Month: June 2020

Organizations dictate the roles of Contract Managers

In contract management, the role of Contract Managers changes on the type of an organization. One of the differences between organizations lies in the extent of authority and accountability that Contract Managers have for making contract changes. Another  difference is the extent to which the Contract Manager’s function in the organization has solely deal-based responsibility, versus a more strategic role in overall company policy and commercial / contractual strategy. For example, does the function simply implement and protect other people’s rules, or does it advocate change and participate in key policy discussions? It is thus, the needs of an organization which dictates the roles of contract management personnel.

<20J>

Roles of Contract Managers are not conclusive

Role of Contract Managers are not conclusive, or consistent in any way, in contract management, the role and its responsibilities vary on different parameters. It shall be noted that the scope depends on the line of responsibility, accountability and authority in an organization. For instance, in one organization the Contract Manager reports to the Commercial Manager and in another it is vice versa.

<14S>

Role of Contract Managers vary depending on the situation of work

In contract management, the role of Contract Managers can vary according to the work involved and the requirement of the jobs. For example, some contract managers have little or no responsibility up to the point of contract signature; and others little or no role after signature (though there is a marked trend towards consolidation of pre- and post- responsibilities, in general). Reporting hierarchy also makes a difference in the process of contract management, with positions attending to Legal matters to have a narrower set of tasks (potentially little responsibility for non-legal aspects of the contract or related policies and procedures, especially in terms of any financial or procurement accountability). Geography has certainly been a major factor in the past, with few Contract Managers visible in non-Common Law countries. However, in modern contract management, this is changing as business globalizes and contract forms and procedures grow more consistent.

<9U>

Role of a Contract Manager

From the observations of the roles of Contract Managers in various organizations, the responsibilities covered in general are summarized below: 

  1. Contracts; Drafting, Compilation, Review, Evaluation, Negotiation and Management. The contracts can be any of following forms;

· Contracting Agreements, Consulting Agreements, Sales / Purchasing Agreements, Sub-contracts, Licensing Agreements, Master Agreements,

· Non-execution Agreements (Non Disclosure Agreements)

· Distribution Agreements (resellers, agents, joint marketing etc.)

· Commercial and Public (Federal, State and Local Municipalities, Government authorities, Public Corporations) Contracting.

  • Serve as the point of contact for customers on contractual matters. Act as the contractual officer between company and customers, ensuring timely review and approval / reconciliation of variations.
  • On all standard and nonstandard contracts, provide redlined recommendations and often negotiate directly with customer attorneys or purchasing staff until consensus has been reached
  • Maintain contractual records and documentation such as receipt and control of all contract correspondence, customer contact information sheets, contractual changes, status reports and other documents for all projects.
  • As needed, provide guidance on contract matters to project managers or other operational staff, including training to new project managers and other employees in contracting practices and procedures.
  • Develop and implement procedures for contract management and administration in compliance with company policy. As appropriate, contribute to or influence company policies.
  • Monitor compliance by company employees with established procedures. Identify areas of recurrent pressure.
  • Work with Risk Management Department / Finance to coordinate contractual insurance requirements.
  • Work with Finance to ensure adherence to broader finance and risk requirements such as revenue recognition, pricing and discounting policies,, export controls etc. May include ‘financial engineering’ and understanding / evaluating economic impact of terms and term options.
  • Support Product Management / Marketing to ensure company products and services are offered with appropriate, competitive terms and conditions
  • Monitor competitive terms. Monitor customer satisfaction with our terms and conditions and contracting practices. Recommend changes.
  • Ensure that signed contracts are communicated to all relevant parties to provide contract visibility and awareness, interpretation to support implementation.
  • Handle on-going issue and change management
  • Monitor transaction compliance (milestones, deliverables, invoicing etc.)
  • Oversee Service Level Agreement Compliance

Ensure contract close-out, extension or renewal.

<4S>

Ways to get a construction contract into success

Most of the construction contracts do not end with the anticipated results in respect of time, cost or quality. The reason lies basically with the lack of communication and friendly relations among the contracting parties. Below is a list of actions which will help the parties to develop better relations resulting ij successful contracts.

1. Communicate and understand the expectations and goals of the owner. The Engineer and the Contractor should consider the best ways to achieve milestones of the project.

2. Establish clear goals for cost, time, quality, and progress for each milestone.

3. Handle issues with mutual understanding and joining hands.

4. Select and engage right workers to tasks, if availability of right workers for a task is an issue then appoint a subcontractor or outsource it. Make sure the workers, or the subcontractors are committed to delivering the tasks as scheduled.

5. Staff members of both the engineer and the contractor who are responsible for each task shall meet regularly on friendly atmosphere to discuss difficulties and issues. Get them to solve problems then and there in mutual helping.

6. Get the employees of like minded operations get to know each other and arrange their sitting in close proximity for better communication.

