Commercial Awareness for Project Managers

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Commercial AwarenessforProject Managers
Types of Contract Managing the Client/Contractor
Interface Managing Instructions, Variations and
Claims Payment Contract Completion
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Types of Contract

• Fixed Price
• Time and Materials
• Cost-Reimbursable
• And various hybrids.

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Managing the client/contractor interface

• Roles and responsibilities
• Review meetings
• Document control

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Roles and Responsibilities

• Project manager

• Named in the contract
• Administration and management delegated
• Empowered to make decisions

Probably one on each side
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Review Meetings

• Often at Director Level
• Scheduled within the contract
• Potentially three types, or levels

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Document Control

• Objective

To control all communications between the two
parties
An authorised decision is made
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Managing instructions, variations and claims

• instructions
• variations
• claims

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Managing instructions and variations

• Must be issued in writing
• By an appropriate authority
• Contractor must acknowledge receipt
• The cost of additional work must be agreed

Should NOT be actioned by the contractor if

• Issued orally
• By the incorrect authority within the client
• By the contractor without authority

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Managing claims
Contractor encounters a problem
Contractor identifies cost implication
Verbal warning to client project mgr.
Contractor presents written details of claim
Client considers
Client disagrees with claim
Client approves claim issues variation
Client/Contractor negotiation
Contractor receives partial settlement
Contractor receives payment
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Payment

• Against pre-determined milestones
• Against valuations of the work achieved to-date

The Project Manager will authorise or provide
evidence
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Contract Completion

• Practical completion
• Sectional completion
• Defects and making good
• Final account

First Final
Completion Certificate Retention Fund Unresolved
Issues Snagging List Defects liability period