CONTRACT
MANAGEMENT
A contract is a legally binding agreement which
recognises and govern the rights and duties of the parties to the agreement . A
Contract is legally enforceable because it meets the requirements and approval
of the law.
An agreement
typically involves the Exchange of Goods , Services , Money or Promises in all
or any one of them .
Initially every agreement and promise between or among
the parties in needed , in which Offer , Acceptance , Time or Duration and
Consideration must be clearly mentioned and enforceable at a court of law is a Contract.
All contracts can be agreement but all agreement are not
contract .
Elements
Of Contract –
Agreement
Agreement should have an legal Offer , Services , Purpose or Objective , without any lawful offer , No Agreement is
valid . The Agreement should not be for any unlawful purpose or activity .
Acceptance
The Acceptance or Confirmation between the parties should
be Mutual , Real and Genuine , there should not be any kind of Blackmailing , Threats , Pressure . The person
must have attain the legal age to accept any offer .
Consideration
It is the most important element of any Contract ,
Consideration has be mentioned clearly .
Any kind of promise or to be fixed in
future is not allowed in Contract. If
consideration is not mentioned . The
contract would be treated as Null and Void.
Types
Of Contract
According to the situation the Types of Contract may very
depending on , Need , Location and Demand of Assignment . But Mainly there are three types of Contract –
Fixed Prices
Under this category the consideration is Fixed or Lump sum
and accepted by both or more parties. First party is agreed upon to pay the
Fixed amount to the second party at the time of completion of work or services within the specified time
frame to the second party , regardless
the variations in the prices of raw material or in labour cost . These type of
Contracts are recommended when the scope of services is completely defined and final .
In few situation this type is favourable to the first party but if the time of work done is increases due
to any unforeseen circumstances , the recipient party may suffer financial losses due to
inflation in Raw Materials , Escalation
in labour cost , Foreign currency rate fluctuations etc .
Cost and Charges Contract
In this categories the first party is agreed upon to pay
to second party the actual cost of Material & Labour , and the prescribed
Charges to the Contractor , in other words it is called Cost reimbursement , after checking all the
vouchers and bills of purchase of material from different vendors , date sheet of labour
involved at end of the contractual job
or may be during the time frame as agreed upon between the two parties .
In this categories the first party may suffer losses due
to price escalation , labour cost variations and currency exchange rate and all .
This type is recommended if the scope of the work is
expected to change during the contract period .
Material and Time Contract
This is hybrid type of contract combining the feature of
fixed as well as cost and charges or cost reimbursable contracts .
This is suitable to use when the organisation is small in
nature and the contractual requirement is not prescribed and may be suitable for acquisition or hiring
of expert , project staff required for a particular period .
Contract
Frame work
The major process of Contract Frame work / Life Cycle are –
Preparation
Evaluation
Award
Administration
Preparation
This Era is not the days of only hand shake promise or oral commitments , those days are gone . As we discussed earlier that the agreement /
contract should be in writing and must be enforceable at the court of law. If
you are planning to get any work done through any outside agency , contractor
,or even by your friend or any family member . The contract document has to be
properly Written , Accepted and Duly Signed
by both the parties , and any legal fees or charges should have been deposited
to make the document authenticated by the competent legal authority.
The contract document should consist detailed agreement ,
Specific Conditions , General Conditions , Scope of work , Drawings , Specification
, Quantities , Schedule time and schedule value .
Evaluation
When the contract is duly prepared , now its
time for Evaluation of the Contract critically
, Contract evaluation is the process of
reviewing a contract provided by a
potential contracting partner to determine whether the terms and
conditions of the contract meet whatever
Criteria have been established and/or whether the terms of
the contract are acceptable to all parties involved, or will need to be changed
to be deemed acceptable.
Award
In this stage when the
contract is prepared and evaluated now its time to Award the contract , Usually at this stage the eligibility of the proposals have been
concluded. So it remains to choose the most preferable among the proposed Contractors , Service provider. Before awarding the contract pre award meeting it is
necessary to negotiate the Eligibility of Contractor , Prices , Time Frame , Quality
control procedures, Proper Documentation , Mode and interval of payments , Obtaining
the necessary permission and certificates from competent authorities , Approval
of material , Proper equipment and machinery , Checking and confirmation of
required license enable them to use machinery and equipment at the working
site .
Administration
Contract
administration refers to the task or function of ensuring that a contract (the contract
between the owner and the contractor) is executed and in accordance with the
terms of the contract. The contract administrator may be a representative of
either party or may be a third party, depending on the terms.
The
duties of the contract administrator flow from both the contractor and the owner. Contract administration may
include the tender stage and the post-construction stage.
During
contract administration, the administrator Observes conformity to the contract documents
as well as the quality of the outcome. Contractual obligations include periodic
site visits, Responding to Requests for Information , Issuing Instructions and Notices from time to time and Assessing
progress Claims and Issuing progress certificates, Contract price adjustments
and assessing claims for adjustments of time.
Contract
administration includes Mobilisation of work smoothly and properly . Strong Communication among parties , Various service provider , Vendors ,Suppliers , Man
power supply agencies . Schedule and
Cost management is one of the key area to control , because any escalation in
time and cost would result to financial losses .
During work in progress various types of Claims arises as break down of machinery , physical injury to labour working there. To assess the loss to the person concerned and settle down all the dispute in very short time is one of the main concern of administrator.
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Sources – Jitendrasxnblogs / site has strict sourcing guidelines and relies on peer-reviewed studies, academic research institutions, related books and journals. We always avoid using inauthentic references.
https://www.gatekeeperhq.com
https://www.icertis.com
https://www.cips.org
Disclaimer –
This article / blog is for information purpose only, but by no means it is a complete and exhaustive explanation on the whole topic, nor it’s intended as a substitute for therapy.
Very informative!
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