7. When the teams encounter a difficult issue which they find difficult to solve, get the respective mangers involved.

8. Avoid arguments, mud slanging, criticism among employees of the engineer and contractor. Get them to understand that the problem is common for all.

9. Get the employees to make good relationships, arrange parties or get togethers. Develop a friendly atmosphere where any body can express the difficulties. 10. List down the problems, issues and difficulties that occurred during the contract. Use the list to avoid such things in the next project.

<68M>

Relationships among contracting parties for better results

In construction contracts, it is seen often that the contracting parties do not involve in friendly relationships with attitude of mutual respect and helping, to complete projects successfully. What is seen is interaction of parties for day to day problems, raising issues, complaints, change orders, fines, delays in payments and if worst, liquidated damages.

The ways of thinking seem different from one another where the owner is constantly worried over the progress, or reducing costs, the engineer facing problems with variations, design errors, non-compliances while the contractor thinking of ways to complete the project with the least cost. There is no synchronization among the players at all.

While the ultimate goal has to be completing the project successfully, the ways to go there seems different among the parties and that creates all the ugly things happening while no body consider of doing it the right way in mutual partnership.

From a better perspective what if, the owner, the engineer and the contractor join hands and try to achieve the goal together?

Often in most of construction project, this thing called a kick-0ff meeting takes place, but it does not seem to cater to lay a good foundation of mutual partnership, rather an authoritative formal governing advising what to do and what not to do. Instead, the meeting should allow all the parties to talk about the risks involved, difficulties, issues and how to prepare for what’s ahead by methods of mitigating or solutions for risks and issues involved. Not ending at the kick-off meeting only, the parties should join hands until the end of the contract, in tackling all difficulties together and achieve the goal of completing the project successfully.

<66M>

Relationship among parties to contracts – Is it satisfactory?

A typical tender scenario is that; a tender notice is launched into the market in a newspaper, or a gazette, or anything like that, eligible contractors who are searching out for new contracts get to notice it, get the tender documents and then the tender division  of the contractor springs into action.

After many days (or weeks) in activities such as; quantity take-off, estimation, subcontracts, quotation requests .. etc., the estimation department comes out with the price of the tender while all the contact management team scrutinize the tender documents to search for any risks and other issues with the tender.

Finally, the tender is presented to the management with its price, issues, risks involved and other essential features for management’s final decision.

The tender is then submitted and then starts the period of waiting until the date of tender opening. If all is well, the contractor is waiting to hear the good news.

Out of all the contractors, only one will get the good news and when it comes, the whole staff of the contractor go into jubilation.

Then the Engineer (Consultant) goes into action and activities such as tender evolution, tender negotiations .. etc., start to take place. The contractor is called in, issues and qualifications are discussed and then the signing of the agreement takes place.

While all the above activities are going on, the discussions among the owner, engineer and the contractor are limited to negotiations, discussions on issues, qualifications and similar things.

It is rare that the parties involved in a construction contract meet, discuss and attempt to communicate fully on a contract and how to go on with a successful construction project. Rather, quite often, there develops a communication gap and the regular and friendly discussions of mutual success in completing the contract becomes a far cry.

The owner and the engineer start to administer the contract from an authoritative angle while the contractor feels defensive and the friendly communication, if existed, ceases to continue and as the project matures the contractor is constantly pressed to increase the progress, slammed with non-compliance and, if the matters get worst delays in payments, liquidated damages and fines. The reason for all this drama is, I believe, the communication gap, lack of mutual understanding and poor relationships among the parties.

<63M>

Development of Technology & Changes to Contract Manager’s role

Technology is undergoing swift changes in today’s world and the effects of technological development in the industries, societies and personal lives is highly noticeable in many corners of the world. These technological developments change many things in our lives, our businesses and everything we do and have enormous consequences in the industries and our work places.

Along with such technological developments, the roles played by various positions of employees in industry, either change, or in some cases become redundant.

Contract management is no exception in the encroachment of technological developments. New technology is relieving the contract managers on the task-oriented activities such as; contract preparation and development, vendor analysis, tender analysis, procurement analysis and review, profit-loss analysis, price or cost analysis, pre-qualification analysis, solicitation, data collection, reporting and monitoring, thereby allowing more time for other roles in contract management such as; Business development and implementation, policy and strategy development and implementation, interpersonal affairs and relationships, communication, negotiation, dispute resolution, assisting project management, trade-offs analysis, risk management, time management, administration and teamwork. Also it is necessary for the contract managers to spend some time in getting used to newly added technology both in getting trained in new software and understanding the behaviour of newly installed hardware. With the addition of more technology into the arena, the number of contract professionals needed would be reduced and the redundant personnel will have to be allocated into new roles within the organization or simply laid off. Such scenario will necessarily need the personnel to develop new skills within the trade or switch over to other trades by acquiring new skills. 

