LECTURER: JOHN DOE

INTERNATIONAL CONTRACT
MANAGEMENT
TOPIC OUTLINE

The Four Phases of Contract Management 1

Phase I: Offer Preparation 2

Phase II: Negotiation 3

Phase III: Implementation (Part 1) 4

Phase III: Implementation (Part 2) 5

TOPIC OUTLINE

Phase IV: Analysis 6

UNIT 4

PHASE III: IMPLEMENTATION (PART 2)

STUDY GOALS

− Understand a contract manager’s duty during the

execution phase.
− Describe how claim management works.
− Comprehend the goals of dispute resolution.
EXPLAIN SIMPLY

1. What are the roles of contract management during

the execution phase?
2. What is claim management and what are its goals?
3. How can disputes be resolved the best possible way?
CONTRACT MANAGEMENT DURING THE EXECUTION PHASE

ꟷ = claim management
− Make sure you get paid for your own
claims.
− Fend off other side’s claims (= counter-
claim management).
WHY DOES CLAIM MANAGEMENT MATTER?

ꟷ Ensures that the project will remain

profitable (buyer’s perspective).
ꟷ If a supplier
− accepted all of the customer’s claims for
alleged defects,
− failed to claim compensation for work
beyond the contract,
it would soon go bankrupt!
THE GOALS OF CLAIM MANAGEMENT

1. Make sure you get compensated for

all works under the contract.
2. Defend against the customer’s
unjustified claims (e.g., delay when it
was caused by the customer).
3. Increase earnings by invoicing
services beyond the contract.
PRACTICAL EXAMPLES OF CONFLICTS IN PROJECTS

− The customer doesn’t accept a

claim for additional works.
− The supplier wants the customer’s
staff visiting the construction to
wear protection.
− The supplier wants more input
from the customer.
− …
TYPES OF CONFLICT

Value Conflict
a) internal conflict
b) relationship conflict
c) task conflict
VALUE CONFLICTS

− Often revolves around a company’s

mission.
− E.g., a company wants to use
sustainable energy only.
− E.g., a company has a strict policy
about relationships among
employees.
INTERNAL CONFLICTS

− Struggle occurring within a

character's mind.
− E.g., inner conflict with decision that
has to be taken by the site manager.
− E.g., inner conflict with role of
supervisor.
RELATIONSHIP CONFLICT

− Regards the relationship between

the parties.
− E.g., very unfriendly atmosphere,
always finger-pointing and
complaining.
− E.g., supervisor of Company A never
greets lower-ranking employees of
Company B.
TASK CONFLICT

− Regards matters of performance

and consideration (as per the
contract between the parties).
− E.g., parties disagree on who
should do landscaping outside the
erected factory.
− E.g., supplier makes additional
claims for everything.
CONFLICT RESOLUTION – BASICS

− Conflicts can always arise and at

any time.
− NEVER think “we are close, we will
always find an amicable solution”.
− Always include an appropriate
dispute resolution clause in your
contract.
CONFLICT RESOLUTION – BASICS II

ꟷ in contract management:
dispute = conflict about claim that
is disputed by other side
ꟷ Every dispute costs money:
− legal fees
− court / arbitration fees
− expert witness fess
− disruption within company because of
dispute
− …
OPTIONS TO RESOLVE DISPUTES

Negotiation Mediation

Dispute
Litigation resolution Conciliation
options

Arbitration Adjudication
CONFLICT RESOLUTION – BASICS III

− Companies should always keep a

close eye on their lawyers and
manage them.
− If you don’t care about the dispute,
lawyers may predominantly think
about their own concerns
(principle-agent-problem).
CONFLICT RESOLUTION – BASICS IV

− Making a claim can have a

significant impact on the
relationship between two
companies.
− It may be better to let go of a small
claim in order to keep “peace” at
the project.
− This goes both ways!
REVIEW STUDY GOALS

− Understand a contract manager’s duty during the

execution phase.
− Describe how claim management works.
− Comprehend the goals of dispute resolution.
SESSION 5

TRANSFER TASK
TRANSFER TASK
TASKS

According to the contract between A and B, A should drill 10,000

holes into the ground to stabilize the warehouse it has to erect. It
ends up drilling 10,001 holes into the ground.
B instructs A to also build 150 meters of road to the warehouse as B
realizes during the project that A has great knowledge in building
roads in rocky terrain. A builds the road even though this was not
foreseen in the contract.
What should A do?
TRANSFER TASK
PRESENTATION OF THE RESULTS

Please present your

results.
The results will be
discussed in plenary.
LEARNING CONTROL QUESTIONS

1. When there is a conflict about a claim, it is commonly

referred to as…
a) a dispute.
b) a claim.
c) an alternative dispute resolution.
d) a dispute resolution.
LEARNING CONTROL QUESTIONS

2. An unresolved conflict is usually…

a) …escalated.
b) …amortized.
c) …arbitrated.
d) …procrastinated.
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