What Type of Contract is Best for Urgent Projects?
From the The Money Files Blog
by Elizabeth Harrin
A blog that looks at all aspects of project and program finances from budgets, estimating and accounting to getting a pay rise and managing contracts.
Written by Elizabeth Harrin from RebelsGuideToPM.com.
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Date
It’s easy (kind of) to plan the project financial provision and contracts when you’ve got lots of time and plenty of opportunity to research the market. But what about when you are up against it? That’s when you might rush into a decision and only find out afterwards that it’s not the right approach.
Stephen Wearne and Keith White-Hunt have reviewed 12 urgent and unplanned projects (from dealing with local flooding to the 9/11 pile removal project) in their book Managing the Urgent and Unexpected. As you can imagine, the cost implications for each were unique to the situation, but there are some lessons that we can take away from those major pieces of work. Here’s what I can summarise:
“In all the cases of employing contractors for construction work, the terms of the contract chosen were those already approved by the sponsors.”
In other words, even when a new contractor is required, go for contract terms that your management team is familiar with. This isn’t the time to be trying to ask for waivers to the rules or to get round procedures. If you want to be fast, make the decision easy.
“Contractor and consultant teams already employed for longer-term programmes were switched to the urgent and unexpected work under cost-plus payment terms.”
Make the most of the people you already have working for you. Divert them on to the priority projects and update your contracts accordingly. If you can, add the new work into an existing contract – several of the projects in the book did this under cost-reimbursable terms.
“In the 9/11 pile removal case the contracts were made orally, for later confirmation.”
When you’re working in a real emergency, you might not have the time to draw up legally binding paperwork. When you know that you need to get started, get started on the basis of a gentleman’s agreement. You need to have confidence in the supplier to do this, so if the situation itself doesn’t bind you together somehow, work with suppliers that have a similar outlook and values to you.
“Terms adapted from previous contracts for emergency repair of a city stadium were used.”
Reuse, reuse, reuse! Don’t start from scratch. Get your contracted work up and running more quickly by adapting documentation that you already have.
“Contractors previously shown trust when employed on normal projects were reported as responding particularly well to these unexpected demands.”
For example, they made their best staff available and supported the projects through all-hours working. The lesson here is that the more of a partnership approach you take, and the better the working relationships with the suppliers you use, the more they will help you step up when you need it. That applies outside of a crisis as well – good working relationships with all your project stakeholders will help you move projects forward in non-emergency times as well.
The overall message from the book is that when you are dealing with an emergency, you need to cut out the bureaucracy and get going. Actually, this is what you should be doing on all projects: simplification is a good thing where you can do it. In the case of an urgent project, it’s essential.
The book mentioned in this article is:
Wearne, S. and K. White-Hunt. (2014). Managing the Urgent and Unexpected. Farham: Gower.
Read my review of it here. Check out Gower’s online catalogue for more about this book and their other PM titles: http://bit.ly/1H5I88G
Posted on: November 02, 2015 05:48 AM |
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Comments (6)
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Andreia Reis
PMO Coordenator| Adimax Indústria e Comércio de Alimentos
Mairinque, São Paulo, Brazil
Excellent Suggestion of book , In the company where I work we usually use two types of contract, which are they : "Time and Material "and "Fixed Price Contract".
Thank you for Sharing.
PARAG KANDEKAR
VP Operations| SoftNice Inc
Allentown, Pa, United States
Best for Urgent Projects would be good to employ contractor on Time & Material basis till the time scope gets clear where all the parties would be in agreement. "Emergency" project execution really require TRUST and Gentleman's Agreement. Great point of views from this article.
Excellent! Nice information and advices for urgent projects.
fosco frongia
Senior project manager| ENTE PATRIMONIALE CHIESA GESU' CRISTO SUG
Fino Mornasco, Como, Italy
excellent article. reusing previous contract is the basis of the improvement of a new contract. at the same time I think the construction contract is an important tool for managing the construction works therefore they should be a result of a sinergic process among legal consultant, project manager and construction expert. Only in that manner they can cover legal and practical construction aspects
http://www.jeffpearlman.com/my-life-part-iii-by-joe-harris/
Not sure this is the best guy to get advice from. 3 part story involving one of the authors in this book. I will let you figure it out.
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