Contract Management- Tendering Process, Contract Disputes, Contractual and Legal Obligations - Term Paper Example

Declaration Ixxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx, do sincerely declare that this piece of work is my unaided work and no one has to the best ofmy knowledge had access to duplicate my work. Contents Executive Summary 4 CONTRACT MANAGEMENT 5 1.Tendering Process 5 1.1. Tender & Offer 5 1.2. Contract Settlement 5 1.3. Letter of Intent 6 2.Contract Disputes 7 2.1. Breach of contract 7 2.2. Fraudulent Misrepresentation 8 2.3. Unfair Competition 8 2.4. Breach of Fiduciary Duty 9 2.5. Dispute Settlement 9 3.Contractual and Legal Obligations 10 3.1. Health and Safety Laws 10 3.2. Property Laws 11 3.3. Tort Law 11 4.Business Planning 12 4.1. Project Management 13 4.1.1.Terms of Reference 13 4.1.2.Plan the project 14 4.1.3.Communicate, Manage and Motivate 14 4.1.4.Project Monitoring & Evaluation 14 4.1.5.Completion & Follow up of the Project 14 5.Conclusion 15 6.Recommendations 16 7.References 16 Executive Summary Tendering a public sector organization contract is not an easy job for contract manager which can also be analyzed by this study paper. This paper provides the tendering process for an IT project in the first section. It is highly unlikely that any contract ends up without any conflicts whereas second sections provides some of the most common disputes in a contract and some dispute resolution strategies. Since every country has its rule and regulations to maintain their minimum quality standards; considering this aspect of regulations and laws third section lightens upon some contractual obligation in European Union. Working on any project requires pre planning and strategies since there arise many hurdles and challenges which require experience and management. In case of an IT project, fourth part of the study provides tools and techniques for project management. Finally conclusion has been drawn along with selected recommendations. CONTRACT MANAGEMENT 1. Tendering Process 1.1. Tender & Offer Considering the nature of public sector organization, the upcoming IT project for supply of software and hardware was tendered in all newspapers. The tender included all the details and terms required for the project. As a result we received hundreds of applications with memorandum of interest but only completed applications were reviewed for further proceedings. In the review process, many applicants were asked for more clarification and even third party verification for project security were also conducted. Out of completed applicants, few companies were shortlisted for the project. Soon after the short listing companies were contacted to submit their proposed project plan for our public sector organizations. These shortlisted companies were asked to submit their offer for the whole project within two weeks. When the companies submitted their initial offers, they were allotted reference number for future cooperation (Judicial Education Center, 2014). The companies were also inquired to submit their environment policy, labour policy, health safety standards and their financial details. Since offer is the first most important element for a contract, only unmistaken and clearly defined offers were selected for consideration. In this regard a team of professionals was designated to look after the contract process for an IT project (Blum, 2011). Those offers which were clear, competitive and eligible were issued notices for consideration approval against their offers. 1.2. Contract Settlement In this regard many meetings were also conducted for further negotiations. It was preferred to involve companies from within European Union but in order to maintain competitiveness and quality some companies ruled out domestic firms. Most competitive firms for hardware sub systems were located in China while some software related firms were selected from India and were also called for negotiations. At this stage when individual companies were called for negotiations and table talk, they were provided with public organization’s offer. Management team was willing to offer contract during negotiations if any company had agreed upon the offer and had accepted the contract. Companies were also made clear that in case of any complaint or incompliance, their application status will simply be changed to reject. 1.3. Letter of Intent Though during negotiations, team made up its silent offer and accepted some companies for future approval but still all the companies were undoubtedly informed that until management team offer letter of intent or accept your contract, companies should not initiate their functions (Baird, 2007). In such case if companies start their work or production before final approval, all the risk and cost will be borne by the company itself and the committee will have no liability whatsoever. Irrespective of the fact that some companies were contacted for offer but we also strongly recommended not to construct the project material. After preliminary review, negotiations and analysis; written memorials were sent to the selected companies for their services in the project. This letter was intent was a mean to notify companies of managements’ intentions for future alliance. No doubt the letter of intent were issued after exploiting all possible negotiations but still letter of intent was no a binding that certain company has been issued with the contract. There have been many unfortunate incidents of rejection, and in order to avoid humiliation committee already informed companies to avoid any involvement into production process until final acceptance and approval is not issued. Furthermore, companies were clearly informed that offer can be revoked by the committee at any time given the lapse of time to meet the criteria, rejection of the counter offer, rejection by the offeror and incapacity of either offeror or the offeree. 2. Contract Disputes It is quite often that there arises a dispute between parties when they are working in a contract. Some potential disputes can be stated as breach of contract, unfair competition, fraudulent misrepresentation, breach of fiduciary duty and undue involvement in contractual and business relations (Lookofsky & Hertz, 2009). 