The Purpose of Contracts?
- To avoid a “loss of memory” of the agreement
- To avoid future arguments
- To ensure that obligations cannot be avoided
- To provide transparency
- Work Transfer
- Risk Transfer
- Contracts are important for risk allocation and to specify roles and responsibilities for contracting parties
- Create meaningful measures and monitoring actions (who, what, when etc.)
Work Transfer?
To define the work that one party will do for other.
Risk Transfer?
To define how the risks inherent in the work will be allocated between the parties.
Different definitions
To economists – an agreement under which two parties make reciprocal commitments in terms of their behaviour – a bilateral co-ordination arrangement.
To lawyers – a legal formulation – a meeting of minds creating effects in law.
To managers – contract as specifying the details of a relationship that can be enforced.
Stakeholder/Supplier selection and monitoring contracts
• Stakeholder/supplier selection for your project e.g.
Use proposal evaluation results as key basis for selection decisions.
• Contracts issued based on needs of acquisition and stakeholder management approaches
e. g. Establish and maintain a mutual understanding of the contract with suppliers and end users (i.e. project stakeholders)!
e. g. Establish and maintain communication processes and procedures with suppliers!
• Work is co-ordinated with stakeholders/suppliers to ensure proper execution of the contract
e. g. Monitor and analyse selected processes.
e. g. Revise the supplier agreements and relationships to reflect changes in conditions/to the project.
Create meaningful measures…
by looking from
- financial perspective
- customer perspective
- process perspective
- learning perspective
Are the measure: unambiguous, simple, relevant and cost-effective?
