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310-PROJECT MANAGEMENT

FACULTY: Dr. CH. VENKATAIAH
B.Tech, MBA, PhD
Associate Professor (Operations, Quality & Project Management)

PROJECT CLOSEOUT

UNIT V

CONTRACT MANAGEMENT & PARTNERING

VENKATAIAH Associate Professor 310-Project Management 4 .  It defines the rights of the parties in relationship to each other and the remedies available to the parties in case the other party breaches the contract and fails to discharge its obligations.  A contract is legally binding.Contract  A contract is a formal agreement between two parties wherein one party (the contractor) agrees to perform a service and the other party (the client) agrees to do something in return.  It defines the responsibilities of both the parties and the conditions under which it is operative. Dr. CH.

VENKATAIAH Associate Professor 310-Project Management 5 .Contracts .Types  Fixed price contract : A price is agreed upon in advance and remains fixed as long as there are no changes to the scope or provisions of the agreement. Dr.  Cost plus contract: the contractor is reimbursed for all or some of the expenses incurred during the performance of the contract. CH.

– Inflation clauses and /or provision for price revision is included. CH.  The client can obtain a minimum price through competitive bidding. the costs can be estimated fairly accurately.  Variations  Economic price adjustment contracts. schedule based incentives or performance based incentives. Dr. VENKATAIAH Associate Professor 310-Project Management .  Preferred when scope of the project is well defined.Fixed Cost Contracts  The contractor agrees to carry out all the work specified in the contract at a fixed price. and the project has low implementation risks.  Fixed price incentive contracts – Incentives may be on a cost sharing ratio basis.

CH. labour. travel and so on and an additional fee to cover overheads and profit. VENKATAIAH Associate Professor 310-Project Management 7 . Dr.  The fee is negotiated in advance and is usually in the form of a percentage of the total costs. like materials.Cost Plus Contracts  The contractor is reimbursed for all direct allowable costs.

VENKATAIAH Associate Professor 310-Project Management 8 .Indefinite Delivery Contracts  It is a contract awarded to one or more vendors to deliver supplies and services. It may be in the form of: Definite Quantity Contract Requirements Contract Indefinite Quantity Contract Dr. CH.

Tenders  Tendering is the process in which a detailed specification of goods or services to be provided is circulated to a number of potential contractors. a timetable.  Sometimes selection may be based on quality. VENKATAIAH Associate Professor 310-Project Management .  The main focus through tender is on competition of price and quality.  The contractors bid for the work by providing a tender document that includes the price for the work. and an explanation of how it will be carried out. though public bodies are generally forced to accept the lowest bid or the cheapest tender on grounds of principle.  The tendering authority is free to select from the tenders supplied. projected speed of operations. and the track record of the contractor rather than the price. Dr. CH. reliability.

Types  Global Tender  Open Tender  Limited or Restricted Tender  Single Tender  Negotiated Tender Dr. CH. VENKATAIAH Associate Professor 310-Project Management .Tenders .

 Analyse pre-qualification responses and shortlist potential contractors based on selection criteria as stated in the advertisements. CH. Dr. This may be required only in the case of negotiated contracts.Tendering Process  Issue advertisements to the press/ magazines inviting expression of interest for the project. to bid for the contract. VENKATAIAH Associate Professor 310-Project Management . In some cases even pre-qualification requirements may not be necessary.  Carry out negotiations or competitive dialogue with potential contractors identified in previous step.  Receive response to pre-qualification questionnaires from interested contractors. if undertaken).  Invite all contractors identified (after negotiations or competitive dialogue.

Late tenders are not allowed to be put in the tender box. VENKATAIAH Associate Professor 310-Project Management . The earnest money is refunded to unsuccessful bidders.  Receive filled in tenders from selected contractors along with earnest money as specified in the tender documents. Tender boxes for receiving tenders are sealed by the authority appointed for the purpose at the time intimated in the tender documents. CH. while it is converted to guarantee money in the case of the successful bidder.Tendering Process  A site visit for identified contractors may be arranged in case of projects involving construction or other work at site. Dr. Earnest money is a sum of money deposited at the time of submitting tenders to ensure the seriousness of the contractor towards the bidding process.

The opening authority makes a comparative statement and hands over the same to the contract section for their further action.Tendering Process  Open the tenders together at the place and on the date and time fixed for the same.  Inform the unsuccessful contracting firms about their non-selection.  Select the successful tender.  Evaluate the tenders against the award criteria. VENKATAIAH Associate Professor 310-Project Management . Tenders are opened in the presence of bidders and the person opening them reads out the amounts quoted by each bidder.  Issue contract to the successful contracting firm. CH. Dr.

movable properties and bank deposits held by the firm. Dr. balance sheets. CH.  Whether proprietorship or partnership firm. This gives an idea about the financial standing of the firm and whether it shall be able to undertake the project with the payment schedules envisaged.  Turnover during last five years. VENKATAIAH Associate Professor 310-Project Management . its legal status. and partners  Immovable.  Valid ITCC  Performance from previous employers  Major equipment held  Qualifications and experience of key personnel  Information regarding litigations  List of works carried out in time  Engineers proposed to be employed and technical capability of the firm.Registration of Contractors – Public Sector Undertakings and Govt Agencies  Constitution of the firm.

