Plan to reach a successful conclusion

Construction News - 19/02/2009

Plan to reach a successful conclusion
Clients may scrutinise contracts so construction firms must manage them carefully to help avoid disputes

With the industry under economic pressure, clients will have a far greater awareness of what their contracts demand.

A common problem for many contractors’ project teams is that the people involved in agreeing a contract are not involved in the delivery of the project – and as such the intellectual property and specific knowledge on its obligations is unavailable.

So what steps do contractors need to take to avoid this scenario and ensure that disputes don’t arise on contracts?

Plan your time effectively
This must take place at the earliest opportunity when a new contract is first considered. It should then evolve from the bid or tender stage, to the point at which the contract is signed.

Planning should include a work breakdown structure showing all the main elements in order of detail. This can then be used for cost estimating and planning resource requirements for each task, activity, project and programme.

There should be a clear understanding of roles and responsibilities from the start of the tender. It is a common problem for the personnel involved in the bid process to leave the team once the contract is signed.

Making things clear
It is therefore vital that a thorough handover is done when the contractor’s project team take over, via a handover meeting. This will clarify their understanding of the contract, the project and the programme.

It’s equally important that all parties understand what they have signed up to, and each member of the team is clear on what they have to do and the impact this has on the job. A summary document or contract manual should be started.

The contract should contain clear administrative procedures that ensure that the contractor and client have an understanding of who does what, when and where the risk or liability lies. This should help identify who is responsible for any additional payments.

It is quite natural for clients to change their requirements as the project evolves. A change control procedure in the contract must then be used to assess these changes as they occur, rather than relying on informal arrangements.

Even where a positive relationship exists it is not uncommon for conflicts to occur – in particular regarding the reason for a change or who is to pay.

Undertake time reporting
Time reporting offers transparency on performance and progress against the work breakdown structure, project programme and budget. It is not uncommon for work to start before the contract is signed, either via a memo of understanding or a letter of intent.

The original bid manager must work closely with the project manager to make sure estimates are accurate and there is a clear record of what has been spent and achieved.

Finally, make sure there are regular review meetings between the bid team, project team, contractor and client.

These procedures will help reduce disputes and increase the chances of a successful project outcome. In the current economic climate, this can only make good business sense.

Greg Brownlee is managing director of commercial and contract management consultancy Blake Newport.

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