Understanding how Contract Management delineate Project Management 201.
Types of projects
A very simple example of a tangible project which leaves very little to imagination is the assembling of a vehicle. At the end of the project there is a car one can see, touch and if lucky enough drive away. An example of an intangible project is a training program that is designed to improve the confidence of staff. The outcome even though can be measured through cognitive assessment it can't be seen or touched. Project procurements are thus mainly categorised into goods, works and services to help ensure the appropriate contracting is used in effecting it.
Contract communication models
Structure of a contract
An offer is a conditional proposal made by a buyer or seller to buy or sell an asset, which becomes legally binding if accepted. An offer is also defined as the act of offering something for sale, or the submission of a bid to buy something.
An express act or implication by conduct that manifests assent to the terms of an offer in a manner invited or required by the offer so that a binding contract is formed.
For a contract to exist the parties to an agreement must intend to create legal relations. Usually, the presence of consideration will provide evidence of this – if the promisor has specified something as the price for the promise this – in most cases – carries with it an intention that the parties be bound. Intention remains, however, an independent requirement and must be separately demonstrated and there are cases in which consideration has been present but no contract found to exist because this pre-condition has not been fulfilled. In determining if there is contractual intent and objective approach is taken.
Something of value to which a party is not already entitled, given to the party in exchange for contractual promises. Consideration can take various forms, including a:
- Monetary payment.
- Promise to do something.
- Promise to refrain from doing something.
Consideration is one element critical to the formation of a contract and it must be legally sufficient for the contract to be enforceable.
Key types of contracts
- Written Contracts
- Verbal Contracts
- Part Verbal, Part Written Contracts (Hybrid)
- Standard Form Contracts (Framework Agreements)
- Period Contracts (Time Scaled)
I prefer to always highlight above listing because embedded in them one can always create several contracts such as:
- Express and Implied Contracts
- Unilateral and Bilateral Contracts
- Unconscionable Contracts
- Adhesion Contracts
- Aleatory Contracts
- Option Contracts
- Fixed Price Contracts
Why project contract management is so key for project success
The above definition in a nutshell best captures how important contract management delineates project management. Haapio, H. (2007) conference paper highlighted the reason why project contract management is so key in realising project success: “Few aspects of project business are unrelated to contracts. Selling, procurement, finance, invoicing, change control, claims, and many other fields operate within the framework of contracts.” The one reason why contracts are created and managed to make any type on contractual relationship successful is its ability to first clearly capture stakeholder expectations, accurately project potential outcomes that this relationship can generates and document responsibilities of all parties to the contract. This pretty much defines a roadmap which of followed to the letter should generate the desired results. This certainly almost always holds true in the absence of force majeure.
For a project delivery to be successful, there is an array of many parts that must come together in total sync. One of the most important parts is clearly defining team roles and responsibilities and getting each one to own their role. Then walking through the project life cycle, the project proposal must be very well developed. All the project related contracts to engage teams, resources, suppliers, tier contractors etc., must be innovatively designed.
In my opinion the best picture of the relationship between contract management and project management may be watching a Fédération Internationale de l'Automobile Formula-1-Race. In addition to the team principal, engineers, analysts, mechanics, drivers and including the factory design and manufacture team, there can be as many as 1,000 members. Each member of the team plays a very crucial role in ensuring race success.
The best contract or contract manager cannot deliver a successful project in isolation. Neither can the best project manager of project team do. The highlight is contract and contract management draw the parameters and ensure the project is delivered within the contractually agreed boundaries. One thing it ensures for sure is the avoidance of gold plating.
Personally he delights in sharing God's Word and is happily married to Debbie with whom he shares three kids – Iden, Ibby & Ilse – with.