 Disputes settled through conciliation or arbitration. CH.Contract Law  All contracts in India are subject to The Indian Contract Act 1872. VENKATAIAH Associate Professor 310-Project Management . Dr.  These are governed by the Conciliation and Arbitration Act 1996.

 A joint inspection of the work is carried out after which the client also issues a completion certificate. The defects are intimated to the contractor.Contract Closeout  The contractor gives a notice of completion to the client. VENKATAIAH Associate Professor 310-Project Management .  Once the client is satisfied that all defects have been rectified. CH. who then rectifies the defects.  A list of defects to be rectified is prepared. Dr. the security performance guarantee sum is released to the contractor.  The client should be informed of completion of rectification of defects by the contractor and a request made for performance certificate on satisfactory completion of defect liability period.

CH. major subcontractors. VENKATAIAH Associate Professor 310-Project Management . communicate openly and resolve issues speedily Dr. cooperative project team with a single set of goals and established procedures for resolving disputes in a timely manner.Partnering  A method of transforming contractual relationships into a cohesive. consultants. community. and suppliers form as one project team and cooperate. prime contractor. share goals.  The customer.

Steps in Partnering The steps involved in partnering are as follows: 1. CH. 3. Introduction Preparation Workshop Application Dr. 2. 4. VENKATAIAH Associate Professor 310-Project Management .

VENKATAIAH Associate Professor 310-Project Management 19 .Public-Private Partnership (PPP)  PPP Project means a project based on contract or concession agreement between a government or statutory entity on the one side and a private sector company on the other side. Dr. CH. for delivering an infrastructure service on payment of user charges.  PPPs are being promoted for implementation of infrastructure projects.

design. construct and operate a facility stated in the contract.Build-Operate-Transfer (BOT) or BuildOwn-Operate-Transfer (BOOT  BOT or BOOT is a form of project financing wherein the private entity receives a concession. VENKATAIAH Associate Professor 310-Project Management 20 .  For instance. Dr. the new airports constructed in India are being undertaken as BOT projects. operating & maintenance expenses incurred on the project.  This enables the builder to recover investment. that is the right to operate the business (for example. CH. a parking lot) from the government to finance.

Project Close-Out and Termination .

CH. VENKATAIAH Associate Professor 310-Project Management .Project Termination All activities consistent with closing out the project Extinction Addition Integration Starvation Dr.

VENKATAIAH Associate Professor 310-Project Management . CH.Elements of Project Closeout Management Harvesting Gaining Finishing Handing Acceptance the Benefits Over the The Work Product for the Reviewing Product How It All Went Putting it All to Bed Disbanding the Team Dr.

VENKATAIAH Associate Professor 310-Project Management .Lessons Learned Meetings Meeting Guidelines  Establish clear rules of behavior  Describe objectively what occurred  Fix the problem. not the blame Common Errors  Misidentifying systematic errors  Misinterpreting lessons based on events  Failure to pass along conclusions Dr. CH.

CH. VENKATAIAH Associate Professor 310-Project Management .Closeout Paperwork Documentation Legal Cost Personnel Dr.

VENKATAIAH Associate Professor 310-Project Management .Why are Closeouts Difficult?  Project sign off can be a de-motivator  Constraints cause shortcuts on back-end  Low priority activities  Lessons learned analysis seen as bookkeeping  Unique view of projects Dr. CH.

Task-team 3.Dynamic Project Factors 1. Static 2. Sponsorship 4. Environment 6. User Dr. VENKATAIAH Associate Professor 310-Project Management . CH. Economics 5.

CH.Early Warning Signs of Project Failure Lack of viable commercial objectives Lack of sufficient authority to make decisions New product developed for stable market Low priority assigned to the project by management Dr. VENKATAIAH Associate Professor 310-Project Management .

CH. VENKATAIAH Associate Professor 310-Project Management .Early Termination Decision Rules  Costs exceed business benefits  Failure to meet strategic fit criteria  Deadlines are continually missed  Technology evolves beyond the project’s scope Dr.

CH. Project lacks people with appropriate skills 8. Project managers don’t understand users’ needs Dr. VENKATAIAH Associate Professor 310-Project Management . Users are resistant 6. Project changes are poorly managed 2. Scope is ill-defined 1. Deadlines are unrealistic 5. Best practices and lessons learned are ignored 9. Chosen technology changes 3. Business needs change 4.The Top 10 Signs of IT Project Failure 10. Sponsorship is lost 7.

VENKATAIAH Associate Professor 310-Project Management . CH.Project Termination Issues Emotional Intellectual Staff Client Internal External Dr.

CH.Claims & Disputes Two types of claims Ex-gratia claims Default by the project company Resolved by Arbitration Standard litigation Dr. VENKATAIAH Associate Professor 310-Project Management  Binding  Non-binding .

Protecting Against Claims o Consider claims as part of the project plan o Verify stakeholders know their risks o Keep good records throughout the life cycle o Keep clear details of change orders o Archive all correspondence Dr. VENKATAIAH Associate Professor 310-Project Management . CH.

CH. VENKATAIAH Associate Professor 310-Project Management .Final Report Elements Project performance Administrative performance Organizational structure Team performance Project management techniques Benefits to the organization and customer Dr.

VENKATAIAH Associate Professor 310-Project Management 35 .Any Queries…??? Dr. CH.