Introduction
Project management is the capacity to plan a project approach regardless of its stage of development. Project management is, therefore, essential for both large and creative enterprises. Cross-functional abilities are necessary for established firms since, to stay competitive, all businesses must build complex procedures and services. A company may require assistance with construction, distribution, marketing, or other projects. Commercial managers are professionals in project management. Contract negotiation, risk assessment, project planning, financial supervision, personnel coordination, advertising, and marketing are areas of expertise for retail managers. Contract management, which manages agreements with other businesses or individuals, is a component of project management. Even the most well-considered and well-written contract will only produce the desired results with sufficient contract management. Depending on the project and its requirements, several types of contracts exist. Effective contract and commercial concerns handling is necessary for better project oversight and management.
Contract Management Problems
There are numerous approaches to handling contract and commercial issues when executing a project. However, there can be problems if one party does not know what the other party has to accomplish. The contract needs to be documented, transparent, flexible, and comprehensive if one or both parties are not experienced in contracting. More than incorrect wording in the agreement could allow one party to take advantage of the other, leading to misunderstandings (Belasen and Belasen 2016).
Scope creep
Projects always experience scope creep. It can be helpful, but the drawbacks often outweigh the benefits. Scope creep affected 52% of project team members in 2017, and it’s worsening. Managing unclear client needs is one of the most significant project management issues for managers and teams. By gathering your clients’ wants and expectations throughout project planning, you can regulate and address them. Managers must also plan how to employ their skills and resources (Belasen and Belasen 2016). Considering that unexpected modification requests during project execution could delay and increase costs, keep the original plan.
Poor Communication
Project management effectiveness depends on good communication. To involve everyone, you require timely and clear communication. According to Deloitte, 32% of project managers find communication the hardest. Misunderstandings impair project teamwork. Thus, team disagreements could delay the project. To manage communication issues during project execution and to keep everyone informed, project managers use collaboration and project management technology. According to (Padalkar and Gopinath 2016) project management responsibilities are made more accessible by project software, raising team accountability and project visibility. Contextual comments, suggestions, and assignment possibilities ranked in order of priority help with this. A weekly stand-up conversation that is brief can also assist in preventing misunderstandings.
Budget Issues
Most managers deemed finance as the leading project management challenge. Cost was the most significant project management challenge for 49.5% of manufacturing managers in 2017. Project execution difficulties can be avoided or worked around by the manager for better results at a lower cost (Chang et al. 2013).
Law Issues
Legal considerations dominate contractual management challenges. The contractor should know the country’s laws and the rules and regulations to complete the project. Work and payment must follow contract rules, regulations, policies, and industry norms. Contract managers must frequently refresh themselves on new and existing laws, rules, and other issues that affect active contracts. Documentation and audits are the most common compliance methods (Kivilä et al. 2017). Only Chinese tendering operations are included. That is, the offer is the first step in contract development. The conditions, project details, obligations to complete the contract, and causes of contract breach are usually stated in an official written agreement. Thus, the parties’ proposal must follow all laws and regulations applicable to the project’s company in that area.
Contract Drafting Errors and Delays
Delegating contract execution to teams may hurt the company’s performance and goals. Contracts created, updated, and renewed by several divisions in a disorganized manner might slow down the contracting process. Thus, manually creating a contract takes longer and is more error-prone (Bohao 2020). Automated contract drafting and assembly can eliminate errors for firms. Contract performance is simplified by contract lifecycle management (CLM), ensuring contract terms conform to regulatory standards.
Contract Type
Another consideration during contract development is the type of contract that will be considered. A business manager may need to create a contract depending on the agreement to avoid contract violations. Written, verbal, unilateral, bilateral, specified, unspecified, and other types of contracts are all possible. Depending on the nature of the contract, the project manager negotiates its conditions (Padalkar and Gopinath 2016). Commercial managers must be familiar with all project contract requirements and formulation aspects. When two or more parties negotiate a contract, things could get complicated if one party’s demands hurt the company or organization or are rejected. Negotiation skills should come naturally to commercial managers.