2.1. Breach of contract Breach of contract is the most common reported dispute in contracts, usually the dispute arises with the deviation of one party from the agreed terms and conditions (Maggi & Staiger, 2009). In this sort of dispute, the party breaching the contract is liable to pay the damages suffered by the non-breaching party. In most of these cases, disputes is caused by misinterpretation of the contractual terms whereas both parties claim to be at right in the contract. Apart from it when a party violates the conditions for a business contract that also leads to breach, or if a party denies to perform its pre-defined roles in the contract such as payments against services are due at completion of the work but other party refuses to clear payments; such incidents lie under breach of contract. Another unusual condition for the dispute arises when actions of one party make it highly unlikely for the other party to perform its duties specified in the contract. Of course, party affected by the actions of the other always want to resolve these crisis but for that one must prove the requirements for a claim such as existence of a valid and acceptable contract and also the knowledge of that specific clause must be there. Moreover, the non-breaching party must provide evidence of some economic damage caused by the involvement in business contract. 2.2. Fraudulent Misrepresentation Another potential disputes that arises is the fraud and misinterpretation which is one the earliest dispute in businesses. In order to prove the dispute a party must prove misinterpretation on the part of another party. Party one must prove that they were relying on the information which was not correct and that information would have caused damage to the contract of second party. Business fraud are related to the intent to deceive in which all actions by any party either its trust or confidence but if the resultant situation is the damage to the business of the other party; it can be concluded fraud. However, determination of fraud varies from case to case and no uniform yard stick can be used for this dispute. Similarly misinterpretation, as in false pretenses and representation falls in this category can also be a potential dispute in contract where companies do not reveal their true face and pretend to be innocent of their actions. Given fraud and misinterpretation in any contract, the liability of damages is subjected be paid by the misinterpreter (Aalto, 2011). 2.3. Unfair Competition In most of the contracts, companies attempt to gain inside information and support which ultimately can influence the selection for the contractor. The goal of any tender published for the public is to encourage competition and efficiency while targeting unfair means and conducting deceptive practices causes irreparable damage to the relationship and to the business. Such incidents of business torts weakens business relations and cause economic damage to the projects. Trademark infringements, bait, attainment of confidential information and false advertisements lie under this umbrella whereas the loss is to be bore by the responsible personnel. 2.4. Breach of Fiduciary Duty Similarly breach of fiduciary duty are also common in contract disputes which include shareholder disputes, corporate malfeasance and partnership disputes etc. Fiduciary relationship is developed through trust and confidence between the parties whereas breaches of fiduciary duties such as self-dealing, corporate neglect, misuse of dominance and misuse of confidential information are worth mentioning can initiate any moment during the project. In this type of dispute defendant is usually the person with dishonest state of mind who stand responsible and liable for mistrust. 2.5. Dispute Settlement In projects whenever a contractual dispute arises either between individuals or between the parties; there are number of ways to resolve them out of the court while business litigation is always considered to be the last resort. In the event of any dispute both parties have their professional responsibility to solve the dispute with reducing disagreements since disagreements lead to future disputes. Contract manager has the role to protect the interests of public organizations and throughout negotiations, mediation, arbitration and litigation; manager provides all available guidance. Negotiations is the part and parcel of procurement process from offer to completion of the project which should never be ignored in any dispute. By negotiation parties can reach at a mutual agreement and solve the crisis in its bud. Mediation is the second stage for dispute settlement which calls a neutral mutually agreed third party. Mediator help parties to resolve dispute by dialogue and assist parties but the decision of mediator is not binding on any party. Though mediation provides the fastest way to solve issue. In contrast to mediation, arbitration is more formal procedure followed by legislation where third party conducts meetings and issues enforceable verdict based on its technical and legal ground (Bockstiegel & Biner, 2001). Finally, litigation comes to rescue parties which is conducted through lawsuit in the court. Litigation is more formal, expensive and time consuming process through its decision are binding on both parties. Usually businesses avoid going to this stage of dispute settlement due to public humiliation and defame. 