1.

PRE-AWARD CONTRACT MANAGEMENT

1.1. CONTRACTING STRATEGY

The Contracting Strategy is a project deliverable, in the form of a document, typically produced by a
multi-disciplinary team, which describes a set of planned contracting decisions and activities that are
aligned with and support, Project organizational goals, Project objectives, Project key success
factors.

The Contracting Strategy is, by definition, the top-level plan for delivering a major capital asset within
an uncertain environment. Deviations from “the plan” are to be expected: the strategy should
contemplate both potential changes which can be managed and mitigated, and the potential for
unknown changes which cannot be managed and simply require adaptation. The strategy should be
framed such that changes are recognized promptly with a responsive planning process immediately
assessing “manage” or “adapt” options.

A “Contracting Strategy” is the synergistic sum of many components - e.g. Project delivery models,
compensation models, sourcing strategies and standard form contracts – but the individual
components are NOT contracting strategies. Therefore, for greater certainty:

> Formal tendering, multiple or sole source negotiations are examples of Sourcing
strategies, not contracting strategies.
> Lump sum, unit rate, reimbursable, target price / guaranteed maximum price are
examples of Compensation models, not contracting strategies.
> Design-Bid-Build, Design-Build, EPC and EPC(M), etc. are examples of Project Delivery
models, not contracting strategies.

Contracting strategy should at least define:

> models for Project delivery

> Project scopes of work and the key interfaces between them
> roles and responsibilities of the participating stakeholders
> risks and constraints (including schedule) associated with the Project and strategies to
mitigate them
> compensation models to be utilized for various contracted scopes
> method(s) of sourcing the Contractors’ services
> Owner organization’s scope of work and responsibilities, and capability assessment,
identified areas for improvement / focus

Highlights:
> Should be processed in the FEED (Front End Engineering Design) phase of the project
> Project Manager leads the development of Contracting Strategy
> Multi-disciplinary team contributes the development of the strategy
> Should be flexible to adjust when factors (internal or external) clearly indicate an
adjustment is required.
> Generally confused with contracting plan or project delivery models
 1.2. APPROVAL WORKFLOWS

Structuring the project approval workflows and defining the power of authority are although not in
the responsibility of the contract management professionals, having a defined workflow and clear
power of authority helps the smooth and successful progress of contract management activities from
pre-award phase till to the completion of the project. This topic can be a part of contracting plan but
better to discuss separately to increase the awareness to its importance.

Approval workflows and PoA’s are unique to each project and should be tailored according to;
> Project size
> complexity of the project
> project delivery methods
> stakeholders involved/interfaces (financing authorities, JV partners, board of directors,
etc.)
> availability of the resources (technology / skilled personnel)

Benefits;
> Eliminates the unclarity among the project team hence expedites the contract
management processes
> Encourages the involvement and awareness of overall project team to contracting
activities
> Increase the communication between different disciplines
> Distributes the responsibilities to overall project team
> Helps to have a properly documented project
> Eliminates the excess intervention of senior management of the organization whom are
not a part of the project team
> Reduces the risk of corruption

How the workflows should be structured?

> Should be formed to cover all necessary approvals or involvement of required project
teams with minimum formalities
> Should be formed according to the risk levels of contracting activities to eliminate the
excess formalities
> Should be traceable and documented
> Should be accepted and approved by project stakeholders or project management
 1.3. CONTRACTING PLAN

Definition: A formal written document reflecting the specific actions necessary to execute the
approach established in the approved contracting strategy and guiding contractual implementation.

Contract planning must involve all personnel responsible for one or more elements of the contracts.
The purpose of this planning is to ensure that the project meets its needs in the most effective,
economical, and timely manner. Many problems of contract performances and administration can be
avoided with a comprehensive and actionable contracting plan.

The level of detail provided in the contracting plan will vary depending on the anticipated dollar
value, level of complexity, degree of significance and other appropriate factors.

