How do project managers and programme managers utilise contracts and procurement to support major projects' delivery?

COMMERCIAL AND CONTRACTUAL MANAGEMENT OF PROJECTS

STUDENT NAME:

Introduction

This report focuses on presenting the topic 'How do project managers and programme managers utilise contracts and procurement to support major projects' delivery?' The report outlines the fundamental aspects of the commercialisation and contractual actions. This report is a practical guide that proposes managers' lifestyle to use contract and procurement activities to secure the effective delivery of projects. The contract and procurement phase has a significant impact, be it optimistic or damaging, on the business potential. The country which is taken here to analyse the project management contract and procurement is the United Kingdom. It all starts with an agreement from both the parties and following this, and the report presents the entire cycle of contract and procurement. This piece of information consists of elements such as various types of contract and procurement, bidding and selection phase, the part of managers in contracting, and different advantages of contracts and procurement in project delivery.

Further, the report demonstrates the contract and procurement activities and software, accompanied by the UK's contract laws. Apart from this, negotiation, commercialisation, and contract issues are also presented as information. Various examples related to construction project are presented in the report. It is essential to have specialised contractors and negotiators to work in this field, as bygone days when only planning and a mere agreement were required. Delivering projects is not an easy task, and subsequently, managers use effective contractual and commercialisation operations to acquire as many opportunities as possible.

Background of Contract & Procurement

Contract under the law is defined as the commitment. The guarantee can be to perform to some degree or to stop doing something. The formation of a contract requires at least two parties' shared consent, one of whom typically makes a recommendation and one of whom is accepts. The inverse is eligible for lawful modification on the off chance that one of the meetings fails to remain the pledge. The contract laws discuss such issues as whether an arrangement exists, what its meaning is, regardless of whether an agreement has been violated, and what salary the setback is supposed to pay (Hampton 2017). Resurrection and law enhancement were a part of Western Europe's commercial, radical, and scholarly revival. The traditional plans were unsatisfactory for the new market and modern social orders in England and the continent. Casual understanding, so essential in market economies for commerce and trade, was not enforceable by law. Eventually, to deliver what was necessary, general sets of laws prevailed a compilation of contract principle by which usual business agreements, including a possible exchange of qualities, can be rendered actionable (Marzouk & Enaba 2019).

Procurement is that a corporation should achieve its corporate goals by obtaining and attaining the belongings and administrations. Procurement is sometimes misunderstood as purchasing, but it is much for than that. Within the procurement interaction, an excellent procurement approach comprises of the whole thing concerned, from deciding which items and contributions a corporate requires, valid through to preserving the necessary documents and archival information. In the ancient era, Romans entered into contract with recorders when trade with non-public suppliers was in the domain. In Britain, the records of procurement date back to Conqueror, William, who required a compact way of archiving assortments of charges. With the British Realm's upward drive and its provincial ambitions, the operation progressed to include objects and contributions (Bienhaus & Haddud 2018).

Types of project management’ Procurement contracts

Procurement contracts which are done by project managers or programme managers involve lawful agreement between 2 or more parties to carry through the services and products. A fundamental part of any endeavour is to choose a procurement understanding, as it determines the manager's association with the agent. He needs to choose an affiliation that provides the best cash and time cost and can protect the initiative from risks. Fixed-Price contract, if the job choice is pleasantly established. The genuine desire is the Reimbursable of Cost if the possibility of effort is not continually set. The type of Time and Material is ideal for signing skilled professionals or for preserving external assistance.

Fixed-price Contract

A Fixed-Price contract of a single quantity deal is alluded to by various managers. While the degree of work is set, project managers or programme managers use this understanding. The merchant is legally sure to complete the effort at the agreed cost and time when the arrangement is labelled. Subsequently, the merchant bears the risk limit. There is no renegotiation of costs until the nature of work changes. Here, extension replacement is a steeply-valued problem. Outworkers also get the competition to use the primary cost offering after which more offers are produced at any opportunity, detail of a conveyed variety (Kamrad, Ji & Schmidt 2017).

Purchase order

A purchase order is a record presented with a guide to using a manager to a supplier, signifying their plan to obtain a particular commodity or administration. POs are routinely used to monitor administrations and materials from suppliers on development programs and are kept for record-keeping. Purchase orders assist with making financial arrangements, that a project manager and programme manager renders plans an enormous undertaking. It helps provide a transparent system for sales requests to be used, which facilitates stock administration (Reindorp, Tanrisever & Lange 2018).

