Contract Management

Question 1

The Purpose of Contracts?

Answer 1

• To avoid a “loss of memory” of the agreement
• To avoid future arguments
• To ensure that obligations cannot be avoided
• To provide transparency
• Work Transfer
• Risk Transfer
• Contracts are important for risk allocation and to specify roles and responsibilities for contracting parties
• Create meaningful measures and monitoring actions (who, what, when etc.)

Question 2

Work Transfer?

Answer 2

To define the work that one party will do for other.

Question 3

Risk Transfer?

Answer 3

To define how the risks inherent in the work will be allocated between the parties.

Question 4

Different definitions

Answer 4

To economists – an agreement under which two parties make reciprocal commitments in terms of their behaviour – a bilateral co-ordination arrangement.

To lawyers – a legal formulation – a meeting of minds creating effects in law.

To managers – contract as specifying the details of a relationship that can be enforced.

Question 5

Stakeholder/Supplier selection and monitoring contracts

Answer 5

• Stakeholder/supplier selection for your project e.g.
Use proposal evaluation results as key basis for selection decisions.

• Contracts issued based on needs of acquisition and stakeholder management approaches

e. g. Establish and maintain a mutual understanding of the contract with suppliers and end users (i.e. project stakeholders)!
e. g. Establish and maintain communication processes and procedures with suppliers!

• Work is co-ordinated with stakeholders/suppliers to ensure proper execution of the contract

e. g. Monitor and analyse selected processes.
e. g. Revise the supplier agreements and relationships to reflect changes in conditions/to the project.

Question 6

Create meaningful measures…

Answer 6

by looking from

• financial perspective
• customer perspective
• process perspective
• learning perspective

Are the measure: unambiguous, simple, relevant and cost-effective?