Contracting plan should address at least below issues;

> Sources. Indicate the prospective sources of supplies or services that can meet the need.
> Competition. Describe how competition will be sought, promoted, and sustained
throughout the course of the contracting.
> Source-selection procedures. Discuss the source-selection procedures for the
contracting, including the timing for submission and evaluation of proposals, and the
relationship of evaluation factors to the attainment of the contracting objectives.
> Contract considerations. For each contract contemplated, discuss contract type selection
> Budgeting and funding. Include budget estimates.
> Milestones (dates) for the contracting cycle. Examples of contracting steps to address:
o Contracting plan approval
o Statement of work
o Specifications
o Completion of contract-package preparations
 o Approval for funding (this approval sometimes happens at the end of contract
negotiations through RFA -recommendation to award)
o Issuance of Notice of Intent
o Pre-tender conference
o RFQ or RFR issuance
o Respond to questions and issue any amendments
o Tender meetings
o Receive proposals
o Assemble technical/cost evaluation team and evaluate
o Develop competitive range and hold discussions
o Receive and evaluate best and final offers
o Final contract drafting, review, and clearance
o Contract award
> How the contract will be administered after issuance
> Milestones or target dates for completions

1.4. MARKET RESEARCH

Market research is a process used to collect, organize, maintain, analyze, and present data for the
purpose of maximizing the capabilities, technology, and competitive forces of the marketplace to
meet the project’s needs for goods and services.

It is important to perform market research in order to foster competition, determine commerciality

of products and services, reduce risk and develop contracting plans.

> Internal Market Research; is to learn as much as possible about the organization (client-
buyer), how it does business, and how it has used goods and services contracted in the
past.
o Review historical information on prior contracts to know who the internal
contractors are,
o Receive detailed briefings on the functions and process of internal contractors,
o Sharing information on contract management issues and trends with other managers
worked with the internal contractors before.

> External Market Research;

o Reviewing historical information on similar prior projects/contracts for related
market research
o Review pertinent professional news, trade, association, or industry publications,
o Contact knowledgeable third-party sources for the information regarding potential
sources
o Attend trade or professional association shows and exhibits
o Contact customers of potential sources for past performance information
o Review catalogs and other information published by potential sources
o Contact potential sources for specific, capabilities information or briefings
o Issuing request for information or budgetary study for the potential scope
 1.5. CONTRACTING METHOD SELECTION

Contracting methods are generally described in three families Fixed-priced, cost-reimbursement and
incentive. The relationship of these contracting methods are mostly summarized or downgraded only
to risk vs contract type or compensation method comparison as below.

However, there are many other factors to consider while selecting the contract type and contracting
and compensation method:

> Type of the requirement

> Complexity of the requirement
> The urgency of the requirement
> Period of performance
> Contractor’s technical capability and financial reporting system
> Price competition or the tradeoffs between the risk and price
> Technical and staffing capability of the project team
> The degree of detailed definition of the requirement

Contract managers should think creative and select the most effective contract type and
compensation method or a combination of these methods by considering all the factors above.

The most commonly used contracting and compensation methods in Turkey are listed below;

> Lump-sum (Turnkey)

> Unit Rate
> Cost-plus percentage
> Cost-plus fixed fee
> Hourly Rate
> Yap-İşlet-Devret (Government Contracts)

Contract types are also categorized according to the structures as well:

> Performance Base Contracts (i.e. Construction Contracts)

> Consultancy Services Contracts
 > Definite-Quantity Contracts (Max and Min quantities of the services or supplies are defined)
> Indefinite Quantity Contracts (Time, quantity duration of the supply or service is not defined)
> Letter Contract (i.e. Notice to Proceed) A legal, preliminary, negotiated contract that
authorizes contractor to start work pending negotiation of a definitized contract, which may
be any type, or combination of types.
> Basic Agreements (Less dollar value contracts)
> Purchase Order (PO)
> Blanket Purchase Agreements

Comparison table is given below for whom are interested in very broad classification of major
contract types as written in the most of the books.
2. TENDERING STAGE

2.1. TYPES OF BID (Tender)

> Open Competitive Tenders:

For open tenders, no limit is imposed on the number of contractors who are allowed to
tender on the work. An open tender process would be used where the services required are
not normally able to be provided by existing contractors, where existing contractors may
appear to be over-comfortable with the work they receive from the Company, or where the
Company is seeking new and innovative proposals from the market in general.

Open tenders will generally require advertising in the appropriate newspapers and journals,
receipt and evaluation of requests from potential suppliers to tender for the work, and
subsequent issue of tender documents.

The advertisement for an open tender should generally include a deadline for issue of tender
documents, as well as the closing date for tender submissions.

> Limited Competitive Tenders:

Limited competitive tendering, based on a pre-qualified and Accredited Contractors list, is

the preferred method of tendering.