Cost reimbursable Contract

In addition to a price addressing their advantage, the merchant is repaid for completed creative creations. Sellers also get this cost if they meet or exceed the preferred task goals: achieving the effort in advance of time or saving costs, and so on. Project managers and programme managers use a cost-reimbursable settlement when the extension or better danger is vulnerable. In this settlement, when they pay for all costs, the liability is to the buyer. After they do not have a very much represented degree, this settlement gives managers greater value power. Likewise, the vendor could try to heighten the incentive to boost the price or repayment. The managers can limit this by following or covering the profit rightly (Rehman 2019).

Time and Materials Contract

This is a blend of Fixed-Price and Reimbursable Expense arrangements. Here, the risk is extended on any occasion. The project manager or programme manager uses a Time and Materials agreement while the deliverable is "work hours." Here, the task manager will send the predefined capabilities and revel into the seller who will offer the employees. This contract is used for the rental or outside assistance of qualified professionals. In this arrangement, the client should indicate the hourly cost with a "not" as far as possible (Li, Yang & Wang 2017).

Contractor bidding

Depending on the nation and the form of project, the preference of project employees varies. Relatively, project employees follow contracts, the clients to screen them practically based on thinking and private choice. On a few occasions, when the responsibilities involve a preferred strength, the utility of contractors and showcasing could be found at the jobber that meets the prerequisite. If there could be no usefulness given the business's extreme intricacy, the numerous meetings could be exchanged. The British specialists continue to acquaint themselves with remarkable robust offering techniques to maximize efficiency in creative efforts (Le?niak et al. 2018). Their motive is to substitute the procurement of financial affiliation and project. Inside the UK, the leading selling approach is to select the bidder at a fair rate. In sync with them, this relationship forestalls defilement and sees an exceptional extreme of formation. The sources of the contractors offer a discernment about the skills of contractors. Besides, this decides how the contractor is placed at some point in the offering of understanding when assessing strength. In London, the most spartan project employees with a fair money-related status, experts in their profession, sufficient control skills and completion agreement records are eligible to use for contracts. Task customers also discuss a few errand specifications inside the sensitive documents in a standard bidding manner. At that point, project employees post tenders within the bid repositories following the needs (Hanák, Drozdová & Marovi? 2021).

Laws related to procurement and contract in construction project

There exists a trinity of contract jurisdiction, in England, Scotland and Wales. In the United Kingdom, industry-favoured ranges of arrangements, powerfully revamped, are ensured within the designed environmental factors and constructions. The set-up of construction contracts delivered through the Joint Contracts Tribunal and the own circle of family members of agreements made through the NEC is the largest and preferred form of formation contracts. The English law falls under England and Wales's purview and is primarily focused on the JCT and NEC preferred systems' unamended terms. When operations expand to an extra enormous degree, project managers are advised to boost their insight into managing contract rules to accomplish various achievements. The creation of agreements is an imperative factor in a mission, while task supervisors should have adequate facilities to check that highlights of acquisition and danger are considered.

To take care of experts and the public interest, the bidding law of the United Kingdom for the people has been cutting edge. Also, to adjust the bidding techniques containing all the legitimate rights and government assistance, sell special activities and increase the benefit of the economy, best-offering sports within the United Kingdom's limits are inclined to set the guidelines being used. Given that law can have a supervisory legal form, the rule restricts the inclusion of the standard body in the period (i Al-Shammar 2018).

Role of project manager and programme manager in Procurement

Project commencement: When there is a fresh procurement, the procurement task is initiated by a project manager or programme manager. This involves allowing the fundamental partners to mutually understand the degree and priorities for the procurement and speak about high-stage requirements and event courses.

Developing a procuring plan: A fundamental skill of the project manager to diagram anticipations and arrange stakeholders is to create a complete procurement strategy. A practical procurement plan includes the procurement of the contributions and post-obtainment tasks required to effectively adjust the construction project's duties or any project (Nguyen & Hadikusumo 2018).

Cooperating with stakeholders:  Ability of the PM is to ensure that each crucial stakeholders’ entity is viewed and drawn in for the duration of the procurement cycle on the ideal occasions.

Cooperating with the suppliers: At any point in the procurement interaction, several suppliers are worried, and each seller may even have several employees concerned. The manager can ensure each vendor has interpreted their project chief, serving as a bridge between all the parties for the procurement duration.

Constant communication: Daily email alerts, audits of job notoriety, and personal meetings usually are verbal channels that the project manager or programme manager can use to communicate with stakeholders and suppliers for the procurement undertaking (Hanák, Drozdová & Marovi? 2021).

Accountability for implementation of project: When the procurement is finalized, and a contract with a supplier has been supported, the project manager acts out a vital skill to assist the project head and ultimately change the product/contributions into manoeuvres (Negara et al. 2019).

