Tricks of the Trade®

Role with Contracts by Rita Mulcahy, PMP

Exercise
When should project managers be involved in the contract or procurement process?

If the project manager must do a risk analysis before a contract is signed, this must also mean
that a project manager is designated before a contract is signed. However, if your company is
like many others, this comes as something of a shock. In companies where projects are created
through winning a contract from an outside client, sales and marketing will have handled the
whole proposal process and signed a contract before a project manager is assigned. The project
manager is then handed a project that is already in trouble because the contract, its terms, con-
ditions, and even the scope of work are not appropriate.

Many such companies bid on many contracts to win only one of them. It is not possible under
these circumstances to assign a project manager to every project when the company is not
sure if it will even win the bid. A solution many companies have adopted is to have a project
manager, usually a senior project manager, assist in proposal creation using work breakdown
structures, risk assessments, and other tools and techniques of project management. If the proj-
ect is won, the actual project manager—the one who will manage it—is assigned and receives
the work breakdown structure, risk analysis and other high-level plans to plan the project in
enough detail to manage its completion.

A project manager must be assigned before a contract is signed.

Exercise
What is the project manager’s role in the contracting or procurement process?

In a recent situation, a consultant was asked to provide technical assistance on a project for a
project manager the consultant knew and respected. The company had a contracts department
that used standard boilerplate contract forms, which is common practice. To execute the work
of hiring the consultant, the project manager simply turned the contracting component over to
the contracts department to handle. The consultant received a boilerplate contract not appli-
cable to the work and spent two days negotiating the contract—for two days’ worth of work.

Can you think of how this situation might have impacted the project? If you had to spend
two days negotiating two days’ worth of work, would you want to work on the project? Would
your performance on the project be less than it could be? Would the project be as successful

Page 
Copyright © 2006 by Rita Mulcahy, PMP. All rights reserved. 11.27.06
RMC Project Management, Inc. • 500 East Travelers Trail, Suite 100 • Minneapolis, Minnesota 55337
info@rmcproject.com • www.rmcproject.com • (952) 846-4484
The copyright owner hereby grants permission to make copies of this handout for personal, noncommercial use only.
 as it could be? Would your objectives be to complete the project, or might you have an ulterior
motive to try to get even? This problem is actually very common and is usually an unperceived
threat to the project. It puts the project at risk before it starts. If the project manager is account-
able for the project, he or she must also be involved during the precontract stage in protecting
the relationship between both parties signing the contract.

During the contracting process, the project manager must protect the relationship
between buyer and seller to protect the project.

In another situation, a project ran into some difficulties that caused schedule and cost impacts.
At a meeting, one of the team members stated that they had known the problem was going to
happen all along, but, “No one asked us.” The contract had been signed before the project man-
ager and team were designated and, therefore, before a risk analysis could be done. As a result,
the contract did not describe responsibilities for some problems that the team fully expected.
The team and the contractor were consequently spending more time in meetings talking about
who was going to do what to solve the schedule and cost problems than actually solving the
problems.

A contract must be tailored to the needs of the project. This tailoring can be achieved easily with
teamwork between the project manager and the contracts, legal or purchasing department. The
result is a contract that includes the risk allocation that needs to be there without any irrelevant
details. Without such tailoring, the project can fail before it even begins. What should you con-
sider in this type of tailoring? Take into account the specific risks of the project and the terms
and conditions that can be added or changed to mitigate or allocate them properly.

A contract must be tailored to the unique needs of the project.

The main complaints of project managers regarding the contracts, procurement or legal depart-
ment are that they are lengthy, bureaucratic, and are roadblocks for the project. Sometimes these
comments are delivered with an extreme amount of anger and frustration. However, when I ask,
“Why this is so?” I usually receive comments such as, “They just are!”

After a few moments, it is apparent to me that those project managers do not understand the
role of the contract manager and, interestingly, contract managers do not understand the proj-
ect management process.

Curiously enough, most project managers have never had training in project management and
most contract managers have never had training in contract management, let alone training in
each other’s fields. Yet, the project manager and contract manager must work together to have
a successful project. The project manager also needs to understand the contracting process to
manage the project around the time the contracting process takes.

Project managers must understand the process of contract and procurement

How do your company’s practices differ? How does this hurt your project and your company?
What are you planning to do about it?

With a few Tricks of the Trade®, any project manager can improve their project.
Good luck!

“PMP” and the PMI REP Logo are marks of the Project Management Institute, Inc. RMC Project management has been reviewed and approved as a provider
of project management training by the Project Management Institute (PMI). As a PMI Registered Education Provider (R.E.P.), RMC Project Management has
agreed to abide by PMI-established quality assurance criteria.
Page 
Copyright © 2006 by Rita Mulcahy, PMP. All rights reserved.
RMC Project Management, Inc. • 500 East Travelers Trail, Suite 100 • Minneapolis, Minnesota 55337
info@rmcproject.com • www.rmcproject.com • (952) 846-4484
The copyright owner hereby grants permission to make copies of this handout for personal, noncommercial use only.