Restricting requests for tender to selected contractors has a number of advantages:

• Limits tender submissions to those contractors which have been pre-qualified, or are
known to the Company as having the capability to satisfactorily complete the works,
• Gives each tenderer a greater individual chance of winning the contract, thereby
encouraging the tenderer to “sharpen his pencil”,
• Simplifies the tender evaluation process,
• Still provides for competitive tendering.

Selection of the contractors to be included on the tender list should consider the following:

• Contractors safety performance, both at the Site and elsewhere,

• Skills and experience of the contractors personnel,
• Availability of tools, plant and equipment,
• Past contracts completed for the Company,
• Results of any prequalification or performance assessment process.

A contractor SHOULD NOT be included on any tender list unless the Company would be
prepared to award a contract to that contractor should his tender prove to be the most
favorable.

The objective of limited competitive tendering is to limit the number of contractors

tendering to a sensible level. As a general rule the number of contractors invited to tender
should not be less than four (4) nor more than eight (8).
> Sole Source Tendering

Issue of single source, non-competitive tenders should be avoided where possible, and
should only generally be issued in the following circumstances:

• Where the work is of a specialist nature,

• Where it is impossible to call competitive tenders (e.g. where an equipment
manufacturer supply contract requires the manufacturer to perform maintenance,
so as not to void any warranty that the manufacturer has provided),
• Where the works are urgent or of a break down nature.

Where possible, the single source contractor should not be made aware of that fact during
the tender process. If the contractor is aware of this fact, he could potentially use that
knowledge to submit inflated prices. In those circumstances, it may be preferred to enter
into direct negotiations with the contractor, while at the same time publicly stating that if
the negotiations do not produce a satisfactory result, the Company may choose to tender the
work.

Consideration should also be given to any increased risk to the Company of entering into a
critical contract with potentially only one available contractor.

2.2. REQUESTING OFFERS

2.2.1. Tender Period

It is important that tenderers be given adequate time to prepare their tender submissions. A
short tender period may not allow the tenderers sufficient time to review the tender
documentation, plan their resources around other works and activities, source best pricing
for materials and equipment, prepare alternative proposals or even submit a tender at all. A
hastily prepared submission will require the tenderer to allow contingencies which should
not need to apply, effectively increasing the cost to the Company.

Tender closing dates should therefore take into consideration the following:

• Size and complexity of the contract

• The extent to which tenderers will be involved in negotiations with others
• Whether a site visit has been planned for the tender
• Quantity and expected availability of materials and equipment required to be
supplied by the tenderer (e.g. the time it may take for the tenderer to receive
quotations for materials)
• Mail delivery times, for both issue and receipt of tenders
• Contract Owners schedule for commencement of the work

In any case, unless exceptional circumstantial exists, no tender period should be less than 14
days.

2.2.2. Invitation to Tender Letter

All tender documents shall be accompanied by an Invitation to Tender letter, which shall
clearly state the following information:
 • The tender number and title
• The tender closing date and time
• A list of documents which form the Tender Documents (including the Conditions
of Offer and Form of Tender)
• Whether the tender is for a lump sum contract, schedule of rates, period
contract, etc.
• The name and address of the Contracts Adviser, to whom all tender submissions
and correspondence should be addressed
• Details of any tender site inspection – date and time of visit, expected duration,
any special requirements for PPE, and the maximum number of people who
should attend.

> Tender Schedules

The Tender Schedules, to be prepared by the Contract Administrator, should be based on
the structure and requirements of the Scope of Work.

In addition to pricing information, tenderers may be requested to provide additional

information that would assist in evaluation of tender submissions or subsequent
management of the contract. Such information could include:

• Estimated man-hours involved in the works

• Any additional materials / equipment / facilities which the contractor would
require the Company to provide
• Details of any proposed subcontractors or suppliers
• Details of contractors plant and equipment
• Schedule for the work, or at least planned commencement and completion dates
• Dates / times when the contractor would require access to existing plant or areas
• Detailed break-up of the price (e.g. design, direct labor, plant and equipment,
materials, commissioning, etc.) – but ensure the break up is kept as simple as
necessary to meet the requirements of tender evaluation
• Proposed layout drawings
• Proposed level of supervision
• Details of previous experience on similar works
• Details of skills and qualifications of proposed site supervisors, safety officers, etc
• Contractors safety management plans
• Contractors previous safety performance record

Where this information is required, the requirement should be stated in the Tender
Schedule.

