Should we engage a Contract Manager? (How NOT to do Contract Management)

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Just as there are dozens of tips and tricks about what to do when you’re performing the role of a Contract Manager, there are also many factors to consider when deciding as an organisation whether or not you will engage an experienced Contract Manager to manage your contract.

The discussion below is representative of how many in leadership positions within an organisation think about the position of Contract Manager. And the responses in the below conversation will be extremely useful to you in deciding whether or not you should engage a Contract Manager for your organisation.

1.Ummm, what’s a Contract Manager? We don’t need them, Legal will manage our contracts

Without a Contract Manager or Contract Administrator, you may as well put the signed Contract into that drawer! Contract Managers play a valuable role in making sure a Contract is properly completed. This role is completely different from the role that Legal plays – protecting the organisation from risk. And the roles shouldn’t be combined.

2. Can’t Legal just…you know…get the contract signed and then…kinda…manage it?

Nope. Different roles, remember. Although many Lawyers are technically capable of managing a contract, you need your Legal Division to be focused on other things. And Contract Managers often have years of experience over Lawyers on how projects run in real-life, as well as programming and scheduling, which can help them foresee and prevent problems

3. All right. So I hire a junior Contract Manager. And tell them to go administer this multi-million dollar contract. They could do it, it’s not that hard! And they’ll be greatful for the experience

You’re telling me that a junior Contract Manager, who is starting to learn how to keep a construction project on time, on budget, and without defects, will know how to manage the Contract? And deal with any disputes that come up, while maintaining good relationships with all parties? Trust me, the amount you THINK you’re saving by hiring a junior Project Manager or Contract Manager will be lost in the costs of inefficiencies, variations, claims and disputes

4. Sigh. So what should a Contract Manager do anyway? If I hire an experienced one

Here are some of the things they will need to do at the very start of the project…

Step 1: Read and analyse the contract in detail

Step 2: Identify obligations placed on their organisation. What do they have to do. When do they have to do it by? (Also, by when must the other party do certain actions?)

Step 3: Input the contract into your contracts management system, particularly the dates by which things need to be done (so the system can generate reminders)

Step 4: If you don’t have a Contracts Management System or Contract Management Software, administer manually by noting relevant dates, adding these to their calendar, and taking action when they receive a reminder.

5. Is that it? Sounds simple

Really? Well, here are some more things your Contract Manager will need to do…

Tip 1: Manage expectations of all their supervisors and leadership of the organisation. Based on my chat with you, that should be simple enough *cough*

Tip 2: Keep in close contact with the Contractor, to make sure they are properly performing the work and help prevent disputes from arising

Tip 3: Hold regular progress meetings with the Contractor. Keep informed about progress and expected progress against milestones

Tip 4: Make sure they follow up on deliverables as soon as they are overdue. For very significant deliverables, touch base beforehand, to make sure things are on track

Tip 5: Deal with disputes as soon as they arise. Escalate them as necessary within both parties

Tip 6: If the organisation needs to change any contract terms, get your Legal Divisionto draft a Deed of Variation

Tip 7: Draft all contractual notices and give them on time. Make sure they respond to all of the Contractor’s notices within the required timeframe.

Tip 8: Be wary of “deeming” provisions – where the Principal is deemed to have accepted a claim by the Contractor unless it is disputed within a certain time! Draft and send any dispute notices (with help from Legal)

Tip 9: Keep checking the contract to remind themself of its provisions and your organisation’s and the Contractor’s obligations

Tip 10: Document all variations (agreed and directed). Being careful of the “innocent” direction that turns out to be a variation. Respond to Contractor requests for a variation

Tip 11: Respond to Contractor claims – accept or reject them, keeping the project budget in mind

Tip 12: Assess Contractor payment claims. Certify payment to the Contractor. Meet any legislative or contractual timeframes

6. Ah. Right. I have to go to a…meeting. Then I’ll put HR onto finding us an experienced Contract Manager asap

Moral of the Story: An experienced Contract Manager is worth their weight in gold. Times 50!

So don’t try to shortcut by having Legal do the role or hiring an inexperienced (and cheap) Contract Manager.

Your Contractor will also thank you if you get the right person to manage your contract, as it will make their life so much easier!

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