How can you improve your contract management skills?
Contract management is a vital skill for construction managers, as it involves planning, executing, and monitoring the agreements between various parties involved in a project. It can affect the quality, cost, and time of the project, as well as the relationships and risks involved. If you want to improve your contract management skills, here are some tips to follow.
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Priyanshu Kumar D.Contract Management Professional | Focused on high stake Infrastructure Contracts | Drafting | Contract Review | Claims…
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Abhishek SinhaPre-Sales Commercial & Contracts' [Consultant] — Telecommunications (5G) & IT, Energy & Materials
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Jeremie Harrison, PMPSenior Project Manager👷🏼♂️
The first step to effective contract management is to understand the types and terms of the contracts you are dealing with. Different contracts have different implications for the scope, price, payment, risk allocation, and dispute resolution of the project. You should be familiar with the common contract forms, such as lump sum, cost plus, unit price, and design-build, and their advantages and disadvantages. You should also read and review the contract documents carefully, and clarify any ambiguities or inconsistencies before signing.
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Effective contract management is crucial for the successful execution of infrastructure projects. It involves a structured approach to administering contracts, ensuring that all parties fulfill their obligations, and managing risks to achieve project goals. The main key areas of focus are: 1.Properly drafted Contract Document 2.Proper communication b/w parties 3 Risk Identification and Mitigation 4.Proper recording of Contemporaneous records 5.Contract Performance Monitoring 6. Implementation a change of scopes process to assess, approve, and document changes, including their impact on scope, schedule, and cost. 7.All above points can be effectively achieved by appointing a Contract Management expert.
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Effective Contract Management is about taking “Contracts” seriously. Practical ways, could be having regular “Contract Reviews” with the larger teams. Having a handy “Contract Appreciation Document (also called Contract Playbook)”for the teams to refer to. And better engagement of the Contract Manager with the Teams, wherein then any & all — “Obligations”, “Rights”, “Risks” & “Opportunities” are brainstormed & deliberated.
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Before identifying the type of contract form to be used, one should aim to gather all information about the work for which a RFI is to be formed. The scope of work is the key and it will pave way for the workflows of the contract. Making a team sit together for a session where ideas / doubts can be discussed shall be a great way to learn types of contracts and their ideas along with implementation. In large organisations, a standard bidding document plays a pivotal role in helping out clarify the type of contract to be adopted.
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To improve your contract management skills, you can consider the following steps: Gain knowledge Seek training and certifications Learn from experienced professionals Develop organizational skills Enhance negotiation skills Improve communication skills Understand risk management Utilize technology Analyze and learn from past contracts Stay updated Remember, improving contract management skills is an ongoing process. Regularly assess your performance, seek feedback, and adapt your approach to enhance your effectiveness in managing contracts.
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Have a company contract playbook made with your construction attorney. Level up your education on contracts through lunch and learns so people have some basic understanding of what they’re reading. Don’t just assume people are reading and understanding contracts. Teach people how to use them!
Communication is key to successful contract management, as it ensures that all parties are on the same page and have the same expectations. You should communicate regularly and proactively with your clients, contractors, suppliers, and other stakeholders, and use appropriate tools and methods, such as emails, meetings, reports, and software. You should also document and record all communication and decisions, and share them with the relevant parties. Communication can help you avoid misunderstandings, conflicts, and delays, and foster trust and collaboration.
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From my experience, a lack of communication or poor communication is often the root of most problems. Does everyone involved understand your expectations? If not, they surely won’t meet them.
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Communication is more than the words that you speak. Body language will play a role in how you convey your confidence, your emotion and your commitment to your words. Actions speak louder than words. Be consistent and follow through on what you promise.
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Communicating regularly is as critical as communicating clearly. Building habits to communicate regularly throughout projects can eliminate misunderstandings and help team mates to do the same, leading to successful team work and project delivery.
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Project Managers must not rely that everything will be solved at the end. In general PM invest most of their time on secure that projects are completed within objetives of time, quality, budget and safety. This is true, nevertheless an important part of project management requires to communicate every single important milestone, event, fulfillement or unfulfillement timely and according contract provisions. Otherwise contractual rights may expire or waived by fact. Better to have everything dully communicated by written instead to trust on customer or subcontractor wellwillness even if project is completed within objetives
Another important aspect of contract management is to monitor the performance of the parties involved in the contract, and compare it with the agreed-upon objectives, deliverables, and standards. You should establish and use key performance indicators (KPIs), such as quality, cost, time, safety, and customer satisfaction, to measure and evaluate the progress and outcomes of the project. You should also provide feedback and recognition to the parties, and address any issues or deviations promptly and constructively.
