Regular readers will know I’ve been breaking down what’s new in the PMBOK Guide®-- Sixth Edition, around Plan Procurement Management (you can read the first part here, and the summary of Conduct Procurements here). But who is actually involved in contract management?
That’s a difficult question to answer precisely, because the exact structure of your organisation makes a difference to who takes part in the contract management process. You may have different teams involved, depending on the structure of your business, or you might have some of the teams below totally missing, so others step in to fill the roles.
So please consider this article as high level guidance, and not a prescriptive account of how you must run contract management in your organisation.
Let’s look at the 5 groups involved in managing project contracts.
1. Legal Team
Your legal team may be internal, or you may hire in outside legal experts if you don’t have the need for a full-time staff of lawyers.
This group is important because they are typically involved in:
They are also involved in making sure that any regulations and laws are complied with, and that the right laws are referenced in contract clauses etc. An example in the UK at the moment would be to make sure that all contracts are updated with reference to GDPR regulations, and references to the ‘old’ Data Protection Act 1998 are removed when the new regulations come into force in May 2018.
2. Contracts Manager
The contracts management function might be carried out by a single person (perhaps with a different job title, like Procurement Manager) or there may be a team responsible for contracts management. The role involves:
They will probably also get involved before the vendor is selected, doing the work (along with others) to evaluate different proposals to establish which supplier is the best to partner with.
The contracts management function also acts as the main point of contact for suppliers (often the supplier project manager) for contract queries. That could be the schedule for milestones, preparing purchase orders and invoices or issuing the paperwork that triggers a payment and so on.
As you’d imagine, any changes to the contract are also run past the person carrying out this role.
In my experience, I’ve done some of this: issuing notification to trigger a payment, dealing with contract changes, facilitating getting the right person to sign off and handling the interface with the legal team. But if you have someone in your organisation who can take this role on, and who can ‘run’ the contract for you, then get delegating! Use their expertise.
3. Procurement Team
Procurement is a function that’s broader than contracts management, although your contracts manager may sit within that department.
The procurement team is responsible for managing the whole procurement activity, from preparing bid documents to dealing with queries from suppliers. They are often the team who prepare the shortlist of vendors, or who cross-check vendors against the company’s approved seller criteria. If your selected vendor is not currently on the approved list, they will make sure that the company is added for future reference.
From the role description you can probably see that they need a really detailed knowledge of your project’s requirements. It’s best to get the procurement person who will be working on your procurements involved in the project as early as you can. Then they can fully understand what’s required and the kind of services or products that will be best for the project.
4. Vendor Manager
Vendor management is different from contract management, because it’s a broader role. I’ll go into the details of the differences in another article, but for now, just know that if you have a vendor management team, it’s hugely valuable to you as a project manager.
The vendor manager might be part of the procurement team, or there might be a vendor management office – this is a function that large companies who work with lots of vendors might have. Think oil and gas, or construction, where you have many subcontractors or different relationships with a variety of suppliers.
Vendor managers look at the whole relationship with a supplier. They can manage requirements across several projects, and ensure the relationship overall works well for everyone concerned.
5. Project Manager
And finally… the project manager! You have a role to play in project contract management, because you’re key in executing the contract i.e. getting the work done.
Your role is to make sure that the contract deliverables are delivered, and that risk management, scheduling and everything else related to managing the project happens as planned. You are key to working with all the different groups, bringing everyone together at the right time and representing your organisation to the vendor.
You’ll probably be the first to see any potential conflict or defects in what should be delivered, and that gives you a great advantage to be able to keep the contract and the vendor relationship on track.
Whether you have these roles I have mentioned as distinct departments, or whether you have to wear multiple hats when managing your contracts, it’s important to know how vendor relationships are set up on your project. Think about who you can bring in so that your project team includes reliable experts in contract management, as that focus will make sure your supplier engagements run smoothly.
What involvement have you had with contract management? Let us know in the comments below!