How manage a contract to protect yourself, your team, and your reputation?
Congratulations! You have won the project. What now follows is contract negotiation and signature. Although in some quarters that process is considered just a formality, it is an important step that can guide the entire execution of an assignment.
Typically, much is made of contract administration by the procuring team (or contracting party). The exercise tends to cover all activities related to the performance of Consultants and Vendors (of goods and services) in the fulfilling their contractual obligations, and to ensure appropriate actions are taken to promptly remedy any deficiencies observed when implementing the contract, or with regard to the scope or terms and conditions. Having said this, Consultants and the Vendors also ought to manage their contracts, to ensure:
- that they are efficiently and effectively executed;
- that the contracting party fulfils their obligations in a timely fashion; and
- that they are aware of the recourse and remedies available to them, as appropriate.
When should you begin to think about the contract and contract management?
Consultants and Vendors should keep the anticipated contract in mind when they are bidding on the project. Although it almost goes without saying that at that stage the contract is not being awarded, the content of your proposal could influence the final terms included in the contract. Further, through that submission, there is the opportunity to begin to indicate issues, especially administrative or project management issues, you consider important, which can be referenced during the negotiation process.
What should you be doing during the contract negotiations?
Sometimes, we can be so eager to start the project that we are prepared to gloss over the contract negotiation phase. Further, the procuring team, especially when it is a public body, frequently finds itself under the gun to start a project, and so wants to rush through the contract negotiation phase. However, during the contract negotiation period you, as the Consultant or Vendor, have the opportunity to ensure that you clearly understand the terms and conditions to which you are agreeing, along with the obligations of all parties concerned.
Further, although it may not augur well to be unduly pedantic when reviewing the contract, or try to extract more than what had been initially specified, it is important to be thorough in your review of the contract, since typically, it is written in favour of the drafter, which tends to be the contracting party.
When does managing a contract end?
Following contract signature, project execution usually begins, and you should be referring to the contract continually to ensure that you (and your team) are adhering to the terms and conditions specified. However, essentially, a contract should be managed right up performance of the final obligations by all parties. For the Consultant and Vendor, that tends to be submission of the final deliverables, or the completion of the specified scope of work. For the contracting party, the end of the contract is usually signalled by the acceptance of the final deliverables, and settlement of all outstanding payments.
Summary
Frequently, most contracts are implemented without any major issues arising. When challenges implementing the project are experienced, all parties tend to be aware of the reasons why, and some latitude may be exercised, which in fact, might not have been contemplated in the signed contract. Although such an approach can be mutually beneficial and welcomed by all concerned, either of the party (but especially the contracting party) always has the option (and the right) to ‘pull rank’; and seek to actively enforce the terms and conditions of the contract. By being versed in the terms and conditions therein, and ensuring that you are guided by them, you can limit your (and your team’s) exposure, should the need arise.
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