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Contract Change Control System

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Contract Change Control System

A process for modifying the contract that should be included in the contract.

Sometimes exam questions ask how project control is different in a contracted environment. The answer may include:

  • You need to deal with a different company’s set of procedures
  • It is not as easy to “see” problems
  • Greater reliance on reports to determine if a problem exists
  • Greater reliance on relationships between the buyer’s and seller’s project managers

All contracts, like all projects, have changes. The first step to handling changes that arise on the contracted project is to analyze the impacts to the project, just as it would be on a project without contracts or purchase orders. The change procedures in the contract must also be followed and all changes should be made formally. Changes are requested through the procurement process and are handled as part of the project integrated change control efforts.

A large number of changes on a project are a major problem because it is difficult, if not impossible, to continue work on an activity if you are not certain the change will be approved. In instances where there are many changes, it might be best to terminate the contract, if both parties agree, and start fresh through negotiating a new contract or finding a new seller.

This is a drastic step to be done only when the existing contract no longer serves the purposes of defining all the work, roles and responsibilities.

Expect situations where your actions regarding changes are different depending on the type of contract used! Also expect situational questions to require that you know how to evaluate and formally make every change.

Buyer-Conducted Performance Review

This is a meeting where all the available data is brought together to see if the seller is performing. Often the seller is present to review the data and most importantly talk about what the buyer can do differently to help the work along. The purpose of this review is to determine and recommend needed corrective and preventive actions and to request formal changes.

Claims Administration

A claim is an assertion that the buyer did something that has hurt the seller and the seller asking for compensation. Another way of looking at claims is that they are a form of seller’s change requests. Claims can get nasty. Imagine a seller that is not making as much profit as he hoped for, issuing claims for every action taken by the buyer. Imagine working with a fixed price contract and an incomplete scope. Many claims are not resolved until the work is completed.

Records Management System

A contract is a formal, legal document.  Record keeping can be critical if actions taken or situations faced during a project are ever in question after the work is completed. This can happen related to unresolved claims or legal actions, or even in order to satisfy insurance needs.

On many projects, every e-mail, every payment, every written and oral communication must be recorded, kept and stored. On other projects the weather each day and the number of people on the buyers’ property each day may also be required. Whatever is appropriate for the particular industry and project is kept.

A record management system can be quite extensive, with one person assigned just to manage these records. They can also include indexing systems, archiving systems and information retrieval systems for projects with extensive documentation.

Contract Interpretation

In the real world, project managers are always faced with the need to interpret the contract to answer many questions including “What does the contract really say?” and “Who is responsible for what part of the contract statement of work?”

Contract interpretation is never easy and frequently requires the assistance of a lawyer.  However, the exam may describe a simple situation about a conflict over interpretation of a contract and ask you to determine the correct answer.

Contract interpretation is based on an analysis of the intent of the parties to the contract and a few guidelines. One such guideline is that the contract supersedes any memos, conversations or discussions that may have occurred prior to the contract signing. Therefore, if a requirement is not in the contract, it does not have to be met, even if it was agreed upon prior to signing the contract. The following is an exercise on intent.

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