Sunday, March 15, 2015
Contract:
The word contract can be defined in short as an agreement between the parties enforceable under the law. A contract is a legally binding agreement between the parties identified in the agreement to fulfill all the terms and conditions outlined in the agreement. A prerequisite requirement for the enforcement of a contract, amongst other things, is the condition that all the parties to the contract accept the terms of the claimed contract. One who is in charge of the project is known as the Employer. One who agrees to execute or perform is known as the Contractor.
What Is Contract Management?
The central aim of contract management is to obtain the product as agreed in the contract and achieve value for money. Contract management may also involve aiming for continuous improvement in performance over the life of the contract. A key point is that the foundations for contract management are laid before contract award, in the procurement process and DPR stage. The terms and conditions of the contract should include specifications, bill of quantities, contractor bonus, liquidated damages, time period, means to measure items executed, price adjustment procedures, variation/change control procedures, foreclosure, termination, and all the other formal mechanisms that enable a contract to be implemented.
It is vital to build a contract that identifies clearly the obligations of the contractor and the employer. The contract must be built on a firm formal and legal foundation, it should be flexible, to accommodate changes, variations etc.
Good contract management goes much further than ensuring that the agreed terms of the contract are being met. There will always be some friction between the different perspectives and approach of employer and contractor. Contract management is about resolving or reducing such friction and achieving the completion of the project as envisaged.
Increasingly, many organisations are departing from traditional methods of contract management and moving towards building constructive relationships with contractors. The following factors are essential for good contract management:
Good preparation of bid document: A detailed estimate, project report of the work helps create a clear output-based specification. Proper eligibility criterion effective evaluation procedures and selection will ensure that the contract is awarded to the right person.
The right contract form: The contract is the foundation for the project implementation. It should include aspects such as obligations of the parties, the quality assurance of items required, and defect liability period, as well as procedures for variations and dispute resolution. E.g. Lumpsum contract, Item rate contract etc
Good contract management is proactive, it should aim to anticipate and respond to project needs. If contracts are not well managed from the employer side, any or all of the following may happen:
The contractor is likely to neglect the quality, resulting in substandard product that is not durable and structurally unsafe
Decisions are not taken at the right time – or not taken at all
That leads to delays in payment, approvals - leading to claims
Time and cost overrun
The word contract can be defined in short as an agreement between the parties enforceable under the law. A contract is a legally binding agreement between the parties identified in the agreement to fulfill all the terms and conditions outlined in the agreement. A prerequisite requirement for the enforcement of a contract, amongst other things, is the condition that all the parties to the contract accept the terms of the claimed contract. One who is in charge of the project is known as the Employer. One who agrees to execute or perform is known as the Contractor.
What Is Contract Management?
The central aim of contract management is to obtain the product as agreed in the contract and achieve value for money. Contract management may also involve aiming for continuous improvement in performance over the life of the contract. A key point is that the foundations for contract management are laid before contract award, in the procurement process and DPR stage. The terms and conditions of the contract should include specifications, bill of quantities, contractor bonus, liquidated damages, time period, means to measure items executed, price adjustment procedures, variation/change control procedures, foreclosure, termination, and all the other formal mechanisms that enable a contract to be implemented.
It is vital to build a contract that identifies clearly the obligations of the contractor and the employer. The contract must be built on a firm formal and legal foundation, it should be flexible, to accommodate changes, variations etc.
Good contract management goes much further than ensuring that the agreed terms of the contract are being met. There will always be some friction between the different perspectives and approach of employer and contractor. Contract management is about resolving or reducing such friction and achieving the completion of the project as envisaged.
Increasingly, many organisations are departing from traditional methods of contract management and moving towards building constructive relationships with contractors. The following factors are essential for good contract management:
Good preparation of bid document: A detailed estimate, project report of the work helps create a clear output-based specification. Proper eligibility criterion effective evaluation procedures and selection will ensure that the contract is awarded to the right person.
The right contract form: The contract is the foundation for the project implementation. It should include aspects such as obligations of the parties, the quality assurance of items required, and defect liability period, as well as procedures for variations and dispute resolution. E.g. Lumpsum contract, Item rate contract etc
Good contract management is proactive, it should aim to anticipate and respond to project needs. If contracts are not well managed from the employer side, any or all of the following may happen:
The contractor is likely to neglect the quality, resulting in substandard product that is not durable and structurally unsafe
Decisions are not taken at the right time – or not taken at all
That leads to delays in payment, approvals - leading to claims
Time and cost overrun