Another aspect of such technology advances is that the professionals would have to keep on acquiring knowledge and skills in new fields and sectors as a constant requirement in order to be on top of the job market. As the history repeats, new technology has always made some trades redundant or reduced to bear minimum and has opened entirely new trades or modified existing trades. The professionals will have to lookout for areas for career development and engage in competency acquiring as a regular practice.

While a first degree or a diploma will become the basic requirement for most of the positions which would have to be supplemented by the new trade competencies for all personnel involved in those employment sectors which are affected by new technological developments. Regular competency development in new trades or sectors would be the norm of the day in such scenario.

<35M>

Evolution of the position of the Contract Manager

As with any position in the world of employment, the position of the Contract Manager undergoes evolutionary process and along with it, the roles played by the position in the industry. This trend of evolution is much faster than before due to technological development happening everywhere in the industry worldwide.

As of now, the general scope (among other things as required by a particular organization) of a contract manager is to;

  • Drafting, preparation, review, manage and closing contracts,
  • Interpretation and implementation of the terms and conditions of contracts,
  • Providing contractual advice to the management,
  • Be aware and use of a wide range of contracting methods and types,
  • Monitoring contract performance and its compliance,
  • Negotiation of contract terms for advantage of the representing organization,
  • Conducting meetings with stakeholders on matters pertaining to contract signing, implementation, managing and disputes,
  • Management of subcontracts,
  • Assisting the procurement process,
  • Tracking and monitoring deliverables until the end of contract validity.

This traditional scope of a contract manager is experiencing changes now with the additional duties such as;

  • Developing the contracting policy of the organization,
  • Developing, planning, and maintaining contract strategies for the betterment of the organization,
  • Developing, planning and maintaining procurement strategies,
  • Automation of contract management functions,
  • Assisting sourcing, review of pre-qualifications, vendor short listing,
  • spend analysis,
  • Assisting supply chain management,
  • Assisting project management,
  • Maintaining external relationships.

These scope additions are noticeable in most of the organizations irrespective of whether it is public or private and are expected to change over time. It is further noticeable that the changes do occur gradually hence difficult to monitor in an ongoing process. An ideal way to understand the changes is to monitor the positions in a periodical manner in periods of few years at a time by allowing sufficient time for new scope to crawl in and get established and integrated in to the role of a contract manager.

<52S>

Achieving maturity in Contract Management in organizations

Acieving competency in Contract Management in an organization is not an overnight affair and needs time and efforts. The best way to acieve maturity is by planning the whole process in steps spanning for a finite number of years.

By observing those organizations who have arrived maturity in contract management, organizations could plan road maps to attain maturity in contract management. One such model is Contract Management Maturity Model (CMMM) and the CMMM© consists of five levels of maturity ranging as listed below;

Level 1 – Adhoc: The organization realizes the benefits of contract management and possess some functions in contract management which are applied on adhoc projects. The personnel involved in such functions are not accountable for their work in contract management.

Level 2 – Basic disciplined process capability: Basic contract management processes exist within the organization but are used only for special projects of high value, or landmark projects, or belonging to prominent clients. The processes are not applied for the whole organization.

Level 3 –  Structured, established and institutionalized processes capability: Contract management processes are fully established within the entire organization, and are mandateory.

Level 4 – Integrated processes with other corporate processes resulting in synergistic corporate benefits: Contract management processes are fully integrated with all organization core precesses. Management is fully involved in monitoring the processes.

Level 5 – Optimized processes focused on continuous improvement and adoption of lessons learned and best practices: The highest level and the organization has achieve maturity in contract management. Continuous process imporement is implemented by utilizing lessons learnt, and best practices.

By the use of similar models, interested organizations could evaluate their existing levels and plan ahead to achieve the maturity level in a systematic and professional approach.

<86>

Contract Closeout

Contract Closeout is the process of verifying that all administrative matters are concluded on a contract that is otherwise physically complete (Garrett & Rendon, 2005).  The contract closeout process includes the following activities: 

1.  Processing property dispositions

2.  Conducting final acceptance of products or services.

3.  Processing final contractor payments.

4.  Documenting contractor’s performance.

5.  Conducting post project audit.   

<80>

Contract Administration

Contract Administration is the process of ensuring that each party’s performance meets the contractual requirements (Garrett & Rendon, 2005).  The contract administration process includes:

1.  Conducting a pre-performance conference.

2.  Measuring contractor’s performance, using performance evaluation tools (Earned Value Management, schedule analysis, budget analysis).

3.  Conducting risk monitoring and control.  

4.  Managing the contract change control process.

5.   Measuring and reporting contractor’s performance (cost, schedule, performance) 6.  Conducting project milestone reviews.

<77M>

Powered by WordPress & Theme by Anders Norén