Project management can be complex and unpredictable, leading to delays, budget overruns, and unsatisfactory results. To avoid these problems, it’s important to combine project management with contract management. Contract management makes it possible to clearly define the obligations and responsibilities of each party, as well as the conditions under which the project will be carried out. This combination of project and contract management can improve project predictability and ensure that contractual commitments are respected.
Project predictability is a major issue for companies and organizations seeking to deliver projects on time and with the resources allocated. However, project predictability can be adversely affected by internal and external factors such as changes in project priorities, unforeseen circumstances, late deliveries, conflicts of interest, etc. To guarantee project predictability, it is therefore necessary to put in place effective management tools and methods.
This is where the combination of project management and contract management comes into play. Project management makes it possible to clearly define project objectives, deliverables, deadlines, and costs, as well as monitoring and control procedures. It also makes it possible to anticipate project risks and hazards and to implement corrective measures in the event of any deviation.
Before we look together at why contract management is essential in project management, let’s take a brief look at the fundamentals of project management and contract management.
1- The foundations of project management
Project management is an essential discipline which aims to plan, organize, execute and control the activities of a project to achieve its objectives within defined time, cost and quality limits. To fully understand the value of combining project and contract management, it is crucial to understand the fundamentals of project management.
Basic principles of project management :
– A clear definition of objectives : All projects must have clearly defined, measurable objectives (on-time, on-budget delivery, stakeholder satisfaction, quality of deliverables, value for money).
– Rigorous planning : It involves identifying tasks, defining deadlines, estimating costs, and allocating the necessary resources.
– Risk management : Effective project management includes identifying, assessing, and proactively managing risks in order to mitigate them as far as possible.
– Team communication : All stakeholders must be kept informed of project progress, potential changes, and problems encountered.
– Project monitoring and control : Continuously monitor the project’s progress against the initial plan.
2- The fundamentals of contract management
Contract management is a key discipline in business and project management, aimed at creating, managing, and executing contracts efficiently and effectively. Understanding the basics of contract management is essential to appreciating its crucial role in project management.
The crucial role of contracts in projects
Contracts are the legal basis for projects and professional commitments. They establish the rights, obligations, and responsibilities of all parties involved.
Some basic aspects of contract management :
– Definition of expectations : This includes deliverables such as document management, deadlines, costs, and other essential project parameters.
– Risk reduction : Project risks are inevitable. Contract management helps to identify, manage, and minimize risks.
– Customer relationship management : To maintain good customer relations throughout the project. The aim is to build customer loyalty and position the company for future projects.
– Contract administration and extra work validation
– Managing costs and preserving project margins : Control costs by defining tariffs, installment payments, and penalties for budget overruns.
– Subcontracting management : To ensure that external parties contribute positively to project objectives
– Contractual commitment : Contracts bind the contracting parties to respect their commitments.
Project management and contract management are two fields that, although distinct, come together in significant ways when it comes to delivering successful projects. Understanding how these two worlds converge is essential to fully exploiting their synergistic potential.
A- The benefits of combining project and contract management for project predictability
1- Better definition of objectives and deliverables
Contract management makes it possible to clearly define the project’s objectives and deliverables, as well as the conditions for achieving them. This makes it easier to plan project stages and ensure that they are completed on schedule.
2- Better risk management
Contract management makes it possible to identify project risks and hazards and to implement corrective measures in the event of any deviation. This reduces the risk of delays or budget overruns and ensures project predictability.
3- Better communication between stakeholders
Contract management makes it possible to clearly define the obligations and responsibilities of each party, as well as monitoring and control procedures. This fosters fluid, transparent communication between stakeholders and enables any problems to be resolved quickly.
4- Better cost management
Contract management also defines project costs and payment terms. This gives you greater control over expenditure and ensures the predictability of project costs.
5- Better time management
Contract management also makes it possible to clearly define project deadlines and monitoring and control procedures. This helps to plan project stages more effectively and ensure that they are completed on schedule.
B- Why is contract management essential to project management?
Integrating contract management into project management has many advantages:
1- Greater predictability
Contract management contributes to predictability by clarifying obligations, deadlines, and costs, enabling better anticipation of project results.
2- Dispute management
By establishing conflict resolution mechanisms, contract management helps to quickly resolve disagreements and disputes that could otherwise disrupt the project.
3- Optimizing resources
Contract management enables efficient management of financial and human resources by defining payment mechanisms, change-of-scope clauses, and penalties for non-compliance with contractual terms.
4- Accountability
Contracts assign clear responsibilities, promoting accountability among the contracting parties and reducing the risk of non-compliance.
In conclusion, the combination of project and contract management is a key success factor for managing projects and meeting contractual commitments. It brings predictability, cost-effectiveness, more effective risk management, and improved collaboration. This makes it an essential approach for organizations seeking to optimize their projects and successfully achieve their objectives.
By investing in this convergence, project management professionals can create a competitive advantage and deliver better-performing projects within the limits of upstream validated schedules.
Contact MESLI CONSULTING today to discuss your project and contract management needs.
