It’s important to have a well-thought-out Contract Plan in place before you start drafting a Contract.
What is a Contract Plan?
A Contract Plan is a detailed outline of the process you will take to draft the Contract, as well as the terms and conditions to be included in the final Contract. It may also include tasks such as risk allocations that will need to be drafted into the Contract. Where Contracts Professionals are working with their Lawyer, the Contract Plan will set out the key steps each person will take and the timing of those steps, to ensure everyone is on the same page and the Draft Contract is completed within the overall Project timeline.
Why are Contract Plans important?
It’s important that Contracts Professionals take the time to create a comprehensive Contract Plan to ensure that all parties involved in drafting the Contract are on the same page and that the final Draft Contract accurately reflects the Project and the organisation’s preferred risk allocation.
Creating a Contract Plan allows you to:
define the timeline of the Project and how the Contract Drafting process needs to fit within that timeline;
identify responsibilities of the Contracts Professional, the Lawyer, and other stakeholders within the organisation who will be involved in the Contract Drafting process;
clearly define the scope of the work or services under the agreement; and
identify potential issues that may arise, and establish a framework for resolving disputes.
A well-crafted Contract Plan can help you avoid costly legal battles down the line and ensure that the Contract you draft actually reflects how you want your business relationship to end up.
The Importance of Planning Before You Begin to Draft a Contract
Before you begin to draft a Contract, it is important to take the time to plan and prepare.
Planning can help you to identify potential issues and risks, and it can help you to create a Contract that is clear, concise, and effective.
Read more about Contract Planning in our comprehensive Guide.
Here are some more reasons why planning to draft a Contract is best-practice:
1. Identify potential issues
Planning can help you to identify potential issues and risks that may arise during the Contract process. By identifying these issues early on, you can address them before they become bigger problems.
2. Ensure clarity
Planning can help you to ensure that the Contract is clear and concise once it is drafted. This can minimise misunderstandings and disputes later on.
Define roles and responsibilities
Contract Planning can allow you to define the roles and responsibilities of each party involved in the Contract before the document is drafted. This can help to ensure that everyone understands their obligations and can help to avoid confusion and disputes.
Save time and money
Planning can help you to save time and money by identifying potential issues and addressing them before they become bigger problems. This can help to avoid costly disputes and delays in negotiating the Contract or after it is signed.
Overall, taking the time to plan and prepare before you begin to draft a Contract can help you to create a Contract that is clear, concise, and effective. It can help you to avoid potential issues and risks, and it can help you to save time and money in the long run. And it can make sure that the Contract reflects your organisation’s chosen risk allocation right from the start.
The Role of a Contracts Professional in the Contract Planning Process
Contracts Professionals play a vital role in the Contract Planning process.
They are responsible for ensuring that Contracts are drafted in the timeframe required for the overall Project. They ensure that the Project requirements are reflected in the Contract, and they act as the Instructing Officer for their internal Legal Division and Lawyer. They also help to identify potential risks and issues that may arise during the Contract lifecycle.
Here are some of the key tasks that a Contracts Professional may undertake during the Contract Planning process:
Assessing the feasibility of the Project;
Conducting a thorough review of the organisational requirements in relation to the Project and the eventual Contract;
Identifying potential commercial and operational risks and issues that need to be taken into account in the Contract Drafting process. This can include issues related to performance, payment, and termination. By identifying these risks early on, Contracts Professionals can help to mitigate them and ensure that the Contract runs smoothly;
Working with their Lawyer to ensure that the Contract (when drafted) is legally binding and enforceable and complies with all relevant laws and regulations; and
Working with their Lawyer to ensure that the Draft Contract reflects the organisation’s required risk allocation, and that the Contract terms are clear and unambiguous.
Why you should Draft a Contract Plan Before you start drafting a Contract
By having a Contract Plan in place, you can ensure that you cover all the necessary steps involved in drafting a Contract (in the right order).
You can also ensure that your Contract – when drafted – reflects the relevant Project and is fit for purpose.
Here are five key steps to take before drafting a Contract:
Step 1: Identify Key Project Timings and Dates
When preparing to draft a Contract, you need to identify the key project timings and dates.
In particular, you need to determine when you need to have the Draft Contract prepared. This will help you to set realistic deadlines and ensure that the Contract is ready in time for the project to start.
Step 2: Determine the Project Delivery Method and the Appropriate Contract
The next step is to determine the Project Delivery Method and the appropriate form of Contract.
This should be done in consultation with your Lawyer, who can advise you on the best form of Contract for your specific Project. For example, do you need a Services Agreement or a Major Works Construction Contract? If there are standard form contracts for that particular type of Project, should you use one of those or a bespoke Contract that your organisation has prepared? Should you amend the standard form contract (given it may not be drafted in a way that favours your organisation)?
Then there are different types of pricing methodologies for Contracts, such as fixed-price Contracts, cost-reimbursable Contracts, and time and materials Contracts, each with their own advantages and disadvantages. You and your Lawyer will need to make decisions about all of these matters before you can begin to draft the Contract itself.
Step 3: Determine whether you have an Appropriate Precedent or Template for your Draft Contract
Before drafting a Contract, it is important to determine whether you have an appropriate precedent or template within your organisation. This precedent/template should be appropriate to reflect the decisions you made in Step 2.
This decision should be done in consultation with your Lawyer, who can advise you on the best precedent or template to use.
Using a precedent or template can save time and ensure that you cover all the necessary details with the risk allocation your organisation prefers. For some Projects, however, you may not have an appropriate document to use as the base Contract – your Lawyer may need to draft the Contract for scratch.
There is an important role for Contracts Professionals here as well, so check out our Course on Contract Drafting Fundamentals (for Non-Lawyers) to learn about how you can work better with your Lawyer and effectively carry out your role as Instructing Officer.
Step 4: Populate Your Precedent/Template or Instruct Your Lawyer to Begin Drafting the Contract
Once you have identified the appropriate Contract and precedent/template, you can populate your precedent/template or instruct your Lawyer to begin drafting the Contract.
Here’s our Masterclass on How to Populate a Precedent Contract – it’s a detailed hour-long course that provides instructions for Contracts Professionals who were never taught how to create a Contract properly from a template or a precedent. Make sure you check it out!
This Step is also where you will start to include specific details about the Project, such as the scope of work, payment terms, and Project milestones.
Step 5: Review and Revise the Draft Contract then Finalise
After the Draft Contract has been prepared, it is important to review and revise it to ensure that it accurately reflects the Project requirements and protects your organisation’s interests. This should be done in consultation with your Lawyer, who can advise you on any necessary changes.
Once the final Draft Contract has been prepared, it can be included in your tender documents (if your organisation is approaching the market) or sent to the other party for their review and comments.
Conclusion
Preparing a Contract Plan is an essential step in the Contract Planning and Contract Drafting process. The Contract Plan helps ensure that all key Project timings and dates are met and that necessary details are included in the Draft Contract.
A written Contract Plan also helps you to work with your Lawyer throughout the Contract Planning and Contract Drafting process and to effectively carry out your role as the Instructing Officer when drafting the Contract.
Taking the time to prepare a Contract Plan before drafting a Contract can help ensure that the final Contract reflects the Project requirements and the preferred risk allocation of your organisation.
By following the five steps outlined in this article, you can create a Contract Plan that meets your specific needs (and the needs of your organisation) and helps you achieve your Project goals while preparing the Draft Contract.
