What is the role each type of contract plays in Project Management?
Every day, infrastructure and projects are being undertaken all over the globe. These projects can be any type, including software, construction, telecom and scientific. Every project has stakeholders/clients and vendor/seller/supplier in common. In other words, every project should be initiated by an organization that can support the procurement needs. These two parties are commonly referred to as the “buyer” and the “seller” in project procurement management. The “contract” is the agreement between them.
Contracts are an integral part of procurement management. Contracts are formal and create a legal binding between buyer and seller. Project management is not possible without contracts. They provide relief for both sides. It is by managing the risk involved in procurements. Contracts must share and bear the responsibility of each party in the completion of the project. This is especially true for larger projects. Corporates can increase their profitability by using good procurement practices.
This article aims to provide more information on procurement and contract management. It is designed to help professionals understand and be conversant about the types and processes of contract management.
The Project Manager:
According to PMBOK 6th edition section (page 91), the Project Manager is the person responsible for leading the team in achieving the project goals. A Project Manager is assigned by the performing organization.
The authority level determines which roles the project manager will play. Many organizations assign a contract project manager based on project complexity and size. The role of a contract project manager is very different from that of a Project Manager.
A Contract Project Manager, also known as Contract Manager, is a critical role in an organization. He/she oversees the contract life cycle and manages projects. They often play the role as a liaison between companies, employees, vendors, customers, and vendors. He/she is responsible for creating the contract’s repository, and is also responsible for maintaining all contractual records. These records are used by the company for their projects and then become part of Record Management.
Some of the key responsibilities include, but are not limited to:
Draft, develop, negotiate, and execute the contract.
To ensure contract effectiveness, create policies and procedures.
A Liaoning person, and a contract facilitator.
Ensure that contracts are closed throughout the project’s duration.
Make a contract repository that you can update regularly.
As the name suggests, a contract is an agreement between two people. It is a formal agreement between buyer and seller, more commonly referred to as supplier in project management. This agreement is used to procure the goods and services necessary for the project. This document must be prepared by the Project manager (or contract project manager, if assigned). It must be prepared in coordination with the Procurement Manager during project planning. It must be documented as a Procurement Management Plan, which is part of the primary Project Management Plan.
Contract Management, a part of the Project management, deals with the vendor/seller/supplier (as termed in the contract). It also manages procurements according the terms and conditions of the ‘Contract. These terms and conditions are mutually agreed between the seller and buyer.
Contract management is the art of and science of managing a contract agreement throughout the contracting process.