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You need to understand at the end of the day, you are working with people beyond what's written in a document. Always try to find that win-win situation where both parties can come to timely conclusion on whatever the issues may arise that needs to be resolved.
Changes are inevitable in construction projects, and they can affect the scope, cost, schedule, and quality of the contract. You should be prepared to manage changes effectively, by following a clear and formal change management process that defines the roles, responsibilities, procedures, and approvals for requesting, reviewing, approving, and implementing changes. You should also communicate and negotiate the changes with the parties involved, and document and update the contract accordingly.
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Change in a project is inevitable. Being able to manage and adapt to change is a key skill that every commercial role should have in their toolkit. In the beginning of a project, establishing a collaborative environment that fosters the narrative that change is inevitable and scheduling regular risk mitigation meetings that act as a safe space to raise concerns as early as possible is beneficial for the project as a whole. If you can convince everyone around the table that simply following the change mechanisms given in the contract does not have negative connotations, you will have a higher chance of your project being successful.
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Before performing work, make sure you check your contract provisions for that customer’s change order process. Figure out who can can approve work and how to submit the change orders. Oh, in case it wasn’t clear: don’t perform work you expect to get paid for BEFORE you get the change order!
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Request of changes is a normal event on almost all projects. Nevertheless every time that a change is identify it must be properly evaluated, managed, approved by integrated change control system and timely communicated. "Scope Creep" is an abnormal phenomena that occurs on projects when due to the afraid of affect customer relationship with tough contractual discussions. Project team accepts changes requested by Customer without be analized or approved.
Contract management also involves identifying, analyzing, and mitigating the potential risks that may arise during the project, such as delays, defects, disputes, claims, and litigation. You should conduct a risk assessment at the beginning of the project, and throughout its lifecycle, and develop a risk management plan that outlines the strategies, actions, and resources to prevent or reduce the impact of the risks. You should also monitor and review the risks regularly, and adjust your plan as needed.
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Disputes, Claims and litigation are not easily manageable like other issues. Claims by low bid contractors use as a tool to recover the profit margins and keeping extra pressure to contract administrator or contract manager. Specially under water crossings, piling, subsurface ground clearance and bridges unawares loss claim and compensation started in the first phase of work.
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Risk Breakdown structure and Risk register are live documents that must be updated periodically during project life. Contract Management impplies to secure that all contract risk are properly identified, clasified, evaluated and managed by a risk response plan that enable to mitigate them.
The final tip to improve your contract management skills is to learn from your experience and feedback, and seek opportunities to enhance your knowledge and abilities. You should conduct a post-contract evaluation at the end of the project, and identify the strengths, weaknesses, opportunities, and threats of your contract management process. You should also solicit and listen to the feedback from your clients, contractors, suppliers, and other stakeholders, and use it to improve your performance and relationships. You should also keep up with the latest trends, best practices, and regulations in contract management, and attend training courses, workshops, or seminars to update your skills.
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Effective contract management helps to mitigate risks, optimize performance, and maintain good relationships with partners and suppliers, Understand the Basics: Contracts types, purpose, and various components. Educational Resources: Enroll in contract management courses to obtain certifications, as offered by the National Contract Management Association (NCMA). Read and Study Contracts: Read the Full Contract (RFC) Legal: Basic knowledge of contract law can be extremely beneficial. Effective Communication: Clear communication is crucial when negotiating contracts, managing relationships, and resolving disputes. Ethical Pillars: Be aware of ethical considerations in contract management, conflicts of interest and transparency and fairness.
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Baseline: Log proposals within your budget bid-management tool. Once you've awarded a contract, the awarded contract should be marked as the final/awarded version. That contract can be added to the vendor's account/pay-app/budget/invoicing account... the more tracking measures the better! Beyond this baseline measure, you can now track the req amounts against the contracted amount for streamlined contract management. Moving forward, you can always access those proposal/awarded contracts and understand if there are areas to improve upon/revise/adjust as-needed... To accomplish all of this- look at a software tool, like Jet.Build. Easy!
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As a good practice I would recomend to develop a detailed extract of contract that shows main critical contractual topics by clauses. This may help PM to identify where to find some particular topic instead to get losted within hundred of mages looking some particular clause. Another good practice is that PM be periodically trained on contract management.
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One important aspect to consider for enhancing contracts is to schedule regular sessions, held semi-annually or annually, for discussing issues. Additionally, at the end, conduct a lessons-learned session involving all parties involved. This helps in identifying areas for improving contract performance. Another key consideration is to allocate sufficient time for reviewing the contract. This review should encompass aspects such as rates, fees, additional charges, and overall quality. Lastly, it's advisable to utilize a standard contract as a foundation, while tailoring it specifically to the requirements of the project. It's also essential to have the contract reviewed by an experienced lawyer to ensure its legal soundness and relevance
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