Contract end
Close-out ensures the contract has been fulfilled and neither party has any legal obligations. According to Dosumu et al. (2017), termination by performance occurs when contractual obligations are fulfilled and are no longer a problem. This can happen when a contract is descoped, and all responsibilities are met. Close-out completes financial, administrative, and asset and property disposal. It ensures suppliers are paid accurately and stakeholders receive the necessary deliverables. Financial approval should be given for contract deficiencies. In budgeting, extra contract payments must be noted and deleted. The manager must recover project overpayments. Commercial contract managers must inform the delivery team and stakeholders about termination clauses and give or receive notice of termination or non-renewal (Demirel et al. 2019).
Improve efficiency
Contracts structure transactions and reassure stakeholders that they won’t suffer unnecessary fees. Contract managers reduce transaction fees. Automation can be used for contracting. Consolidate needs into fewer jobs. Total quality management and lean manufacturing can improve contracts.
Contract Negotiation
Negotiation is vital to contract execution. Because everyone negotiates differently, there is no best approach to dealing with contract terms. Negotiators and arbitrators are the other party’s disposition, and only the executable contract can determine the form of negotiation (Chang et al. 2018). After considering all the above factors, the commercial manager will know how to review the contract. When negotiating, management should aim to reach mutual consent and interest so that all parties profit equally and the project’s financial resources are fully employed.
Hand Tool
A simple hand tool solution, represented in Figure 1, has solved contractual project concerns. Many issues can be avoided if parties review and answer questions before creating, amending, or passing on contractual obligations. Project managers and site staff can learn the ABCs of Contractual Literacy and use resources, models, and checklists to read and understand their contracts. Uncertain task allocation or scope of work will cause confusion and problems. An experienced project manager can help prepare the contract by sharing past expertise and information. Requesting clarifications and queries during planning might reduce implementation complications (Hwang and Ng 2013). The project manager can help tailor the contract to the project and maintain the relationship to secure it. After a project is finished, reflect on what worked, what didn’t, what went wrong, and what should be done differently next time. Record and share project lessons to drive innovation and improvement in current projects and contractual methods.
Poor Supply Chain Management
Assaad and El-Adaway (2020) documented that supply chains matter most to a corporation. Contracts between corporations and suppliers control their relationship. Contract management between supply networks must improve as the global supply chain grows. Manufacturing raw material price variations need to be revised. A contract management solution’s drafting features will help the organization build and maintain solid supply chain contracts.
Messy Expiry and Renewal Date Management
Contracts can be tricky in project execution. Contract managers must be careful when renewing or expiring corporate agreements. Missing the due date or renewal date might lead to issues like being unable to bill for contract work or restoring unused equipment (Aluonzi 2014). Contract management tools inform stakeholders automatically to address this issue. These warnings prepare stakeholders for contract renewal or expiration. Contract management solutions may send these messages automatically using processes.
Businesses often need to pay more attention to contract delays. These delays will slow contract turnover. Companies may lose revenue as a result. Possible delays include the difficulty of finding the contract templates in time to produce them, supplier red lines lost in email conversations, or an approval backlog. Contract management systems help identify difficulties and accelerate project execution (Al Juboori 2021).
Poor Contract Lifecycle Management Tools
According to Maranda et al. (2022), poor contract life could cause better systems to plague project execution. Most contract managers use spreadsheets, email, and paper. Contract management solutions have yet to be discovered; trace life cycle management solutions are unknown to many people. A manual contract procedure allows a contract manager to fill out a contract template, email it to their legal department, and have it reviewed. Following these steps, the contract’s rival can receive the file, edit it, and submit it back to the compliance department, which will email the contract manager. This causes miscommunication and teamwork breakdown. When multiple people email, minor details may be missed or miscommunicated. This increases the likelihood of poor negotiations and low visibility. An expanding organization will benefit from employing a contract management solution to manage this issue in project execution.
