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A PMs Guide To CM PDF
A PMs Guide To CM PDF
Manager’s
Guide to
Contract
Management
How Project Managers
with Little Contract
Management
Experience Can Jump
in and Get Up-to-Speed
By Trevor Jacobs
FIGURE 1. Balanced Contract Manager and Project Manager And, of course, there are other organizations where contract man-
Division of Responsibilities agement is almost non-existent. This includes many of the com-
Contract Manager Project Manager panies where I have previously worked, where most software is
built in-house by the IT department and the contracts are written,
negotiated, and signed without anyone from contracting ever talk-
ing to a project manager or engineer. From the project manager’s
point of view, the division of labor in these types of organizations
T&Cs
looks like FIGURE 3.
Negotiate Review Fulfill Obligations
Sign Estimate Manage Work Situations like this result in unreasonable objectives, impossible
Modify Prioritize Report schedules, and abysmal budgets. For one project I managed, I
Implement took the requirements to the engineers, and we made a develop-
Cancel Schedule ment plan that would take four months. When I presented it to the
Close vice-president of sales, he told me it was wrong. A contract had
already been signed and we had three weeks to deliver. For the
next three weeks, five developers and I worked every day around
the clock. When the deadline arrived, we delivered the product. It
wasn’t anything to be proud of, and it certainly didn’t impress the
FIGURE 2. Unbalanced Contract Manager and Project Manager customers. But it did meet the requirements. At least, it did when
Division of Responsibilities it worked, which it didn’t always do. We never worked with that
customer again.
Project Manager
Contract
PMs and CMs, Working Together
Manager
T&Cs There are several things that can optimize how project managers
Negotiate and contract managers work together. They are:
Review
Clearly defined roles and responsibilities,
Estimate
Early involvement of the project manager,
Sign Modify Prioritize
Schedule Continuing involvement of the contract manager,
Cancel Close
Fulfill Obligations Understanding each other’s responsibilities and processes,
Manage Work Simplifying the process, and
Report Contract management tools.
Implement
Each of these will be discussed in the following sections.
Every organization is different—whether it is an entire company or Early Involvement of the Project Manager
one department. Despite the extreme differences that can exist Many professional project managers believe that project manage-
between organizations, there are some common guidelines that ment begins only when there is a project to implement; that “a
most organizations can follow: contract with a detailed [s]tatement of [w]ork should precede.”7
However, without the early involvement of project managers, a
PMs serve as multifunctional team leaders on one or more projects, SOW could be unreasonable or less effective than it could be (as
shouldering the responsibility for achieving the desired results for these in my experience with the three-week project previously men-
projects. What may vary, however, is the extent of their authority…. When tioned). There are many benefits to involving the project manager
it comes to contracting, PMs in most companies lack the authority to sign, early in the contract management process:
modify, or cancel contracts that legally bind companies to buy or sell
products or service[s]. Yet PMs in some companies have the express au- PMs can give CMs and marketing managers critical insights into the value
thority to sign contracts and modifications or cancellations of contracts. of certain requirements and the realistic opportunities of achieving the
results the customer desires. PMs can, for example, assess whether cost
CMs, however, seldom are in charge of the day-to-day project planning and schedule estimates are realistic, analyze the risks and opportunities
or operations. Yet, as individuals authorized to enter into legally binding the project provides, and recommend special Ts and Cs for tailoring the
contractual arrangements, they may shoulder the responsibility for hav- contract to the project goals.8
ing critical resources available as needed under tight, often conflicting or
unrealistic time frames. Alternatively, they may be placed in an advisory All contracts can benefit from the early involvement of project
or support role to PMs who have contracting authority.6 management. One of the real benefits of my current position is
I didn’t realize this due to my lack of contracting experience and One thing that helps project managers and contract managers
knowledge. Having a contract manager involved throughout the understand the process and their responsibilities in that process is
process would have made such issues easier to resolve. “simplification.” A simple contract is easier to manage. It reduces
confusion and increases the chance of successfully completing the
Understanding Each Other’s Responsibilities and project:
Processes
The project manager and contract manager should understand Simplified contracts…ease contract management…. Because PMs are
the responsibilities and processes of the other to improve their often responsible for contract administration tasks, PMs and CMs both
ability to work effectively together. This is true for both the seller’s benefit, as does the customer.10
side and the buyer’s side:
Contract Management Tools
The PMs—whether they are buying or selling products, services, and There are many tools a project manager can add to his or her
solutions—often must work closely with [CMs] to achieve the desired busi- “toolbox” by learning more about the contract management
ness results. Every CM should understand the role, responsibilities, and process. The following is a list of contract management topics that
challenges that PMs face.9 project managers should learn. Although not all-inclusive, this list
is a good place to start:
The same is true for project managers. By understanding the “role,
responsibilities, and challenges” that a contract manager faces, Integrate change management into the contract—This is especially
they can help the contract manager create and approve optimal useful when unforeseen events cause parts of the contract to
become obsolete. Utilize contract modification requests, indepen-
contracts, and know how the contract manager can help them
dent expert opinions, or dispute review boards.
fulfill their clients’ needs.
