financial processing.
Introduction
A Contract Proposal is the starting point for creating a new Service Contract or preparing changes to an existing agreement. It provides a controlled environment in which contract terms, object content, pricing and maintenance obligations can be defined before activation.
Creating a Contract Proposal
When creating a proposal, the user specifies the Contract Holder, contract start date, duration, Contract Type and Service Level Definition. A Contract Template can be selected to populate predefined commercial and operational settings, reducing the amount of manual configuration required.
The proposal remains separate from an active contract until it is promoted. This allows the user to review its content and confirm that the agreement reflects the customer's requirements.
Proposal versions
Multiple versions can be maintained under the same Contract Proposal. Each version can contain different contract terms, coverage arrangements, Service Level Definitions, object content or visit schedules. This supports internal review and commercial negotiations without creating unrelated proposals for each alternative. The appropriate version must be selected before the proposal is promoted.
Introduction
Contract Object Content defines which Service Objects are included in the agreement. This determines the scope of the contract and which objects are entitled to the associated service conditions.
Adding Service Objects
Existing Service Objects can be added through the proposal's object content lines or the Graphical Object Builder. The Graphical Object Builder is particularly useful when complete object hierarchies need to be included or modified, while content lines support the addition of larger numbers of objects.
Proposed Service Objects
A Contract Proposal can also contain new Service Objects that do not yet exist in the operational object database. These are created as proposed objects with the appropriate Object Type and remain in the proposal until promotion.
When the proposal is promoted, the proposed objects become active Service Objects. If the proposal is cancelled, the proposed objects are removed.
Contract eligibility
A Service Object cannot be covered by multiple Service Contracts simultaneously. Objects already included in an overlapping contract are therefore not available for inclusion in another proposal for the same period. The user should verify the object content and contractual dates before promoting the proposal.
Introduction
The Contract Type, Coverage Types and Service Level Definition determine how a Service Contract operates. Together, they establish the commercial model, customer entitlements and rules applied when service work is created.
Contract Types
The Contract Type defines the contract model and its invoicing behavior. Depending on configuration, this can include periodic invoicing, prepayments, coverage pricing, frequency or interval schedules and usage-related arrangements.
The Contract Type also determines which Coverage Types can be included and how their prices are calculated.
Coverage Types
Coverage Types represent the rights and obligations included in the agreement, such as covered labor, materials, travel, inspections or preventive maintenance. They describe the service components covered by the contract and contribute to the calculation of contract value and service chargeability.
Service Level Definitions
The Service Level Definition connects contractual coverage with Service Call processing. It determines the applicable Call Types, default Call Type, Project Integration and coverage for specific object scopes. These rules can apply to all objects, an Object Group or an individual Service Object. When a Service Call is created for an object covered by an active contract, the applicable SLD helps determine the operational and financial defaults for that call.
Detailed configuration of Contract Types, Coverage Types and Service Level Definitions is described in the Setup & Configuration chapter.
Introduction
Contract pricing determines the commercial value of the agreement and how the customer is charged. Depending on the Contract Type, this can involve periodic coverage fees, prepaid amounts, fixed service prices or contract-specific pricing arrangements.
Coverage pricing
After adding the Service Objects, the proposal can calculate its contract value based on the configured Coverage Types, pricing rules and object content. Coverage prices can be reviewed and adjusted where permitted, after which the contract value and invoice schedule can be recalculated.
Periodic invoicing
For periodically invoiced contracts, the invoice schedule contains the expected invoice amounts and dates. The invoice frequency and coverage periods determine how the contractual amount is distributed across the contract duration. The user should verify that the schedule corresponds to the agreed amounts and billing periods before promotion.
Prepayments and retainers
Contracts can also use prepaid or retainer arrangements. In these scenarios, the customer pays an agreed amount in advance, which can subsequently be settled against eligible Service Call transactions. The treatment of prepayments and settlements depends on the Contract Type and related Project Integration.
Contract-specific pricing
Contract Trade Agreements can provide agreed item prices or discounts for particular Service Contracts, contract groups or Service Objects. These arrangements allow contract customers to receive pricing that differs from standard service pricing.
Introduction
Visit Schedules define the planned service obligations included in a contract, such as periodic inspections or preventive maintenance. They establish when maintenance should take place and which Service Objects are included.
Adding a Visit Schedule
A Visit Schedule can be added to the Contract Proposal by selecting the applicable service schedule, rollout start date and Service Objects. Additional settings determine the permitted visit days, working times, calendars and other scheduling conditions. Multiple Visit Schedules can be included when different maintenance activities or object groups require separate planning arrangements.
Proposed maintenance visits
For static schedules, the user can generate and review proposed visit lines before creating the forecast. These lines represent the intended maintenance visits and can be adjusted before the schedule is finalized.
