Commercial Contract Management - Assignment Example

Commercial Contract Management Commercial Contract Management Benefits of an Independent Project Manager A project manager is a person who takes total responsibility in managing a given venture. This manager will be accountable for spearheading the entire project’s endeavors geared towards achieving the desired outcomes from planning, coordinating and full control from the beginning until completion. The manager’s responsibilities will include catering for the clients interests, which are utility terms, quality, proper functioning, cost, and time. Good relations between resources and control of contributors in the project will be established together with their output. Continued evaluation and selection of alternatives is inevitable in pursuit of satisfying the client’s desired objective in the project completion. For the manager to have this job he/she must exhibit a good background professionally and lots of experience as an asset in all aspects as they are time and finance savers with their independent advise professionally as compared to the client. In every project, risks are run such as cost overruns and schedule. With such risks in question, the benefits of hiring a credible and effective manager come in handy. A project manager who possesses ground experience is very helpful in that they can get rid of expensive claims. With evaluation, he/she will control risks and ensure that you receive value as per your investment. The manager will also ensure that the venture meets the designated time, cost objectives and quality. The manager will arrive at the stipulated requirements by providing a profound statement of the limitations and objectives of the project. It will be mandatory for the manager to monitor the work proceedings on your behalf to ensure that they meet the set requirements as stipulated in the project. An added advantage is that the manager will provide independent reviews all along the entire project even on document bid reviews; outstanding issues, claim reviews and other disputed issues. Contractual Agreement Proposal In this context, a conractiual agreement is necessary to help both you and the contractor to iron out the details of the project on time and try to avoid probable disputes in later stages of the contract. According to studies business regulations, such a contract agreement needs to have clear details of the contract, the responsibilities for both parties, mode and terms of payment in addition to other details. In this case, the proposed agreement could possibly appear in the following format; Title and preliminaries: in your case, the identifier of the title will be provided, with a specific name of the contract. In addition the section will specify that the agreement will be between you and the contractor even in the case of partnership or otherwise. It will further provide your adress and that of the project manager. Scope of the work: This clause will determine how the manager’s work will be judged and it will be very specific. Information will be deeply detailed in terms of time required, the given duties, dates and details pertaining to each.specifications of the acceptable final products will be attached alongside the contract depending on analysed client needs. Revisions and Changes: In this clause, points about project revisions will be included such as; you will be allowed to revise once the original drafted contract at no expense. Incase of additional revisions, you will be required to pay the contractor hourly or at a negotiable flat fee. If there is revision outside the original draft contract as stipulated in the work Scope, it is negotiated differently. Client responsibility: If there is any input whose availabiliy relies on you, the contractor will specify that any delays in its acquisation will interfere with performance. It will also be stipulated that non responsivenss of the same could lead to contract termination. Your manager will ensure that the person to whom the work is delivered and has power to reject or accept it has duly signed every review and the timing of the acceptance or the rejection. Payments and terms: The amount to be paid and its due time will be in writing. The least you will get is a quarter to a half of the amount up front, the next amount come halfway the project and the final upon project completion. Payment on completion will only be for short projects. New systems and hardware components supplies from contractors and consultants will be paid for in deposits when ordering and the outstanding balance settled upon delivery. For payments made based on time units, the unit will be specified if it is weekly, hourly or monthly and the period after which it is paid. Independent contractor status: The project’s contractor will be required to state clearly his/her status of independence that they are totally in control and are not employees of another client. The manager will therefore determine when, how and where services will be performed. The contractor will offer servicses to other clients at the same time since they are non-exclusive. The contractor can use subcontractors or other employees some duties and is also responsible for clearing taxes be it federal, state or local. The contractor will not be entitled to benefits such as profit sharing, medical, sick pay and others offered to employees by client. Responsibility for materials and expenses required to perform services lies with the contractor. You will not be liable for any training needed by the employees, sub-contractors or the contractor. Term of contract and termination: The project scope will dictate the term.Incase of long projects, a term of six months will be specified with renewable options. Reasons that will lead to termination include;breach of contract which occurs when one of the involved parties, say you, your project manager or the project’s contractor does not perform as expected in the contract’s term, and therefore one of the involved parties will just terminate the contract. Nonpayment is another reason for termination if you fails to pay within the agreed time. For purposes of great flexibility, business reasons will also lead to contract termination. In this case a 30 day notice will be given by the party terminating the contract. There are several Procurement Procedures that are important in relation to investments. Procurement procedures are regulations that are laid down to enhance accessibility to fair and free competition for contracts. A contract notice should always state the type of procurement procedure used. These procedures include; Open procedure: This particular one states that, all participating parties should hand in tenders at a specified date. Evaluation of the tenders will commence and you will award the contract to the deserving parties. This