Basic knowledge of contract law is essential for an effective project manager

There are many different considerations for project managers to think about when procuring and managing external project suppliers. One of those – contract law – is the topic of a forthcoming series of webinars arranged by the APM’s contracts and procurement SIG.

Research shows that, increasingly, projects involve contracts with external providers or suppliers of good and services. Contracts can range from simple ‘off the shelf’ widgets to complex contract structures worth millions or billions of pounds. They also include specialist services and bespoke goods, and may involve overseas organisations. These contracts are not just a matter for the procurement department. Whether you are a project manager at the buyer or seller end, you should take note.

Across project sectors, your human resources could come from external providers too. Projects are hard enough for project professionals to manage even when most of the team works for the same organisation, but adding temporary teams and people management to the mix brings additional layers of complexity to project delivery. Mostly, project managers are well-equipped to do all this, but they may be doing the job alone and it might be an entirely different project than what they’re used to.

Unsurprisingly, long-standing research (and Schütte Consulting Limited’s client research) shows that misunderstanding contracts and not having a grasp of contract law are common reasons that project team members inadvertently put their organisations and projects at significant commercial risk. It’s not your fault; project professionals are not routinely trained in these areas. But I think they should be. That’s why the contracts and procurement SIG chose in its 2021 plan to offer this webinar series again for you (it first ran in 2018).

I want project managers to start a learning journey in basic contract principles. In projects I advise on, and from workshops I run, I see time and again project professionals being left to work things out themselves. But often it’s too late; the deals have been done by others, without any consultation, and the project manager has to pick it up and get on with it. What I want to show you in these webinars is that being proactive and clearly articulating your needs in your role can help you to do your jobs better. If you understand the key legal and contractual obligations, you will feel you have a better handle on all the components, and thus be more in control. Consequently, the project you’re managing is far more likely to be successful, with fewer delays, fewer cost overruns and more satisfaction for all involved.

When working on a project, here a five things you must understand and know how to manage when handling contracts:

1. Scoping output promises: what do you have to deliver and when?
2. Assuring works’ quality: what happens if materials are not up to scratch or there are import delays?
3. Managing risk in supply chain: how do you deal with a supplier becoming insolvent?
4. Resources of time and money: what should you write into your contract that’s necessary?
5. Challenges to your authority – how do you deal with a contract party’s dissatisfaction with your decisions?

These are all things to think about before you’ve got your feet under the table of your project, and don’t worry, I’ll show you how to identify and handle them in my webinar series. It’s up to you as the project manager to raise your voice and get stuck into the conversations before the contracts are made for you, because it’s going to be up to you to deliver on them.

These project delivery challenges are not only something for the lawyers or procurement and commercial experts to worry about. Many different members of project teams can have an influence – positive or negative – on the project’s contracts and commercial situation. As project manager, you need to have a good handle on the basics of doing business. A solid knowledge of contract law is an essential pre-requisite to be an effective project manager.

What we will do over the three-part series of one-hour webinars is tackle these issues:

• Part one: Contracts – what are they all about? Contract formation and the five foundations for a contract; letters of intent; express vs implied terms; freedom of contract and boundaries; special contracts. This webinar takes place at 12.30 on 20 May 2021
• Part two: Building a contract. Components of a contract; ‘boiler plate’ and negotiated clauses; risk allocation; who should be involved and project managing a contract’s development. This webinar takes place at 12.30 on 14 September 2021
• Part three: What to do when things go wrong or the unexpected happens? Breakdown in performance; frustration and force majeure; resolving disputes; bringing it all together. This webinar takes place at 12.30 on 9 November 2021

I look forward to speaking to you soon, please join us and book your place by clicking the links above.

You may also be interested in:

• APM Guide to Contracts and Procurement
• Why subcontract management is a cornerstone of project risk management
• Making procurement work for your projects (APM Learning)