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Commercial Awareness for Project Managers. Types of Contract Managing the Client/Contractor Interface Managing Instructions, Variations and Claims Payment Contract Completion. Contractor’s risk. Client’s risk. Types of Contract. Fixed Price Time and Materials Cost-Reimbursable

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commercial awareness for project managers

Commercial AwarenessforProject Managers

Types of Contract

Managing the Client/Contractor Interface

Managing Instructions, Variations and Claims

Payment

Contract Completion

types of contract

Contractor’s risk

Client’s risk

Types of Contract
  • Fixed Price
  • Time and Materials
  • Cost-Reimbursable
  • And various hybrids….
managing the client contractor interface
Managing the client/contractor interface
  • Roles and responsibilities
  • Review meetings
  • Document control
roles and responsibilities
Roles and Responsibilities
  • Named in the contract
  • Administration and management delegated
  • Empowered to make decisions

‘Project manager’

Probably one on each side

review meetings

Strategy review between directors

Progress reviews between managers

Technical review between engineers

Review Meetings
  • Often at Director Level
  • Scheduled within the contract
  • Potentially three types, or levels
document control

Someone wants a change

The work is carried out

They bring it to the Document Controller

The variation is communicated

Document Control

To control all communications between the two parties

Objective:

An authorised decision is made

managing instructions variations and claims

Raised by the client; usually minor, within the terms of the contract

Raised by the client; usually cause a change to the terms of the contract

Raised by the contractor; asking for more money for having to make changes to the contract

Managing instructions, variations and claims
  • instructions
  • variations
  • claims
managing instructions and variations
Managing instructions and variations
  • Must be issued in writing
  • By an appropriate authority
  • Contractor must acknowledge receipt
  • The cost of additional work must be agreed

Should NOT be actioned by the contractor if:

  • Issued orally
  • By the incorrect authority within the client
  • By the contractor without authority
managing claims
Managing claims

Contractor encounters a problem

Contractor identifies cost implication

Verbal warning to client project mgr.

Contractor presents written details of claim

Client considers

Client disagrees with claim

Client approves claim; issues variation

Client/Contractor negotiation

Contractor receives payment

Contractor receives partial settlement

payment
Payment
  • Against pre-determined milestones
  • Against valuations of the work achieved to-date

The Project Manager will authorise or provide evidence

contract completion
Contract Completion
  • Practical completion
  • Sectional completion
  • Defects and making good
  • Final account

First

Final

Completion Certificate

Retention Fund

Unresolved Issues

Snagging List

Defects liability period