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Commercial Awareness for Project Managers

Commercial Awareness for Project Managers. Types of Contract Managing the Client/Contractor Interface Managing Instructions, Variations and Claims Payment Contract Completion. Contractor’s risk. Client’s risk. Types of Contract. Fixed Price Time and Materials Cost-Reimbursable

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Commercial Awareness for Project Managers

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  1. Commercial AwarenessforProject Managers Types of Contract Managing the Client/Contractor Interface Managing Instructions, Variations and Claims Payment Contract Completion

  2. Contractor’s risk Client’s risk Types of Contract • Fixed Price • Time and Materials • Cost-Reimbursable • And various hybrids….

  3. Managing the client/contractor interface • Roles and responsibilities • Review meetings • Document control

  4. Roles and Responsibilities • Named in the contract • Administration and management delegated • Empowered to make decisions ‘Project manager’ Probably one on each side

  5. Strategy review between directors Progress reviews between managers Technical review between engineers Review Meetings • Often at Director Level • Scheduled within the contract • Potentially three types, or levels

  6. Someone wants a change The work is carried out They bring it to the Document Controller The variation is communicated Document Control To control all communications between the two parties Objective: An authorised decision is made

  7. Raised by the client; usually minor, within the terms of the contract Raised by the client; usually cause a change to the terms of the contract Raised by the contractor; asking for more money for having to make changes to the contract Managing instructions, variations and claims • instructions • variations • claims

  8. Managing instructions and variations • Must be issued in writing • By an appropriate authority • Contractor must acknowledge receipt • The cost of additional work must be agreed Should NOT be actioned by the contractor if: • Issued orally • By the incorrect authority within the client • By the contractor without authority

  9. Managing claims Contractor encounters a problem Contractor identifies cost implication Verbal warning to client project mgr. Contractor presents written details of claim Client considers Client disagrees with claim Client approves claim; issues variation Client/Contractor negotiation Contractor receives payment Contractor receives partial settlement

  10. Payment • Against pre-determined milestones • Against valuations of the work achieved to-date The Project Manager will authorise or provide evidence

  11. Contract Completion • Practical completion • Sectional completion • Defects and making good • Final account First Final Completion Certificate Retention Fund Unresolved Issues Snagging List Defects liability period

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