Contract Management Why, What, How?
Many projects rely on the supply of hardware, software, facilities, and services by various vendors or sub-contractors. The Project Manager may need to:
select the best suppliers,
negotiate terms and conditions,
ensure the goods or services supplied are acceptable,
deal with disputes,
negotiate changes where the client requires new or changed deliverables from the vendor,
ensure the vendor or sub-contractor is paid in accordance with the agreement,
Manage the relationship to maintain a good working relationship.
The Project Manager has an important part to play – but remember what you are not…
You are not the right person to enter into contractual relationships on behalf of the organization. It will usually be a senior manager who is most appropriate and is authorized to agree the terms and sign the contract.
You are not a lawyer. Although it is in your interest to see that, the deal meets your needs, use lawyers or other specialists to determine the precise wording of the contract.
There are many different situations requiring contracts. Your approach may vary considerably. In terms of scale, look at these examples:
complete outsourcing of facilities and business functions,
outsourcing the development of a new IT system,
sub-contracting the development of a specific component of your new system,
purchase of packaged software and on-going support,
using consultants from a major consultancy firm,
hiring a freelance programmer working as a contractor,
Additional licenses for standard desktop software.
Most people and businesses are reasonably honest. They need satisfied customers to build their reputation and gain future work. However, some of them will bend the truth a bit if they feel it is legitimate. We call such people “salesmen.”
For example, in a selection exercise if you ask the question “is your system user friendly,” you can guarantee they will say “yes.” It was not worth asking the question. Worse than that
, some vendors will use the word “yes” to mean, “Yes – it could be done … if we modify the system for you.” You need to probe for the truth and make sure you leave no room for them to mislead you.
Watch out for the hidden extras. If the contract does not say something is included, you can guarantee an additional charge for it. By the
n you will be tied into the relationship. You will find you have a poor bargaining position when negotiating those charges.
Beware of the sharks!