Remember that too much information is preferable to too little.

2.2.3. Issue of Tenders

Prior to the issue of tender documents, the Contract Administrator is responsible for
ensuring:
• That the full requirements of the work have been clearly detailed (to reduce the
possibility of variations later)
• That all tender packages are checked to ensure all pages, documents, drawings,
specifications, etc. are included in every tender package
 • That all tender packages are issued to all tenderers at the same time and by the
same method of delivery (excluding packages delivered by hand or internal mail
to site contractors).

Tenders may be issued by email, but ONLY if ALL tender documents are issued in Adobe
Acrobat format to ensure the contents cannot be altered.

2.2.4. Extension of Tender Closing Date

Requests from tenderers to extend closing dates should only be granted where:
• The request is received at least 72 hours before the scheduled tender closing
date,
• The reason for the request has been justified by the tenderer,
• The decision to extend the closing date will not advantage or disadvantage any
tenderer, and
• The extension is approved by the Contract Owner and the Contracts Manager

The Contract Administrator shall immediately notify all tenderers by fax or email of the
extended closing date.

2.2.5. Cancellation or Recall of Tenders

Tenders should only be cancelled or recalled where:
• the scope of the work has changed significantly,
• all (or the majority of) tenderers have failed to address specific components of
the tender,
• tendered prices are significantly above the Company’s estimate,
• misleading information has been given to tenderers, or
• one or more tenderers have displayed or are suspected of improper conduct, and
• approval is granted by the Contracts Manager.

In the event that a tender is cancelled or recalled, the Contract Administrator shall write to
each tenderer advising of the cancellation / recall, and thanking them for their efforts to
date. Note that the Conditions of Tender allow the Company to recall / cancel a tender
without advising any justification.

2.2.6. Liaison with Tenderers

During the period following issue of tender documents until award of the contract, ALL
contact with tenderers shall be through the Contract Administrator. All contact shall be in
writing, and notes of any discussion should be recorded. Where the contact is at a meeting,
formal minutes in standard format should be recorded and issued to those in attendance at
the meeting.

All correspondence with tenderers should be either by fax, in which case a copy of the
transmission advice should be attached to the fax, or by email. Where documents are
emailed, they must ALWAYS be in Adobe Acrobat format. This is to ensure there is no chance
of a contractor making alterations to the document and claiming a variation later.

2.2.7. Tender Clarifications

Where further information is to be supplied to tenderers to clarify requirements, the request
must:
• Always be in writing,
• Clearly define the questions,
 • Be sent to ALL tenderers (or where a short list has been established, all short
listed tenderers), and
• Be clearly identified with the Tender Number and Tender Clarification Number.

Where further information is required from one or more tenderers only, the request must
clearly refer to the item in the tenderers submission which requires clarification. Do not tell a
tenderer what you think he may have missed, but request he confirm that he has provided
for specific items detailed in the tender documents.

Where one tenderer offers an alternative method of completing the work, one which will
result in benefits to the Company, that information should not be passed on to any other
tenderer.

During the course of tender clarification and subsequent negotiation, do not give any
tenderer any indication of where their pricing stands compared to others. Do not give any
tenderer ANY information about any other tenderer’s tender (or lack of tender).

2.3. CLOSING OF TENDERS

2.3.1. Receiving Tender Submissions
Instructions as to the time, date, place for the submission of tender submissions must be
included in the Invitation to Tender Letter.

Tenders are confidential and must not have a wider circulation than is necessary for the
purpose of deciding the award of the contract. Once opened tender documents shall be
securely stored in the Contract Administrators office until such time as the contract is
awarded.

Tenderers have the right to modify their tenders in writing at any stage before the appointed
tender closing time. In the event of a tender being delivered before the due tender closing
time, and if the tenderer wishes to modify it, the tenderer may submit a separate
supplementary statement of amendments to his first tender submission. This amendment
shall be delivered and kept in the same way as the original tender.

2.3.2. Acceptance of Late Tender Submissions

Under normal circumstances, late tender submissions should not be accepted unless there is
sound justification for doing so, and the acceptance will not expose the Company to any
claims from other tenderers for damages or unethical behavior. Where the Contract
Administrator recommends acceptance of a late tender, it shall require the written approval
of the Contracts Manager, suitably noted on the Tender Opening Record.