3. Contractual and Legal Obligations 3.1. Health and Safety Laws According to the European Union Treaty and Procurement Law except for some military equipment’s, public procurements in all fields is to follow a certain fundamental framework prescribed by the EU Treaty Principles (2004/18/EC) which states that there should be no discrimination in procurement on the basis of nationality and locality, fulfilment of high health and safety standards, transparency and free movement of goods and services. Apart from treaty principles there are couple of laws preventing health and safety of workers such as European labour laws which prevent human rights at workplace and is connected to European Convention on Human Rights, Occupational Health and Safety Laws targeting better sustainable occupational standards and economic growth (Drew, et al., 1998). OSH are considered part of Corporate Social Responsibility which assert companies to standardize their working through adaption of best practices, through financial incentives, through communication and through awareness. Similarly Staff Welfare Law are in place ensuring the right to safe and healthy working environment with paid holidays, equal wage and limited working hours (European Commission: Employment, 213). So, when companies outside European Union are invited in a contract, they are required to abide by all the EU Legislation and standards. 3.2. Property Laws Regulation (EC) No 593/2008 of the European Parliament defines the property law on contractual obligations and is known as Rome I. This regulation for property laws relates to contractual dealings. Since labour law discards contractual procurement on the basis of nationality and locality which is further practiced through property rights. Once the company outside European Union is selected to work on contractual basis with public or private sector organizations, the company can seek premises in European Union whereas the company will be required to provide its agreement and registered office for acquiring immovable piece of land or leasing it for specific period. After acquiring property or taking on lease company is required to register its articles and business functions in the nearby notary office and will also be bound to state the company officers appointed for the contract. On the basis of their contract and business dealings company an also obtain resident permit and stay visa for its foreign directors (Bar, et al., 2004). The company will also be required to patent its company name in commercial court. According to EU regulations companies are required to appoint their statutory auditor for transparency and accountability which will evaluate the capital share and contribution of the firm into the IT project. Acquiring land in European Union will require company to further register its articles with ta authorities against their office location, registering with insurance companies for civil responsibility, registration with retirement plan officials to ensure employee protection and fulfilment of hiring obligations for office staff at their office. So, in a nutshell company acquiring land in EU region will be obliged to comply with the basic residence and employment laws of EU. 3.3. Tort Law Since companies in this contract are not bound to one region specifically to European Union. It will become highly unlikely to resolve any dispute that arises during the contract. It will be complicated to decide which laws should be applied since companies are following laws of different origins. It is necessary to define tort law that clearly defines rules and regulations to be implemented against any offense before entering into the contract (Steiner, et al., 2006). In such scenario, EU legislation is already defined as some basic preliminary obligations will be applicable even if they are mentioned in the contract. Rome I contractual obligations provide information relating to European Laws. Furthermore, Rome I regulations demand organizations to include governing law clause in their contract which specifies the system of law to be used for dispute settlements and guidance (DAM, 2013). Besides jurisdiction clause has also been advised for contracts outside the EU. If there is no jurisdiction defined in the contract, any dispute if arises will be resolve by private international law which has certain limitations such as delays, higher costs and uncertainty. Even if the parties have decided their self-specified laws but while working in European Union, parties will be forced to enjoy freedom of choice under limitations. These rules specified in Rome I regulations of 2009 are applicable on all the contracts and reserve the status of mandatory law (European Parliament, 2010). 4. Business Planning Large scale projects such as projects for public organizations are not a child’s play and require extensive analysis, strategies and planning for successful completion. Project is the usually the collection of number of plans for which initializing project aims is very essentials. Project management strategies can help accomplishing smaller tasks and fulfillment of management techniques and tools ultimately end up with effective project implementation. Given the IT project for contract requires staff, management, products in the form of hardware and software, material, communication, equipment, logistics, finances, administration, premises, marketing, customer relations, legal professionals, technical and research staff and above all quality, safety and health etc. These all requirement are needed at different stages of the project completion but in order to perform all operations effectively, project managers must design a strategy and should schedule their project planning which is not the task of only one sitting. 4.1. Project Management Successful project management can be ensured when project management strategies are efficiently evolved in the project (Lock, 2007). 4.1.1. Terms of Reference First stage for any project is to define the specification for a project. Such as managers and team should describe purpose of the project that after completion what sort of utility the project will deliver. Project parameters should be defined that project will be completed in certain time period, what is the scope of this intervention, what are its audience, what is the territorial jurisdiction or coverage, what are the budget available for this project. In the initial stage management should elaborate its teamwork, decision making process and frequency of meetings etc. Certain break out point are considered the best way to divide work load for effective performance (Tinnirello, 2000). 