Know the legal framework—It is necessary to have an awareness of
Simplifying the Process applicable legal concepts in order to effectively use an organiza-
Contracts in the United States have a tendency to be long, compli- tion’s legal specialists if necessary.
cated, and full of legal jargon. Large organizations may also have Define the requirement—Ambiguous or missing requirements
significant bureaucracies that complicate the contracting process. pose major risks. It is not advised to assume that because a sup-
AGU.edu
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A PROJECT MANAGER’S GUIDE TO CONTRACT MANAGEMENT
plier is a specialist in a given field, it will also fully understand what Both NCMA and IACCM provide education through seminars,
is required from the contract. webinars, and conferences.
Establish clear roles and responsibilities—Define who is supposed
to do what. While these organizations are geared to educating and certifying
Manage relationships—If an issue arises, know what to do and how professional contract managers, they are also excellent resources
to resolve it. Have the hard conversations up-front, and written to help project managers to learn about the process of contract
down. The rest of the relationship will follow. management. Even if you do not seek to be a certified contract
manager, the education is useful in helping project managers be
Manage risk—The higher the liability allocation is in a contract,
more effective.
the higher the price will be. As such, the risk remains with the
customer.11
Mentors
Recommendations Having an experienced mentor enables less-experienced people
Based on my research and experience, there are multiple things to gain insight, knowledge, and experience more quickly than
project managers can do to really excel at working with contract they would on their own. For our purposes, a mentor that is either
managers, and to use the contract management processes and a professional contract manager or someone else with significant
tools in the successful completion of projects. Some are: contract experience (such as another project manager, account
manager, or executive) would be the ideal candidate.
Make lists and take notes,
Education and certification, Some organizations offer formal mentoring programs; however,
Mentors, most do not. You can sometimes find mentors within your com-
pany, but it is up to you to find experienced people and ask them
Internet resources, and to mentor you. Sometimes there is nobody within the organization
Real-life experience. to help you. In these instances, mentors can be found through:
12. See Susan Metros and Catherine Yang, Cultivating Careers (The Ohio State
For example, experience taught me how to design a contract University, 2006): chapter 5, available at www.educause.edu/research-
that we could easily accomplish, and how to manage to those publications/books/cultivating-careers-professional-development-campus-it/
chapter-5-importance-mentors.
contracts. However, experience did not teach me how to use
contract modifications when tasks proved to be more difficult than
expected, or when a client discovered that what it actually needed
was different than what was specified in the contract. Learning TREVOR JACOBS, MBA
through experience works best when coupled with education and Senior product manager, ChartLogic
guidance from a mentor.
Experienced project manager
Conclusion Still finds himself regularly involved in contract management
Project managers can become more effective by learning about
contract management and its processes and tools. This will help ^^ /in/trevorjacobs1
project managers work with professional contract managers, and
it will also help them in situations and organizations where there
is no contract manager, or where there is a lack of organizational
contract management knowledge.
ENDNOTES
1. NCMA, Certified Professional Contracts Manager Study Guide, third ed. (Ash-
burn, VA: NCMA, 2014): 126.
2. Kristian Jaakkola, “A Way to Successful and Strategic Contract Management,”
available at www.icoste.org/NORDNET2004%20Papers/Jaakkola.pdf.
3. Peter Stoemmer, “Project Management Knowhow,” available at www.project-
management-knowhow.com/contract_management.html.
4. Gregory A. Garrett, World Class Contracting, fifth ed. (Chicago, IL: CCH Inc.,
2010): 41.
5. Ibid., at 36.
6. Ibid.
7. Andy Mantler, JD, “Contract Management for Project Managers: Fundamentals,”
available at www.northalabamapmi.org/documents/papers/2007_Contract_
Management_for_Project_Managers.pdf.
8. Garrett, see note 4, at 39.
9. Ibid., at 205.
10. Ibid., at 39.
11. List derived from Elizabeth Harrin, “The Value of Contract Management
Fundamentals for Every Project Manager,” available at www.pm4girls.elizabeth-
harrin.com/2011/01/the-value-of-contract-management-fundamentals-for-
every-project-manager/; and Rick Graham, “The Value of Contract Management
Fundamentals for Every Project Manager,” Contract Excellence Magazine (May
2011), https://www.iaccm.com/news/contractingexcellence/?newsletterid=4#44.