2.3.3. Opening of Tender Submissions

All tenders should be opened by the Contract Administrator and at least one other person,
both of whom shall initial and date the following pages of each tender submission:

• The Form of Tender

• Any introductory letter from each tenderer
• Each priced page of the tender submission
• Each completed tender schedule and enclosure
• Each page of any program, Gantt Chart or details of commencement and
completion dates included in the tender submission.
 Details of each tender and the opening shall be recorded on a Tender Opening Record Form,
signed by all present at the opening, and filed in the tender file.

Tenders should be opened within 2 days of closing, and should not in any event be opened
prior to the advertised tender closing time.

2.3.4. Tender Validity Period

The validity period as stated in the Company’s Conditions of Tender is three months from the
closing date of tenders, however, under certain laws a tenderer may withdraw their tender
at any time up to its formal acceptance. This fact must be borne in mind during the tender
evaluation process to ensure that the tender evaluation process does not take an unduly long
amount of time.

2.4. TENDER SUMMARY

The extent of evaluation of tenders depends entirely on the value, complexity or criticality of
the works. The evaluation of smaller service type contracts may be simply a matter of
selecting the best cost option, while larger contracts or those of a highly technical nature
may require considerable investigation, analysis and effort. The method and factors used to
evaluate each tender should be communicated to all tenderers at the time of tendering. All
tenders will require the completion by the Contract Administrator of a Tender Evaluation
Summary document.

2.4.1. Technical Evaluation

Tender submissions should be copied and sent to the Contract Owner for technical
evaluation. To ensure fair evaluation of the technical, safety and quality aspects of the
submissions, all pricing information should be removed or blacked out. All copied tender
submissions must be marked ‘COPY’.

The Contract Owner is responsible for ensuring that the tender submissions comply with the
technical specification.

An example of tender evaluation summary table with weighted scores follows:

2.4.2. Commercial Evaluation
> Conforming Tenders
The Contract Administrator shall review each tender submission to identify any non-
conformance with the tender documents. Wherever possible, all such non-conformances
should be resolved during the tender clarification period.

Any non-conformances which have not been resolved and their impact on the Company or
the work under the contract adequately addressed, should be clearly stated in the Tender
Evaluation Summary document. The Contract Owner must be informed of any non-
conformances to assess their impact.

> Significant Variances in Tender Prices

Where significant variances exist in pricing between the Owner estimate and the various
tender submissions, the Contract Administrator must investigate and identify the reasons for
the variances.

Variances could arise from any of a number of reasons, including:

• Incorrect estimate by the Contract Owner

• Ambiguities within the Scope of Work or Contract documents
• A tenderer not understanding Owner’s requirements
• A tenderer using a higher (or lower) hourly rate

Any such significant variances should be either clarified with the tenderer prior to completing
the Tender Evaluation Summary, or clearly explained in the Tender Evaluation Summary
document.
> Financial Evaluation
Financial evaluation of tenders should always focus on the TOTAL COST to Owner.

Where the tender is for a lump sum price, consideration should be given to probable
variations based on each tender submission, the past or known performance of the
contractor, the perceived accuracy of the scope of work and specifications, potential delays
caused by operational interfaces, etc.

Where the tender is for a schedule of rates contract, the Contract Owner will be required to
estimate the quantities of each type of work over the term of the contract The Contract
Administrator can then calculate forecast total cost.

The evaluation should also include other direct cost impacts such as Owner having to supply
equipment or materials to one tenderer but not others, Owner having to supply
accommodation for a longer period to one tenderer, or Owner not having to provide fuel to
one tenderer.

Items which should also be discussed, but should NOT be included in any total cost
comparison, include early production expected as a result of a particular tenderers proposal,
expected reduction in administrative effort required for a particular tenderer, or expected
reduction in the cost of producing as-built drawings due to the capabilities of a particular
tenderer.

An example of a simple cost comparison follows:

2.4.3. Safety Evaluation

The Contract Administrator shall ensure that a representative of the Owner Safety Section
has sufficient tender submission and prequalification information to enable detailed
evaluation of the tenderers’ submissions. Where the tender schedules have included
requirements for safety management information, or resumes of proposed safety officers,
these should be forwarded to the Owner Safety Section for review. Where possible, tender
 pricing schedules should be reviewed to identify how much the contractor has allowed for
safety during the contract.