Completing Projects on Schedule
Several activities before and after the building contract will ensure on-time completion. Project planning must be detailed to anticipate every issue during design and construction. However, the contractor and client must collaborate to make all necessary accommodations. A major mentality shift is needed. Developers should treat contractors as coworkers. Contractor success significantly impacts supervising engineer performance, which is often overlooked.
Conclusion
Contracts aim to ensure project, business, and partnership success. Outlining goals, allocating tasks, and setting expectations are necessary. Successful implementation, not the contract, is the goal. As contracts become increasingly complex and crucial to project success, attorneys need help to handle them. Contracts are more than legal papers or litigation tools. Contracts generate money, profit, goods, and services. When potential concerns are detected and eliminated, and existing issues are resolved before a crisis, all parties save resources before disagreement. Legal expertise works best when applied proactively before problems develop. As the company restructures and outsources, project managers try to improve their contracting practices. Legal and contract experts will need these skills when drafting sophisticated firm contracts. The project, contract, and legal experts must now work together. A project team with knowledge and connections can build and implement contracts that reward excellent performance and help achieve goals with minimal cost and risk. When working with academics and educators, proactive project, contract, and legal professionals can identify the relevant skills and determine how to practice, teach, and improve them. The systematic creation of a robust project foundation and problem prevention becomes easier.
References
Al Juboori, A.A., 2021 “Practices That Increase the Budget Estimate’s Accuracy During the Initial Phase of the Construction Project’s Life Cycle”. International Journal of Construction Project Management, 13(2), pp.129-159.
Aluonzi, G., 2014 “Contract Management and Performance of Road Maintenance Projects in Arua Municipality (Doctoral dissertation, Uganda Management Institute)”.
Assaad, R. and El-Adaway, I.H., 2020 “Enhancing the knowledge of construction business failure: A social network analysis approach”. Journal of construction engineering and management, 146(6), p.04020052.
Belasen, A. and Belasen, A.R., 2016 “Value in the middle: Cultivating middle managers in healthcare organizations”. Journal of Management Development.
Bohao, G., 2020 “Review on Legislation and Relevant Institutions of Private Participation in Public Services in China”. China Legal Sci., 8, p.56.
Chang, A., Chih, Y.Y., Chew, E. and Pisarski, A., 2013 “Reconceptualizing megaproject success in Australian Defence: Recognizing the importance of value co-creation”. International Journal of Project Management, 31(8), pp.1139-1153.
Chang, T., Hwang, B.G., Deng, X. and Zhao, X., 2018 “Identifying political risk management strategies in international construction projects”. Advances in Civil Engineering.
Demirel, H.Ç., Volker, L., Leendertse, W. and Hertogh, M., 2019 “Dealing with contract variations in PPPs: Social mechanisms and contract management in infrastructure projects”. Journal of construction engineering and management, 145(11), p.04019073.
Dosumu, O., Idoro, G. and Onukwube, H., 2017 “Causes of errors in construction contract documents in Southwestern, Nigeria”. Journal of Construction Business and Management, 1(2), pp.11-23 [Cross Ref.].
Hwang, B.G. and Ng, W.J., 2013 “Project management knowledge and skills for green construction: Overcoming challenges”. International journal of project management, 31(2), pp.272-284.
Kivilä, J., Martinsuo, M. and Vuorinen, L., 2017 “Sustainable project management through project control in infrastructure projects”. International Journal of Project Management, 35(6), pp.1167-1183.
Nicholls, G.M., Lewis, N.A. and Eschenbach, T., 2015 “Determining when simplified agile project management is right for small teams”. Engineering Management Journal, 27(1), pp.3-10.
Padalkar, M. and Gopinath, S., 2016 “Six decades of project management research: Thematic trends and future opportunities”. International Journal of Project Management, 34(7), pp.1305- 1321 [Cross Ref.].
write