Project Management

Always Understand Your Contracts!

Andy Jordan is President of Roffensian Consulting S.A., a Roatan, Honduras-based management consulting firm with a comprehensive project management practice. Andy always appreciates feedback and discussion on the issues raised in his articles and can be reached at [email protected] Andy's new book Risk Management for Project Driven Organizations is now available.

An ever-increasing number of projects involve contracts with third parties. Whether that’s outsourcing part of the work or bringing consultants or contractors into the project from outside, a lot of PMs have to operate around formal contracts. And with the increase in these relationships, so the need for new project managers to understand and manage them effectively also increases.

But it’s not something that is taught very much in project management training courses. There may be some basic stuff around contract types and negotiation practices, but there isn’t much around the day-to-day management of work covered by these contracts.

Worse than that, I know many project managers who don’t feel as though they have any accountability in that area because their organization has a procurement of contract management function. The PM believes that team will look after all of the contract elements and there is nothing for the project manager to worry about other than the tasks assigned to the third party.

Nothing could be further from the truth.

Separating work from contracts
There is a key distinction that needs to be made between managing contracts and managing the work being performed under those contracts. A procurement or similar team will ensure that the contract is negotiated fairly and that the commitments on the organization are understood…


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- Mark Twain