Thinking in Contracts : The Role of Intelligent Procurements in Projects

Abstract

Contracts, the legal documents capturing the formal agreements between people, parties or groups are often of little interest to project managers. Devised by solicitors and lawyers, they tend to emphasise the enforcement of promise-based obligations to perform a particular duty, supply certain goods, provide a given service or commit a specific act. Contracts are typically phrased in a legal language that endeavours to identify all contingencies and deliver a legally binding and enforceable agreement. The Sixth Edition of the APM Body of Knowledge focuses on contracts under the Resource Management section, which is concerned with the acquisition and deployment of internal and external resources required for delivering the project or programme. The APM Body of Knowledge defines contracts as the “agreement made between two or more parties that creates legally binding obligations between them … and sets out those obligations and the actions that can be taken if they are not met” (p. 202). Contracts are covered by contract law, governed and determined by local jurisdiction. The Body of Knowledge therefore recommends that specialist advice should be sought to interpret and understand the legal ramifications of the contract. Given that contracts are invoked when actions, goods or services are required from outside the host organisation, local legal experts need to be involved in drafting the contracts and interpreting their implications. The fifth edition of the PMI Guide to the Project Management Body of Knowledge includes a wider knowledge area focused on project procurement management, which is defined as the “processes necessary to purchase or acquire the products, services or results needed from outside the project team”. Accordingly, procurement management is therefore concerned with establishing, maintaining and closing relationships with suppliers of goods and services for the project.