University of Karbala

College of Engineering
department of civil Eng.
MSc. Of infrastructure Eng.
Infrastructure Management

Lecture
Lecture Three 3
Contract Management
Abdullah Abbas
Ali Mustafa
Submitted by: Abdulla Abbas & Ali Mustafa
 Contents
Contract Definitions •
Contract Drafting and Main Conditions •
Considerations in Drafting a Contract •
Main Conditions in Contracts •
Contract Management •
The role of contract manager •
Skills required to the success of contract manager •
Construction Contract •
Normal Set of Tender Documents •
Contract Definitions

• The contract represents the entire and integrated agreement between the parties and
supersedes prior negotiations, representations or agreements, either written or oral
• The contract is the contract between the procuring entity and the contractor to execute,
complete and maintain the works. The name of the contract is defined in the contract data.
• A contract is an agreement entered into between two or more people with the intention of
creating legally enforceable obligations. Once properly concluded, a contract is binding
on each party. This means that each party has a legal obligation to do the things which
the contract requires him or her to do. If a party does not do so, he or she may be in
breach of the contract and the other party will have certain remedies, such as claiming for
additional costs caused by the breach (called damages). They are also able to get a court
order to force the party in breach to do what is required of them under the contract
Contract Drafting and Main Conditions •

The following key considerations must be taken by an experienced contract manager

:when drafting a contract
.The terms of the contract are comprehensive and fair to both contracting parties -1
The legitimate interests of both contracting parties are appropriately considered and -2
.balanced
The legitimate interests of each party include the right to enjoy the benefits of the -3
.contractual relationship
Best practice principles of fair and balanced risks/rewards allocation between the -4
.employer and the contractor are put into effect
.No party shall take undue advantage of its bargaining power -5
Considerations in Drafting a Contract
Provisions for the contractor/subcontractor to be paid adequately and promptly are included in the -6
. contract
To the greatest extent possible, cooperation and trust between the contracting parties are -7
.promoted
.The contract provisions can be put into practice -8
To minimize disputes some steps must be considered by the contract
: manager in drafting a contract are
Obtain full and clear instructions and information as to what the contract aims to achieve .1
.Avoid drafting a clause without being able to foresee all possibilities intended to be covered .2
Keep instructions and information made during negotiations and refer to them when needed to .3
.make sure that the draft is made according to the intention of the parties
Become knowledgeable in the subject matter and investigate with the parties all relevant issues .4
.that might arise during the performance of the works
.Make a structured plan of the documents to be inserted in the contract .5
.Use published forms and forms from previous documents wherever possible .6
.Avoid using unclear clauses .7
.Make as many revisions of the draft as necessary .8
Special alterations or additions made to the standard forms must be explicit .9
.and precise
Use simple and clear words and easily understandable sentences .10
Contract Drafting and Main Conditions

Main Conditions in Contracts

This section has the following headings as they are the most essential in any
:contract
Adjudication .1 Indemnifications .10
Basic Definitions .2 Claims .11
Employer Responsibilities .3 Dispute Resolution .12
Engineer .4 Warranty .13
Suspension .14
Contractor Responsibilities .5
Termination .15
Design, Specifications and Documents .6
Time for Completion .7
Payments .8
Variations and Change Orders .9
Construction Contract
construction contract seeks to regulate the relationships between the contracting
parties, particularly in respect of risk, management and responsibility for design
.and execution by follow a standard pattern
:Typically, construction contract deals with
.General obligations to perform the works •
.Provisions for instructions, including variations •
.Valuation and payment •
.Liabilities and insurances •
.Provisions for quality and inspections •
.Completion, delay and extension of time •
.Role and powers of the employer representative or the engineer •
Disputes •
:The actual works on all construction projects exhibit recurrent distinctive characteristics such as

• The nature and scope of the works.