4.1.2. Plan the project The next stage comes of project planning cycle which explains the time scale and strategies to perform the project such as brainstorming, idea generation, resource available, how to capitalizing the available resources, how the resources can be turned into output, plucking best strategy, implementing the prototype, evaluation and monitoring etc. The use of these management strategies declares completion of half of the project. 4.1.3. Communicate, Manage and Motivate The next stage comes of communication, scheduling, team management. Since the resources and strategy is designed, project manager moves to utilize its human capital which calls for manager’s skills to motivate, encourage and inform its teammates about the process and targets (Binder, 2007). 4.1.4. Project Monitoring & Evaluation Timely review and evaluation is necessary for project management because it keeps the whole team posted about the project progress, shortcoming and adjustments. If timely adjustments are not made; it may lead to project failure as one mistake in the programming may lead the whole project software down. 4.1.5. Completion & Follow up of the Project Project manager must take responsibility of the whole project and should it handover to the authorities with excellent performance. Project completion does not mark the end of the contract rather it precede project follow up in which project team must train the staff of public organizations (Project Management Institute, 2011). It also involves support and customer care in future whenever the software or hardware faces problems, it is the responsibility of the project manager to overcome it and make the project beneficial. So, project management is an art and has certain defined patterns and by following these defined rule, any project can easily be management. 5. Conclusion This study provides extensive knowledge about managing projects and contracts from tender to completion of the project. In order to procure products and services in public organizations, it is necessary to tender away the contracts for competitiveness and efficiency. From tender to acceptance of an offer, the contract manager must ensure transparency, scrutiny and merit while negotiations are the most important element of contract management. Given the scenario of proposed contract acceptance to non-European countries, there were many challenges and requirements to be ensured before signing the contract such as health and safety standards, environment policy, labour policies, employment benefits and retirement benefits etc. The contract manager must have to look into these aspects since countries outside the EU have their own specified laws and standards. It has also been examined that during contracts there may arise many conflicts for which contract managers must be careful and should focus more on negotiations and dialogues to settle disputes. Project management after contract has been tendered away is also an essential ingredient for successful implementation of projects which has certain pre-defined parameters and by following those techniques; a project can be a great success. 6. Recommendations No doubt, contract management and project management are challenging tasks but it is highly recommended that through good practice contract management framework; these challenges can easily be overcome. Project managers are recommended to adapt department wide ownership and should provide leadership to their team for accomplishment. Strategic measures for management are key to achieve target within budget constraints which should be kept in mind before starting project (Governmental Internal Study, 2014). Project evaluation and midterm reports also provide insight to progress and provide analysis about shortcoming which can be crucial for consistency and strengthening of the projects. Finally, training and development skills are the responsibility of the manager to transfer to the authorities so that actual beneficiary may profit from the whole exercise. 7. References Aalto, P., 2011. Public liability in EU law: Brasserie, Bergaderm and beyond. Oxford: Hart Pub. Baird, D. G., 2007. Contracts stories. New York: Foundation Press/Thomson/West. Bar, C. V., Drobnig, U. & Alpa, G., 2004. The interaction of contract law and tort and property law in Europe a comparative study. München: Sellier. Binder, J., 2007. Global project management communication, collaboration and management across borders. Aldershot, England: Gower. Blum, B. A., 2011. Contracts. Austin, Wolters Kluwer Law & Business: Aspen Publishers. Bockstiegel, K.-H. & Biner, R., 2001. Law of international business and dispute settlement in the 21st century. s.l.:Köln, C. Heymanns. DAM, C. C. V., 2013. European tort law. Oxford: Oxford University Press. . Drew, E. P., Emerek, R. & Mahon, E., 1998. Women, work, and the family in Europe. London: Routledge. European Commission: Employment, S. A. a. I., 213. Health and safety at work, s.l.: European Commission. European Parliament, 2010. Rome 1: EU introduces Regulation for law applicable to contracts, s.l.: Europa. Governmental Internal Study, 2014. Recommendations for Project Management Departments, s.l.: International Academy of Project Management Limited. Judicial Education Center, 2014. ELEMENTS OF A CONTRACT. [Online] Available at: http://jec.unm.edu/education/online-training/contract-law-tutorial/contract-fundamentals-part-2 Lock, D., 2007. Project management. Aldershot, England: Gower. Lookofsky, J. M. & Hertz, K., 2009. EU-PIL: European Union private international law in contract and tort. New York: JuristNet, LLC. Maggi, G. & Staiger, R. W., 2009. Breach, remedies and dispute settlement in trade agreements. Cambridge: National Bureau of Economic Research. Project Management Institute, 2011. Practice standard for earned value management. Newtown Square: Project Management Institute. Steiner, J., Woods, L. & Twigg-Flesner, C., 2006. EU Law. Oxford: Oxford University Press.. Tinnirello, P. C., 2000. Project management. Boca Raton: Auerbach. Read More