Contract and Procurement Management

Many times it is the project manager who is on the buying end of the project. Most of the time we think of projects as work that we are doing to produce a set of deliverables that will be delivered to some organizations. However, often the project manager is required to hire another project manager to produce goods and services for his or her organization. When this is done, the roles and responsibilities of the project managers change somewhat. It is necessary to have assurance that the hired project manager and his or her team will actually produce what is required.

Contracts provide us with a way of making agreements that can be depended on. After considering the need to protect life, property, and freedom, nearly all of the legal systems of the civilized world are designed to allow business to flow with reasonable ease and allow people to exchange goods and services in a mutually beneficial way. This is called commerce.

Contracts are binding agreements between two or more parties. The terms of a contract are not only binding but enforceable by our legal system and our courts. If this were not the case, our entire economy would soon collapse, and commerce would end. Without the right to property and the enforcement of contracts no one would be a party to any agreement, because the other parties to the agreement might change their minds. Because of the legal nature of contracts there is usually a higher level of approval required. As the value of contracts becomes greater, legal and procurement experts will become part of the project team. Even in the simplest purchases a purchasing agent must sign the purchase order as agent for the organization. Traditionally we refer to the seller and the buyer by several names. A seller may be called contractor, subcontractor, vendor, agency, or supplier. A buyer we may refer to as client, customer, contractor, prime contractor, or acquiring organization.

The contract statement of work is a necessary part of any procurement or contract.

It must be in sufficient detail to allow any of the potential vendors to fully understand what is required of them and if they are capable of meeting all of the requirements. If the purchased items are commodities, the statement of work (SOW) is very simple, but if the items being purchased are very specialized, the SOW can be quite lengthy. The SOW should include the items that are required that are not necessarily part of the product delivered. These are items like quality reports, manuals, documentation, and performance and progress reports.

This chapter has two parts: Contract Management and Procurement Management.

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Project Management Made Easy

Project Management Made Easy

What you need to know about… Project Management Made Easy! Project management consists of more than just a large building project and can encompass small projects as well. No matter what the size of your project, you need to have some sort of project management. How you manage your project has everything to do with its outcome.

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