Contract management

Euromethod offers guidance about how decision points can be planned.

We now need to consider the communications between the supplier and the customer while the work contracted for is being carried out. It would probably suit all concerned if the contractor could be left to get on with the work undisturbed. However, at certain decision points, the customer needs to examine work already done and make decisions about the future direction of the project. The project will require representatives of the supplier and customer to interact at many points in the development cycle - for example, users need to be available to provide information needed to carry out effective detailed interface design.

This interaction, or other external factors, often leads to changes being needed, which effectively vary the terms of the contract and so a careful change control procedure is needed. Each of these topics will now be tackled in a little more detail.

When a the contract is being negotiated, certain key points in the project can be Chapter 4 discusses identified where customer approval is needed before the project can proceed. For incremental delivery, example, a project to develop a large system can be divided into increments. For each increment there could be an interface design phase, and the customer needs to approve the designs before the increment is built. There could also be a decision point between increments.

For each decision point, the deliverables to be presented by the suppliers, the decisions to be made by the customer and the outputs from the decision point all need to be defined. These decision points have added significance if payments to the supplier are based on them. Not only the supplier but also the customer has responsibilities with respect to these decision points - for example, the supplier should not be unnecessarily delayed while awaiting customer approval of some interim deliverable.

Where work is contracted out there will be a general concern about the quality of that work. The ISO 12207 standard envisages the possibility of there being agents, employed independently of the supplier or customer, who will carry out verification, validation and quality assurance. It also allows for joint reviews of project processes and products, the nature of which needs to be clearly agreed when the contract is negotiated, otherwise the supplier might claim unwarranted interference in their work.

As the system is developed a need to change certain of the requirements often emerges. As noted earlier, essentially, this is varying the terms of the contract. Oral evidence is not normally admissible to contradict, add to, or vary the terms of a written contract, so that agreed changes need to be documented properly. An effective change control procedure is therefore needed to record requests for changes, along with the supplier's agreement to them and any fees for the additional work.

It could happen that the supplier does not meet one or more of their legal obligations. This might be through no fault of theirs, if, for example, the customer has caused the delay by being tardy in giving the necessary approvals for intermediate products. If no action is taken when the default occurs, this can be taken to imply that the customer in fact condones the failure and this can lead to the loss of a right to legal redress. The customer should therefore protect their legal rights by officially notifying the supplier as soon as possible that the failure has been recognized. It will be recalled that under English law any claim for liquidated damages should be based on actual losses. From the point where the default occurs, the customer needs to keep an accurate record of the actual losses incurred as a result of the default including any consequential losses.

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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