Creating the forecast generates proposed visits in the operational planning context, including planned dates and resource capacity requirements. Dynamic schedules use their configured calculation logic and do not require the same static visit-line preparation.
Contract activation
When the Contract Proposal is promoted, its proposed visits become part of the active contract's planned maintenance obligations. These visits can subsequently be converted into Service Calls and Service Tasks when the work becomes due.
The detailed execution of planned maintenance is described in the Preventive & Planned Maintenance chapter.
Introduction
Contract Promotion converts an approved Contract Proposal into an active Service Contract. This establishes the agreement as the governing record for contractual service delivery.
Promotion process
Promotion creates the active contract, activates the covered object content, converts proposed Service Objects into operational records where applicable, creates the contract invoice schedule and confirms the planned maintenance visits. The promoted contract becomes applicable according to its effective dates. A contract can therefore be promoted before its start date without immediately applying to new Service Calls.
Validation before promotion
Before promoting a proposal, verify the selected proposal version, Contract Holder, Contract Type, start and end dates, object content, Coverage Types, Service Level Definition, pricing and invoice schedule. Any configured visit schedules and their resulting planned maintenance obligations should also be reviewed. Once these elements have been validated and the agreement has received the required approval, the selected proposal version can be promoted.
Introduction
An active Service Contract provides the contractual context for service delivery throughout its effective period. It determines which Service Objects are covered and which operational and financial conditions apply when Service Calls are created.
Contract information
The contract header contains information such as the Contract Holder, Invoice Customer, Contract Type, Service Level Definition, start and end dates, Invoice Group and current addendum. The associated object content identifies the Service Objects covered by the agreement.
Contract application
When a Service Call is created for a covered Service Object, the system can derive the applicable contract, SLD, default Call Type, Project Integration and coverage information. These defaults depend on the selected object, Call Type and effective contract date. The same Service Object may be subject to different contract conditions over time, particularly when an agreement is renewed or amended.
Chargeability
Contract coverage can affect whether labor, materials, travel or other service transactions are charged separately, included in the contract fee or handled through another pricing arrangement. The resulting financial treatment is determined by the applicable contractual rules and Project Integration.
Introduction
Changes to active Service Contracts are managed through controlled proposals and addenda. This preserves the original agreement and provides a traceable history of changes to contractual terms and covered content.
Contract addenda
An addendum can introduce changes such as adding or removing Service Objects, replacing object content, modifying coverage or the SLD, adjusting prices, changing Visit Schedules or extending the contract duration. The changes are prepared as a proposal and promoted after review, rather than directly replacing the historical contract information.
Difference-only and full proposals
A difference-only proposal contains the specific changes to be applied while retaining the remaining contract content. A full proposal represents the complete contract content and is useful when reviewing or restructuring an agreement. Simulated active content can be used to examine the combined result before the changes are promoted.
Contract renewal
Renewal can be handled through the contract change process by preparing the new contractual period and reviewing the applicable coverage, pricing, object content and maintenance obligations. The effective dates of the renewed agreement determine when the updated terms become applicable.
Introduction
Contract invoicing is based on the Contract Type, Invoice Group, invoice schedule, coverage pricing and applicable Project Integration. Depending on the agreement, the contract can generate recurring invoices, prepaid settlements or other contract-related financial transactions.
Invoice schedule processing
The invoice schedule identifies the periods and amounts eligible for invoicing. Each schedule line represents an expected amount associated with contract content, coverage and the applicable period. When a contract is amended, changes to coverage, object content or pricing can result in adjustments to the invoice schedule.
Project invoice proposals
Contract invoices are processed through the Project invoice proposal functionality in Microsoft Dynamics 365 for Finance and Operations. The user reviews the eligible contract invoice lines, creates the invoice proposal and validates the amounts before posting. After posting, the invoice status and next scheduled invoice dates should be reviewed.
Prepayment settlement
For contracts using prepayments or retainers, eligible Service Call transactions can be settled against the prepaid amount. The resulting financial processing depends on the configured contract and project settings.
Detailed invoice processing and financial integration are described in the Invoicing & Financial Integration chapter.
Introduction
Contract Closing ends the active contractual relationship when the agreement expires, is terminated or is replaced. Closing should take place only after the remaining operational and financial obligations have been reviewed.
Operational review
Before closing a contract, review open Service Calls, Service Tasks and planned maintenance visits. Future visits that are no longer required should be cancelled or otherwise resolved to prevent unnecessary service work from being generated.
Financial review
The invoice schedule should be checked for outstanding amounts, unposted invoice proposals, prepaid balances and invoices covering periods beyond the intended termination date. Depending on the circumstances, credit notes, adjustments or settlements may be required.
Final closure
Once the remaining obligations have been resolved, the actual end date can be recorded and the contract closed. Historical contract information remains relevant for reviewing previous service activity, coverage decisions and financial transactions.