The Owner Safety Officer should prepare a detailed evaluation that may be included or
summarized in the Tender Evaluation Summary document.

2.5. CONTRACT AWARD AND KICK-OFF

2.5.1. Letter of Award

An approved Tender Evaluation Summary and the Application for Contract Form shall be
sufficient authorization to allow the Contract Administrator to award the contract, and issue
the appropriate purchase / service orders / contract.

The Contract Administrator may issue a Letter of Award to the successful contractor. The
Letter of Award shall also advise the name of the appointed Contract Owner, and shall make
mention of any immediate actions required of the successful contractor.

Where final approval of funding is still outstanding, and commencement of the work under
the contract is “business critical” and is directed by the area General Manager, the only
option available to make a commitment to the contractor is to place a service order for the
value of the initial start-up work.

2.5.2. Advice to Unsuccessful Tenderers

To avoid the possibility of a contractor claiming that in their opinion, their offer had been
accepted because it was not specifically rejected by Owner, a letter, or preferably a faxed
advice, should be sent to all unsuccessful tenderers immediately after the contract has been
awarded.

2.5.3. Execution of Contracts

Following award of the contract, it is important to arrange execution of contract documents
within the shortest possible time to ensure there is no misinterpretation by either the
contractor or Contract Owner of the scope or conditions of contract.

All documents which form the contract should, where possible, be bound together in one
single document. Where it is necessary to have more than one bound document for each
contract, each document should be clearly labelled with “Contract Number xxxx, Document x
of y”.

In general, all contracts should be executed in the presence of both parties, and each party
left with one executed copy of the contract.

The Contract Administrator should assemble a copy (preferably unsigned) of the contract and
issue it to the Contract Owner. The copy should be clearly stamped “COPY” in red ink on the
front cover and Instrument of Agreement.

2.6. CONTRACT PRE-START MEETING

Where appropriate to the size and duration of the contract, the Contract Administrator
should arrange for a Contract Pre-start Meeting as soon as possible after award of the
contract.

Attendees at the meeting should include the Contract Owner, Contract Administrator, an
Owner Safety representative, and contractor management, safety officer and site
supervisors. Minutes of the meeting should be recorded by the Contract Administrator, the
original filed on the contract file, and copies issued to all attendees.

The agenda for the meeting will vary with different types of contracts, but should generally
include the following:

• OVERVIEW – Parties professionalism, ethical relationships, open/frank

communications, help not hinder.
• TERMS and CONDITIONS OF CONTRACT – Administration of progress claims, site
instructions, variations, extensions of time, claims, insurances, disputes, early
warning of difficulties (performance / time / cost).
• MEETINGS – Design progress and review, site progress / co-ordination and safety,
meeting frequency.
• COMMUNICATIONS – Between the parties (including key contacts for various
activities).
• PROGRAM – Contract / base line program, progress reports and updates,
potential delays.
• PAYMENT – Contract price schedules, progress claims, invoicing, administration
schedule and sequence.
• QUALITY ASSURANCE – Standards, Quality Plan, I. T. P’s.
• SITE MATTERS – Supplier’s onsite representative to have authority, safety,
industrial relations, hours of work, site inductions and conditions of access, site
facilities and services, supplier’s compound laydown areas, co-ordination with
other suppliers, stores and free issue equipment, commissioning etc.
• TECHNICAL – Scope, standards and interfaces.
3. POST-AWARD CONTRACT MANAGEMENT/ADMINISTRATION;

The range and extend of the contract administration can be tailored based on the type of the
contract, requirement complexity, dollar value, number of contracts to manage, importance of
contract to organization and organization size. (Note: size of the contractor or sub-contract
should not affect the pre-defined administration processes).

Contract administration begins with reading the contract to understand its terms and conditions.
The contract administrator (or officer) should be thoroughly familiar with the contract
requirements to facilitate effective communication between owner and contractor.

3.1. USE EFFECTIVE COMMUNICATION

An essential element of successful contract administration is establishing and maintaining
effective communications between the owner and contractor, and within their organizations.

Inadequate oversight can cause cost, schedule, technical, or other compliance problems that
may result in failure of the project and poor relations.

Lack of cross-functional awareness within the organization can cause misinterpretation of

contracts by other departments, inadequate contracts scopes, commercial conflicts with
contractors, delayed services and schedule.

