The importance of contracts in project management
Contract management is vital for project managers, and of central importance to most projects. Contracts are covered by contract law. Project managers should always seek specialist advice to ensure that the legal ramifications of any proposed contract are fully understood.
It is the project manager’s responsibility to ensure that certain key principles are followed when selecting and managing contractors and suppliers. For example, using an objective process to select the contractor, avoiding influence of personal preferences; making sure there is understanding of what the contractor wants from the arrangements; and involving the contractor in the project team activities where it’s practical.
Once a contract between project manager and client is agreed and the contract is awarded, project professionals arrange to monitor and manage supplier performance in line with the contract. There are some important controls relevant to all contracts that project professionals should put in place:
Understanding the contract obligations
Planned meetings to review progress and identify issues
Formalised reporting, communication and escalation routes
A route to sharing perceptions of risk and putting into place effective responses