type is commonly used by local authorities. Restricted procedure: This procedure uses a process known as the two-stage. The first stage involves a pre-qualification questionnaire whereby, you are required to identify suppliers in a short list.The second stage follows and it’s about inviting response to tender invitation and evaluation of tenders is carried out. After this evaluation, you will eventually award the contract. Competitive dialogue procedure: This procedure applies for complex procurements. After a contract is laid down and a successful process of selection, the authorities initiates negotiations with companies for development of suitable solutions.This lays the basis for companies to be invited to tender.After invitations to tender are given, the negotiation chapter is closed and only clarifications or tender fine-tuning are allowe. Subsequently,an award is made. Negotiated procedure: This one is utilised in circumstances with limitations. Public sector bodies may be involved in negotiable contracts with one or several other suppliers. You are not supposed to publicly open submitted negotiable proposals. Sealed bidding procedure: In this procedure, invitations to tenders are issued and interested companies submit sealed bids. These bids are later opened publicly at a stipulated date, evaluated without discussions and the highest bidder who conforms to the invitation for bids is awarded the contract. The prices and it’s other related factors are put in consideration. I would highly recommend a negotiable procedure since evaluation of proposals is based on subfactors and factors in the solicitation. You can also give contractual award without holding discussions and when discussions are held, there is room for offerors to revise their schedule, price, contract type, technical requirements or other contractual condition and terms at their disposal. Only after the completion of all negotiations is the award given. Available standard forms contract There are several forms of standard contracts and they vary according to their timing and degree of assuming the responsibility of the contractor for performance costs and the nature and amount of incentive given to the contractor for achieving the specified standards. Contract types are broadly categorised into two; fixed-price and cost-reimbursement contracts. The fixed-price contracts’ types provides a price for a firm or in some instances a price that is adjustable. If an adjustable price is provided,it may include a target price, a ceiling price or both. The target or ceiling price can both be adjusted unless specified otherwise in the contract. During acquisition of commercial items, the contractor is to use the fixed –price contracts with economic price adjustment. The firm-fixed-price contract gives an unadjustable price based on the cost experience of the contractor in the contract performance. In this type of contract, the contractor is accountable for all risks and overall responsibility for the total costs and the resultant loss or profit. The fixed-price contracts types are; Firm-fixed price (FPP) contract: In this contract, the price of the contract is the price bid and it has no incentives and fees are not added. Total responsibility on all costs is on the contractor and not you. This type is most preferable with minimal costs risks or if costs are predictable with an unquestionable certainty degree. Firm-fixed-price (FFP),Level-of-Effort Term Contract: This contract requires the contractor to potray a specific level of effort for a given period of time and get a fixed amount of dollar in return. These contracts are usually used in studies of research or for investigations. Firm-Fixed-Price (FFP) Materials Reimbursement Type Contract: This contract is used in the buying of overhaul and repair services so as to provide the firm-fixed-price with reimbursement for material cost. Fixed –Price Contract with Economic Price Adjustment: This contract protects both you and contractor when there are doubts involving labour stability or prices of the materials during the contract period. Fixed-Price Incentive Contracts: This is a fixed-price class but for profits adjustment. The final price of the contract is based on comparing the negotiated total cost and the cost targeted. Cost Reimbursement Contracts caters for payment of incurred costs that are allowable as the contract prescribes.An estimated overall cost for obligating finances and ceiling establishment is provided for in the contract to bar the contractor from overspending without the aproval of the project manager or you. For a firm that is making use of basic profit motives, a firm-fixed-price contract can be used if the risk involved is minimal and is predictable to a certain approved certainty degree. You should put into considerations the following factors before settling for any standard form of contract;cost analysis, price competition, price analysis and production length amongst others. The following terms and conditions can lead to termination of contracts due to several reasons such as; Fraud: If a party be it you, your project manager or your project’s contractor who are bound to a contract intentionally misrepresents facts to lure the other party in agreeing to the contract, termination is inevitable. This includes hiding defects or giving false statements. If either of you accepts fraudulent contract terms, it can rescind the contract or sue the counterpart for damages resulting from the fraud. Impossibility to perform: You are all bound by a contract to fulfill your designated obligations. If the perfomance of your obligations becomes difficult to abide by and is impossible to perform or is impractical commercially, then termination of contract is valid. The obligations performance can be rendered impossible if any of you is deceased or there is destruction of an exchange element. Breach of contract: This occurs if either of you declines to meet your stipulated obligations as per the contract. It involves failure of the party in question to perform their contractual terms thereby inconviniencing the other party to perform their obligations as stipulated or violation of a contract provision. In conlusion, for vast investments, a qualified and experienced project manager like me is a dire need. Your expectations are an interest i will protect and meet. A contract is about promise which i intend to accomplish. References Edwards, G.T., 2007. Get That Project Management Job. Washington: DC, Blue Crystal Press. Hass, K.B., 2009. Managing Complex Projects. Viena, Management Concepts Press. Camilleri, E., 2011. Project Success. Farnham:UK, Gower Publishing, Ltd Massey, S., 2011. Best Practices for Environmental Project Teams. Boulevard:UK, Elsevier. Melton, T., 2005. Project management toolkit. Amsterdam, Uitgeverij Verloren. Read More