Managing SLA Penalties and Contract Terms
DigitalCore automatically detects SLA breaches and can generate penalty entries when performance thresholds are crossed.
Understanding SLA Breach Detection
When Does DigitalCore Check for Breaches?
Breach detection runs automatically every time a performance actual is entered — either through the check-in grid or via the AI assistant. It checks the entered value against the contract’s SLA terms for that KPI.
How Thresholds and Operators Work
Each SLA term defines a threshold value and an operator:
- “Less than” operator: A breach occurs when the actual is below the threshold (e.g., Availability < 99.5%)
- “Greater than” operator: A breach occurs when the actual exceeds the threshold (e.g., Response Time > 4 hours)
Configuring Contract Performance Terms
Linking a KPI to a Contract
In the contract detail, add a performance term for each KPI with financial consequences. You select the KPI from the performance catalog, ensuring consistency with the engagement’s performance template.
Setting Threshold Values
Set the threshold that defines the boundary between compliance and breach. This should match the agreed contractual SLA target.
Choosing Penalty Type
| Type | Description |
|---|---|
| Fixed | A flat amount per breach (simple, predictable) |
| Percentage | Based on the contract’s monthly or total value (scales with contract size) |
| Tiered | Multiple penalty levels based on severity (rewards near-misses, penalises major failures) |
What Happens When a Breach Occurs
Penalty Event Created
A penalty event record is created with the details: which KPI, what was the actual value, what was the threshold, and the calculated penalty amount. This provides a complete audit trail.
Auto-Generated Finance Entry
If the SLA term has auto-create enabled, a corresponding cost entry is added to the finance domain. The cost amount equals the calculated penalty and is attributed to the correct finance line item.
Where to Find Penalty Records
Penalty events are visible in the engagement’s detail view. Each event links to the originating performance measure and (if applicable) the resulting finance entry.
Reviewing and Overriding
Viewing Penalty Events
Navigate to the engagement and look for SLA penalty events. Each shows the KPI, period, actual value, threshold, and calculated penalty.
Manual Adjustments
In some cases, contractual negotiations may result in waived or reduced penalties. You can manually adjust the finance entry amount without deleting the penalty event, preserving the audit trail.