OF
CONTRACT MANAGEMENT
by
Ayotokunbo Ehiribe
Legal Programme Management
8 September 2006
Scope
8 September 2006
8 September 2006
Buyer (VNL)
8 September 2006
Contract
Seller/
Prime Contractor
(Some Credits: PMI PMBOK,
ESI International)
Contract
Subcontractors
Contracts
Definition
An agreement between two or more (competent)
parties or persons that creates an obligation to do
or not do a particular thing
A contract has two aspects:
Document: Written manifestation of an
agreement between parties
Relationship: The personal or professional
commitment that forms the understanding
between people who enter into agreements,
either oral or written
8 September 2006
Contracts Are:
Sources of business: For
sellers
Sources of goods and
services: For buyers
Risk management tools:
For both buyers and sellers
Projects: That must be managed by people from
both the buyers and sellers organisations
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Goal-oriented
Coordinated and
interrelated activities
Of finite duration
For stated consideration
Unique
Time
Quality
People
Privity
Privity
Roles
Roles &
&
Responsibilities
Responsibilities
Authority
Authority
Accountability
Accountability
Improved
Improved
Business
Business
Performance
Performance
Superior
Superior
Project
Project Results
Results
Solicitation
Solicitation
Planning
Planning
Procurement
Procurement
Source
Source
Planning
Planning
Selection
Selection
Solicitation
Solicitation
Contract
Contract
Administration
Administration
Contract
Contract
Closeout/
Closeout/
Termination
Termination
Contract
Management
Customer
Customer
Satisfaction
Satisfaction
Performance
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Reasonable
Consideration
CR
Contracts
FP
Contracts
T&M
Contracts
Price
(Some Credits: PMI PMBOK,
ESI International)
Phase II:
Award Phase
2.
Solicitation
Planning
3.
Solicitation
Phase I:
Pre-Award
Phase
Phase III:
Post-Award
Phase
4.
Source
Selection
5.
Contract
Administration
6.
Contract
Closeout/
Termination9
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Buyer
Buyer
Authority
Agent
Agent
Agent
Seller
Agent
Seller
Agent
Agent
Subcontractor
Privity
Privity
No Privity
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Who Is in Charge?
Project Manager
Contract Manager
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In charge of:
contractually specified
tasks for completion of
the work
contract deliverables not
related to the SOW
specifications or product
descriptions
13
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Sources of conflict
Precontract actions
Seller selection
Pricing arrangements
and contract terms and
conditions
Specification of
requirements
Control of contracts
with other party
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Competent
parties
2.
3.
Acceptance
(agreement)
Consensus ad idem
5.
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4.
Offer
Consideration
(bargained for
exchange)
Legality of purpose
(Some Credits: PMI PMBOK,
ESI International)
16
What Is a Breach?
Failure, without legal excuse, to
perform any promise that forms the
whole or part of a contract
Remedies for breach
Compensatory damages
Liquidated damages
Specific performance
Other actions (waiver, forbearance)
Nonpunitive damages
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17
Contract Ts & Cs
Define the rights and responsibilities of the parties
to the agreement
Term: An enforceable promise that addresses a
specific subject
Condition: A phrase that either activates or
suspends a term
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Acceptance
Duration
Change Management
Delivery
Dispute Resolution
Choice of Law
Force Majeure
Intellectual Property
Rights
Confidentiality
Invoicing
Payments
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Liquidated Damages
Points of Contact
(Authorised
Representatives)
Pricing & Discounts
Product Quality
Scope of Work/Services
Taxes
Termination
Warranty
Indemnification
Limitation of Liability
19
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Contract Interpretation
Objective
To ascertain the purpose of the
parties, from the point of view
of an impartial third party
knowledgeable of the facts
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Secondary
Rules
Order of Precedence
or Whole Instrument
Express Language
Rules of Statements
Conduct of the Parties
Custom in the Trade
Prior Course of Dealings
Contra Proferentem Rule
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Contracting Methods
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Non-competitive
Competitive
Simplified Purchase cards
Imprest funds or petty
cash
Auctioning
BOA, Frame/Master/Universal/
General Purchase
Agreements
Dealer/Distribution Agreements
Formal
Single-source negotiation
Sole-source negotiation
Sealed Bidding
2-Step Sealed Bidding
Competitive Proposals
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Minor
Requisition
Activity Description
Value Limit
N100,000 and
below.
