CONTRACT MANAGEMENT

EMCM5103
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DEFINITION (PMBOK 2013)

• PROJECT PROCUREMENT - “A management function that

identifies , sources, accesses and manages the external
resources required by an organisation in order to meet its
strategic objectives”

• CONTRACT - “ A mutually binding agreement that obligates

the seller to provide something of value ( such as specified
products, services or results) and obligates the buyer to
provide monetary or other valuable compensation”
PROCUREMENT MANAGEMENT
Plan Procurement Management.
Process of documenting project
procurement decisions, specifying
the approach, and identifying
potential sellers.
Key benefit of this process is that it
determines whether to acquire
outside support, and if so, what to
acquire, how to acquire it, how much
is needed, and when to acquire it.
KEY PLAYERS IN CONSTRUCTION CONTRACT
MANAGEMENT

- STAKEHOLDERS / CLIENTS
- CONSULTANTS
(ARCHITECT, ENGINEER – C&S, M&E, QUANTITY SURVEYOR,
LANDSCAPE ARCHITECT, INTERIOR DESIGNER)
- MAIN CONTRACTORS
- SUBCONTRACTORS
- PROJECT MANAGER
CONTRACT STRATEGY
AMONG MAIN FACTORS INFLUENCE THE CONTRACT STRATEGY SELECTION
ARE:
- Key objectives and constraints of the project
- Risks that may arise during the delivery of the project
- Level of complexity of the project

3 types of project contract strategies that commonly known in contract

management :
- Traditional project contract strategy
- Integrated Strategies
- Management Strategy
 TRADITIONAL PROJECT CONTRACT STRATEGY
CLIENT
-stakeholder/funder
-Project Manager CONSULTANTS
-Project boards ,project Responsibilities :
director, project team - Management of design
- Promoter process
- Assist in tendering and
design process
- Site supervision
MAIN CONTRACTOR
- Planning the work on
site, mobilising, As specialist to undertake
constructing and opening sections of the contract
or commissioning work
Their expertise represent
Also managing risk the existence of supply
and the chain processes as part
construction phase and parcel of contract
of project management
Other features of the traditional/conventional procurement method:
•A contractor is usually selected and appointed by competitive tender, but sometimes by negotiation.
•The terms of many traditional contracts require the client to appoint a professional consultant (i.e.
architect, quantity surveyor, contract administrator) to act as an independent contract administrator.
•Full documents are needed for the tendering process – including that from specialist sub-
contractors. Time is needed to adequately prepare this.
•The client has control over the design through their appointed consultants (i.e. architect). Generally
there is no design responsibility on the contractor.
•Design and construction are separate sequential processes – this can increase the overall time of
the project.
•There is reasonable certainty on the cost of the project because the contract figure is usually known
at the outset. The contract does have provision for cost to be adjusted later, if required.
•Speculative risks are balanced between the parties. A lump sum contract is more in favour of the
client whereas a measurement contract is less so. A traditional lump sum approach in terms of
design, quality and cost is relatively low risk procurement option for a client, however the time
required for the project overall is likely to be longer than other procurement methods.
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