• Specification and design details.
• Interactivity between employer, contractor and supplier.
• Provisions for changes.
• Complexity of sequencing of activities and dependencies on other activities/supplies.
• Site characteristics.
• Outside factors such as fluctuations in raw materials prices, lack of resources due to
demand .
• Product’s life.
• Responsibility and liability of parties towards defects
 contract Type Description

A fixed total price is set for the entire project rather than individual aspects.
Lump sum contract
.Usually reserved for straightforward projects with a clear scope of work

Contractors are reimbursed for the cost and materials as well as labor at an

Time and materials contract established pay rate. Often used for projects without a well-defined scope of
.work

Owner pays the contractor for costs (materials, labor, overhead) incurred

Cost-plus contract during the project as well as a preset profit margin. Can offset contractor
.risk for projects that involve design changes throughout

Divides the work to be completed into separate units, which the contractor

Unit price contract bills for individually. Best for repetitive construction tasks without an
.estimate of the amount of work required

Establishes an upper limit for construction costs, and contractors absorb

Guaranteed maximum price (GMP contract) costs above this set point. Best for projects with relatively few unknown
.variables
/https://www.levelset.com/blog/construction-contracts-5-main-types
Contract Management

Contract management refers to the process and procedures that parties to a

contract implement in order to manage the negotiation, execution, performance,
modification and termination of contracts between contractors, subcontractors,
.suppliers, consultants and employers
In most cases, a contract manager is responsible for drafting the contract and
all related documents as well as identifying and resolving specific legal issues;
hence, it is absolutely essential that he/she works closely with the different
parties involved in a construction contract to establish well in advance their
mutual expectations regarding the role that they will be expected to play in
. negotiating, drafting, finalizing and monitoring a particular contract
Contract Management

Contract Lifecycle Management

The contract lifecycle can broken down into seven are:-
1. Inception
2. Negotiation
3. Execution
4. Start-Up
5. Operation
6. Renewal
7. Closeout
Contract Management

Inception Renewal Negotiation

Operation Execution

Start-Up
Closeout

Contract Lifecycle
Contract Management

Factors Affecting Contract Selection

The employer’s priorities and objectives, and the type of works carried out, are the
principle considerations affecting contract choice. The choice of procurement route
and payment arrangements will also limit the contract options; hence, procurement
.and contract selection are considered in principle simultaneously
The size and complexity of the contract vary accordingly. A proper contract
:selection for a project involves four key decisions
setting the project objectives and constraints .1
selecting a proper project delivery method .2
selecting a proper contract form/type .3
.contract administration practices .4
Contract Management

In general, the following factors influence the choice of contract ;

1. The nature of the employer.

2. The employer’s risk attitude.
3. The employer’s priorities.
4. The procurement method.
Contract Manager Role

One cannot overemphasize the importance of determining the contract manager’s role
in the contracting process, and the level of active involvement that he/she may have in
negotiations relating to the contract negotiating and eventually drafting the contract.
It is not necessary for the contract manager to become a lawyer, nor even an expert
in law. The contract manager needs, however, to have an awareness of the legal
concepts in order to be able to effectively use the resources of the company’s legal
specialists to put the details into place. In short, the contract manager needs to know
the applied fundamentals of contract and procurement management that are applicable,
and when to get the legal department involved. If a contract is set up and managed
.correctly, there will be minimal need to get the lawyers involved
Skills required to the success of contract manager

1. Understanding contract terms and conditions

2. Negotiation tactics and planning
3. Soft skills such as influencing and persuasion
4. Risk management
5. Financial analysis
6. Handling conflicts and dispute resolution
7. Managing internal stakeholders
8. Understanding contract law
9. Creating a performance framework for suppliers
10. Relationship management
/https://www.cips.org/supply-management/news/2020/september/the-top-10-skills-for-contract-management
Tender
?What Is a Tender

The term tender refers to an invitation to bid for a project. Tendering usually refers
to the process whereby governments and financial institutions invite bids for large
projects that must be submitted within a finite deadline. The word tender can also
refer to the acceptance of a formal offer, such as a takeover bid. This form of
tendering is the process whereby shareholders submit their shares or securities in
.response to a takeover offer
Tender
Stages of the tender process

• Advertising the requirement

• Selection Stage / Pre Qualification Questionnaire (PQQ)
• Evaluation of selection Stage / PQQ
• Invitation to Tender (ITT)
• Evaluation of the tender submissions
• Award of contract
References

Book of
A. D. Haidar, Handbook of Contract Management in Construction - -