Project lifecycle – 4. Understanding the contract

Published by Paul Heming | Date 20 June 2018

Understanding the contract is of absolute importance to the success of your project. Do you know how many days you have to give notice of a variation? What do you do when there is a delay event – are there particular rules on this?

Projects are not simple. Knowing how to act in difficult situations is imperative. At the start of any project, you should always complete what I call a ‘Contract Audit’ document.

What is a Contract Audit?

A Contract Audit is a questionnaire on key items in the contract asking all sorts of questions. These could range from “what is Notice period to commence on site?” to “what is contract procedure for raising/issuing Valuations?”

Over time this document will be adapted or updated but the idea is simple:

  1. The QS, completes the questionnaire and, in doing so, creates a 2 to 3 page document which summarises the contract.
  2. This document is shared with the project team who have it as a handy guide throughout the project.
  3. The project team meet and discuss the Audit at the outset of the project to create an agreed strategy for certain situations.

For example?

You’re working with a new client who you want to build a long-term relationship with but the Contract includes the following Clause:

It shall be a condition precedent to [your] right to an extension to the Period(s) for Completion that [you] shall have given written notice to the Employer of the matter which is causing or may cause delay within 5 days of the delay first occurring…

You know that if you want to claim the time and money (which of course you do!) then you have to give notice within 5 days of the event happening, but you don’t want to seem ‘contractual’ and alienate the new client.

So what do you do?

One way to ‘quietly’ deal with the issue of a 5-day notice is to write a Weekly Project Report which very simply records the state of play (basically your client’s delays) and gives early warning of issues without appearing ‘contractual’ by sending a letter.

In this instance, the Contract Audit works wonders: it highlights the risk to the whole team and allows you to set Project Procedures the whole team can buy into.

This is just one example of how a Contract Audit can help set the tone for your project management. There are many ways of protecting and/or increasing your project margins.

Without a doubt understanding the contract and focusing your team from the very beginning is fundamental and this can only stem from thorough analysis and understanding of your contract. If you’d like to access a Contract Audit template and a template Weekly Progress Report, get in touch via email.

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