During Project Development and Project Execution, Contract Management is a delicate topic that many Project Directors overlook at times.
Based on a study by [email protected] with the feedback from Multinational companies like Alstom, Siemens, GE and participants in our PM Trainings show noticeably that Project Contract Management including the following key topics
- Project Due Diligence
- Contract Review, Monitoring and Controlling
- Risk Management
- Claim Management
- Communication Management.
All of these are of paramount importance for successful projects, financially and technically.
Having experience with not only the technical side of things, but also the legal aspects of contracts will really support you here. If you do not have much legal experience, it may be in your best interest to find a great contract lawyer to be on your team!
Most of the time, the root cause of contractual issues are misunderstandings about the scope of work, unclear descriptions or even missing descriptions, no experience in legal matters and its consequences, no standards and inexperienced staff. And for those who say they don’t have enough time for contractual management have not factored in their own time and energy that may be wasted on a failed project that doesn’t come to fruition… Not to mention possible hashmarks on their credibility!
The contract has a periodical importance:
- At the beginning of the project until it is signed
- At the end of the project during the panic curve
Many times the contract is ignored or neglected by project engineers
- Ad hoc change of management does not include official approval to technical or commercial alterations in the contract
- “Grey zones” are there either by coincidence or even intentionally created to leave room for further concessions or amendments.
Basic recommendations for contract management in projects are:
- Stick to the contract – but find amicable ways of managing the project in the interest of all parties involved
- Create awareness about the contractual determined requirements to the entire project team
- Sort out and address the grey zones and/or the compliance issues at the beginning – that would be the least costly
- Participation of Contract Managers in risk projects – Risk Review
- Proposal/contract release by Review Board and documented decision making
- Taking country specific legal regulations into account
- Use the services of a Contract Manager for professional contract management