N2,000,000 and
below to be issued
by Procurement
Division
Frame
Agreement
Unlimited
Other
Agreement
Type
Above N2,000,000
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Output
Procurement
Management Plan
Statement of Work
27
Solicitation Planning
Involves preparing the documents needed to
support the solicitation
Input
Procurement
Management Plan
Statement of work
Other procurement
planning output
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Output
Procurement
documents
Evaluation criteria
Statement of Work
updates
28
Solicitation (Contd.)
Involves obtaining information (bids and proposals) from
prospective sellers on how project needs can be met
Input
Procurement
documents
Qualified seller
lists
Output
Solicitation that
leads to the
submission of
bids or proposals
Types of solicitations:
RFP, RFT, RFQ, IFB, ITB, ITT, RFI, RFI&Q
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Contract
Pricing
Arrangements
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Cost-Reimbursement
T&M
Cost-Reimbursement (CR)
Time-andMaterials
(T&M)
Cost-plus-incentive fee
(CPIF)
Cost-plus-award fee (CPAF)
Cost-plusfixed fee (CPFF)
Costplus-a-percentage-ofcost (CPPC)
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33
FFP
FP
FPI
Fixed-price
Cost-Reimbursement
CPPC
T&M
Risk
Low
High
Buyer
Seller
High
Low
Performance Measurement
Less
More
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Buyer
Seller
(Some Credits: PMI PMBOK,
ESI International)
More
Less
34
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35
Evaluation
criteria
Evaluation
standards
Proposals
Organisational
policies
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Contract
negotiation
Weighting
system
Screening
system
Independent
estimates
Output
Contract
or
Walk Away
36
Weighting
Selection and weighting of attributes must
reflect buyers needs
Three general categories
Management - Attributes or
qualities of seller as an
organisation
Technical - Features and
functionalities of the product
Price - Fair and reasonable price
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Evaluation Standards
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Absolute standards
Minimum standards
Relative standards
38
VNL
Contract
Drafting &
Execution
Process Flow
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40
Contract Administration
The principal objective of contract administration is to
ensure fulfillment of contractual obligation by all parties
lnput
Contract
Work results
Change requests
lnvoices and
payments
Other tasks
Contract
administration
policies
Tools&Techniques
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Output
Documentation
Contract changes
Payment
Completion of work
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42
Track
Report
Ensure timely invoice and
payment
Document decisions and
events
Manage contract changes
Monitor contract
performance
Resolve contract disputes
Close or terminate the
contract
43
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Written
Confirmation
Change
Management
Identification
Compensation
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Change
Impact
Notification
Document(Some Credits: PMI PMBOK,
ation
ESI International)
45
Performance Monitoring
Ensure Quality
conformance to requirements
Form, fit & function
8 September 2006
46
Rules of
Acceptance
In-process inspections
Pre-final inspection
Final or closeout
Inspection
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strict conformity or
perfect tender
material and
immaterial breaches
fundamental breach
substantial
conformance
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Contract Closeout
Contract closeout involves both product
verification and administrative closeout
lnput
Completion of
work
Contract
documentation
or
Termination notice
Tools&Techniques
Compliance
verification
Contract
documentation
Contract closeout
checklist
Termination
Output
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Product or service
completion
Acceptance and
final payment
Contract closeout
or termination
documents
Documented
lessons Iearned
48
N/A
No
49
3.
4.
5.
6.
7.
8.
assessments
Simplify standard contract Ts & Cs
Permit oral presentation of
proposals
Employ highly skilled contract
negotiators
Hold pre-performance
conferences
Adopt a uniform solicitation,
proposal or contract format
Use ADR methods to resolve
disputes
Develop and maintain a bestpractices and lessons-learned
database
50
Thank You
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