IACCM Contract Management Forum

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Toronto transit commission
2020-06-09 17:00:23

commercial and contract management involvement based on project type?

what are the criteria for involvement of a commercial and contract manager in a project and extent of it (at which stage)?
 •  World Commerce & Contracting  •   2020-06-10 08:27:49
Hi Alma,
This is a difficult question to answer because it rather depends on organisational design and, to some extent, the nature of the project.

Commercial and contract considerations should be in place from inception of the project concept and design. There should be a commercial analysis to understand the business requirements and to determine the nature of the commercial relationships and contracting models that will be needed. If this is a relatively standard and low risk form of project, the decisions may be quick and easy to make.

Too often, projects are initiated without proper thought being given to the commercial risks and opportunities. As a result, assumptions can be made with regard to the form of relationship and the underlying terms. By the time commercial or legal resources get engaged, it is often too late to alter some of these assumptions, or doing so creates major delays.

Another issue arises in the context of post-award contract management. Frequently, the implementation and operational resources are not the same as those who were involved in the original tender and negotiation. Good practice here is to start involving post-award contract management during the negotiation so that they have a good understanding of the final agreement and can move rapidly once it is signed.

You may find several IACCM resources are helpful. I will send you a paper on the Role of a Contract Manager. You might also look at the 2019 Benchmark Report which sets out the typical work areas for CCM staff. We have also undertaken a cross-industry project to define the contracting lifecycle.

I made my initial comment about organisational design because the critical point here is about competence in performing a role, rather than a specific job title. If, for example, you have project managers who have specifically been trained in contract and commercial management, they may have the competence to make front end decisions.

Do get in touch if it would be helpful to discuss this in more detail.
 •  GMR Energy LImited  •   2020-06-18 13:56:35
I agree with Tim that requirement of commercial & contracts manager is required at each and every stage of the transaction right from beginning i.e go or no go stage . To be a good commercial contracts manager one should be able to understand technical ,legal, finance, business risks, insurance, taxes etc. rather all aspects of a business. They need not be an expert but need to cut thru the clutters of complicated matters involving multiple dimensions and factoring them appropriately in all the documents created for signing with the counterparts,decision making etc.

Typically in any organisation depending on the confidence level of the management one enjoys and ability to contribute in bringing different dimension to the table than other participants , he /she would be kept in the loop as a commercial & contract manager.

Problem with commercial & contract managers is that every project manager for that business manager/engineer feels that they know contracts/commercial matter ( which they might be right in some cases) and go beyond their briefs while they can get away in small value low risk item contracts, it gets complicated when contracts are of high value, long term with multiple risks.
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