Below listed communication methods are valid for both within and outside the organization;
Written communication:
• emails, messages and forums, (WhatsApp groups etc.)
• approval forms,
• transmittals,
• reports, (weekly, monthly, quarterly etc.)
• presentations, studies and analysis,
• bulletins, etc.

Verbal communication:
• meetings,
• unofficial chats,
• toolbox talks,
• briefings,
• site visits, etc.

3.1.1. Communication Within the Organization

• Briefing the key aspects of each contract to other departments to create awareness.
• Briefing the contract management/administration workflows, responsibilities,
requirements, durations, communication methods to other departments in the
organization to eliminate conflicts and delays.

3.1.2. Communication with Contractor/Owner

• A communication matrix can be defined for major topics,

• The way of communication should be defined and agreed between the parties
3.2. STATUS REVIEW MEETINGS,

A member of the contracts team will prepare a schedule for progress meetings with each
supplier, if the relevant contract requires progress meetings.
The purpose of these meetings is to review progress, quality of work, resolve issues, briefly
present and discuss claims, and for general project co-ordination purposes.
Minutes of all meetings are to be taken by a member of the contracts and procurement team
and distributed to all participants. A member of the contracts and procurement team will
prepare a schedule for progress meetings with each supplier, if the relevant contract requires
progress meetings.

The proposed agenda for the progress review meeting should address:
• PROGRESS – Last period and forecast period (labor and plant reports, % gained, delays,
completed activities, deliveries).
• CONTRACT - Progress claims, site instructions, variations, claims, extensions of time,
administration issues.
• QUALITY ASSURANCE – Inspections, tests, non-conformances.
• SAFETY – Accidents, Near Misses, Lost Time Injuries, Investigations, Rehabilitation
Monitoring.
• INDUSTRIAL RELATIONS – Disputes, other.
• NEXT MEETING.

3.3. MONITOR AND DOCUMENT PERFORMANCE,

In addition to the information provided by the contractor in various meetings and reports,
contract owner will also observe contract performance to ensure performance is in
accordance with contract requirements and to validate information received from other
sources such as technical representatives or inspectors.
• Daily, weekly, monthly reports,
• Gate records, manpower counts,
• Social security records,
• Progress vs payment comparisons,
The records can be used as a ready reference source to reflect the intent of the parties over
time as a means to guide future actions based on agreements reached in the past or as
evidence in the event of claims, disputes or any subsequent litigations.

3.4. PROGRESS CLAIMS AND PAYMENTS,

• The contract administer is responsible for the processing of progress claims/invoices.
• Progress claims/invoices are generally submitted at the end of the month and are
payable within a certain time frame (as set out in each contract).
• Generally, it is best to keep the supplier informed of the progress claim/invoice
evaluation process and gain the supplier’s agreement to adjust the value of the
claim/invoice. Where joint agreement with the supplier cannot be reached on the
amount to be paid to the supplier, the contracts and procurement team shall advise
the Project Commercial Manager immediately for instruction of further action to be
taken.
 • Once the contracts and procurement team has confirmed that the claim is in order
(including any back charges or retention money), he or she shall distribute the
Progress Claim Approval Form.

3.5. CONTRACT CLOSE-OUT / DEMOBILIZATION,

The contracts administer will ensure that all contracts are closed out after the works, services
or supply of an item being finalized in accordance with the requirements of the relevant
contract. In relation to contract close-out activities, the contracts administer will:
• Verify that all contract deliverables, such as maintenance manuals, as-built drawings
and reports have been received or satisfied.
Ensure equipment warranties are provided by the supplier, and assigned in favour of
company.
• Ensure the Responsible Manager has compiled and issued the defects list.
• Monitor / update / distribute the defects lists to the contracted parties until all items
have been signed off.
• Final account has been requested from the supplier.
• Ensure any back-charge issues are resolved and that no outstanding payments are due
to the supplier.
• Prepare and issue of a contract variation to reflect final contract values.
• Ensure the Deed of Release (if required) has been issued to the supplier and is signed
prior to final payment.
• Review and release of supplier Bank Guarantees (if any are held).

3.6. LESSONS LEARNED.

• Review the initial contracting strategy,

• Review workflows and processes,
• Review the structure of the contract team,
• Review the main causes of claims and claim avoidance practices,
• Review contract condition and clauses,
• Etc.