Contract Administration Planning

The PMO should provide guidance to ensure that contractual obligations that impact the project effort are identified and appropriately addressed during detailed project planning conducted following award of the contract. Sometimes, more detailed planning is not particularly required, and in that circumstance the proposed technical solution is then used as the project workplan. The PMO can establish a staff position to perform contract administration planning; it can assist the project manager in this activity; or it can simply provide guidance incorporated into the project management methodology for use by the project manager and project team members. The following list presents a few of the more prominent planning activities that should be considered for implementation within the project management environment. It should also be noted that most of these activities are initiated with standard project planning process guidance — usually in conjunction with the project communications plan or project workplan (or both), but are highlighted here because of their importance to customer contract administration.

■ Establish a meetings schedule. The meetings schedule specified in the contract should be established and communicated to all project stakeholders. The schedule should include preliminary meetings, such as the customer's kickoff or initial planning meetings. It is important to the customer relationship that the PMO, project manager, and project team members demonstrate awareness of and preparation for all customer meetings.

■ Establish deliverables, reports, and reporting schedules. All contractually required external and internal (team and management) deliverables, reports, and reporting schedules should be identified and communicated so that members of the project team and other project stakeholders know the required schedules for providing project deliverables and project reports to the customer in a timely manner.

■ Establish contract documentation oversight. The PMO or a specified business unit may be the primary repository for contract documentation, but the project manager, and some members of the project team, will need access to critical contract documents. In addition, the project manager and project team members may need to document ongoing interactions of the customer relationship. Documentation is essential to provide proof of performance, management of changes, justification for claims, and evidence in the unlikely event of litigation. The purpose of documentation is to record facts and reduce reliance on human memory. Efforts to maintain documentation must be thorough and consistent. Project documents can be made accessible to a variety of authorized stakeholders on the knowledge management system developed for use within the project management environment. Contract administration documentation should include:

■ Official copy of the contract

■ Contract modifications

■ Conformed or adjusted working copies of the contract

■ External and internal correspondence

■ Change orders

■ Meeting minutes

■ Project plans

■ Progress reports

■ Project diaries

■ Telephone logs

■ Photographs and videotapes

■ Establish a contract communication control system. Communication is an essential part of contract administration. Compliance with contract terms and conditions requires effective communication about contract performance. The project manager must establish not only the communication procedures to ensure that project team members and all stakeholders know what to do, but also the controls to ensure that the procedures are used. In addition to developing an internal communications system, the project manager must ensure the practice of effective communication with the customer.

■ Establish procedures to solve contract issues and problems. The means for project team members to use an issues log to identify, handle, report, and track project (contract) issues and problems should be implemented.

■ Establish contract change control procedures. The PMO must ensure that acceptable change control procedures are established for each project effort having contractual obligations and that all members of the project team know how to use it. Change control procedures normally provide guidance to:

■ Ensure that only authorized people negotiate or agree to contract changes.

■ Estimate the effect of a change on cost, schedule and resource utilization, and gain approval for any additional expense, time, and resources before proceeding with a change.

■ Notify project team members that they must promptly report any action or inaction by the customer that does not conform to the contract terms and conditions.

■ Notify the customer in writing of any action or inaction that is inconsistent with the established contract terms and conditions.

■ Instruct team members to document and report in writing both the actions taken to comply with authorized changes and the cost and time required to comply.

■ Promptly seek compensation for increases in cost, time, or resources required to perform project work, and negotiate claims for such compensation from the customer in good faith.

■ Document all changes in writing and ensure that both parties have signed the contract or contract change; such written documentation should be completed before work under the change begins, if practical.

■ Set up procedures for claim and dispute resolution. The PMO must ensure that project managers and other stakeholders responsible for achieving contract obligations are well versed in contract claim and dispute resolution procedures. Disagreements are inevitable and should be expected as a normal part of contract management. However, all contract parties must commit themselves to resolving disputes amicably. Although claims and disputes cannot be avoided, they can be resolved effectively, fairly, and without rancor and litigation. To that end, only professionally trained contract managers or legal counsel should initiate and conduct formal contract conflict and dispute resolution actions. The PMO's primary responsibility in dispute resolution is to work with each project manager to identify and attempt to resolve disputes when they are minor and showing only the earliest signs of disagreement. The project manager must seek the advice of the PMO, senior management, and legal counsel at the first indication that a customer dispute is emerging or escalating. The PMO should ensure that each project manager and all project team members are familiar with the range of common resolution techniques that can be used to avoid escalation of contractual conflicts and disputes. Prominent techniques include:

■ Negotiation. Similar to the negotiation conducted for award of the contract, this interaction between the involved parties seeks to compromise on issues leading to resolution of a conflict.

■ Mediation. Legal counsel is involved in this effort led by an impartial third-party participant who facilitates a compromise on issues leading to resolution from an unbiased perspective.

■ Arbitration. The disputed issues are submitted to a disinterested third party for a final decision. This approach is usually considered to be more expedient, less expensive, and a less-formal resolution method that is often preferred over litigation.

■ Litigation. A highly formal and potentially lengthy process for resolving contractual disputes through the courts and applicable legal system. Litigation always involves lawyers.

All of these planning actions and determinations can be compiled into a contract administration plan for use by the project manager and members of the project team, and for oversight by the PMO. In some cases, depending on content, elements of a contract administration plan can be shared with the customer.

Was this article helpful?

0 0
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.

Get My Free Ebook

Post a comment