Contract management activities by project managers/ programme manager

Numerous activities of contract management tend to be monotonous and regulatory. Subcontractors, especially administrative offices, force innovations for contract adaptation. Independent of settlement expresses, outside games occur and may even supplant contracts. Announcing financial details from contracts within the UK through Sarbanes Oxley (SOX) is an extra-legally binding technique for which settlement managers can still be kept responsible. Project managers or programme managers should carry out legal recommendations under some instances and in transit to such orders. While contract evaluation is taking place, the fundamental set-up fragment is; meetings within and with different settlement entities for ensuring shared objectives and working out limit chances; the PM is building and implementing a guide plan; and the director is compiling far and large job papers, tools and techniques at the desk. Tasks of contract regulation must emerge as more notable authoritative. A very highly regulated project recognizes the general execution and supervision of legally necessary activities consisting of invoicing, charge control, recording of gratitude, teaming up in surveys, or safeguarding records of data and documents. The 3rd primary contract management area refers to cases and debates. In contract wind-up, contract management has a principal job at long last.

For a victory adventure consummation, it empowers the objects and contributions to be gained in sorting out (Wang et al. 2019).

Advantages of procurement for project delivery

• For accomplishment of project, it empowers the products and contributions to be gained in sorting out.

• Gives the suppliers a full posting of Purchase Orders and related issues.

• It provides negotiated time intervals and delivery procedures.

• Assists to survey and buy suppliers' products and amenities.

• It approves the accomplishments of the supplier settlement and affirms their instalment.

• It goes around as a source of insight that empowers the supplier to verify execution contrary to the contract in general.

• In general execution problems, it empowers in working out and settling supplier.

• It is a communication platform, refreshing the notoriety of the endeavour to the higher administration (Kharynovych-Yavorska 2018).

Advantage of contract for project delivery

• A contract helps a project manager or programme manager to monitor the advantage of appointing separate the project because of the fact that the organization and the project worker want the total expense of the agreement sooner than labelling.

• A contract has a conspicuous meaning that pretty much removes uncertainty regarding the existence of the understanding.

• The contract remains within the accounts of the project and disposes of the right of a project worker to establish extended cost audits and develop the cost of understanding.

• The language of a contract governs the effort and a contractor can simultaneously exercise polished ability as she works under the settlement (Verweij & van Meerkerk 2020).

Contract and procurement software 

There is several contract and procurement management software currently present in the market to assist the project manager and relative stakeholders with the project's established policies and guidelines. Following are the most preferred procurement and contract management software:

Procurement management software

Tradogram is all-in-one procurement management software as it provides exceptional features like tracking and inventory management at a low cost while keeping quality in concern. It also allows monitoring of purchases, vendor sources and control over expense (de Araújo, Alencar & de Miranda Mota, 2017). 

Procurify is majorly famous for its user-friendly interface and easy to use the system; this software requires no specialized training and on the same hand provides its client with a cloud-based system to save data on. 

Contract management software

Juro has a high-functional dashboard that provides its users with both paid and free of cost plan while assisting them with Artificial intelligence (AI) search station (Norta et al., 2017). 

Agiloft presents its user with a scope of lifetime guarantee and coverage of free of cost plans for small and medium businesses along with no-cost training to learn functionality and operations of the software. 

Issues 

Several issues and challenges are faced in day-to-day operations of contract and procurement management; to mention few the suppliers and buyer relation has to be considered the most crucial one as it gets the least attention by the project managers at times. It is necessary to establish a strong communication and network chain among these two as well. In contract management, one of the major issues is lack of clarity/communication; the agreement's goal and scope need to be established beforehand to avoid any tussle in later future (Mackie et al., 2019). The availability of limited search information for the procurement can also be a significant challenge for the project/ procurement manager. Still, the same can be mitigated with the assistance of AI functional procurement software. Misunderstanding and lack of engagement in the contract among the concerned parties act as barriers, leading to further chances of contract failure following which the legal issues also arise (Khan & Khan, 2017). 

Commercialization 

It has been assessed that the procurement is not commercial as the definition of commercialization states that the organization or project’s policies and guidelines are interrelated and are in line with that of needs and requirements of the market. Commercialization requires the project's goals and aim to be focused towards reconcilement of ethics, economics, and innovation; the approach of commercialization is inverse to the nature of the project’s contract and procurement management (Kembleton et al., 2020). Considering the gap between both fields, it will be fair to establish that it is challenging to manage both areas simultaneously. However, the same is not impossible, either if managed appropriately. 

Negotiation

The United Kingdoms is seen as one of the world's most querulous negotiation-related regions. Negotiation is a strategy of the plausible deft association. With a few apparent rivalries, attempts and upgrades through operating as a gathering, they can, on the other hand, or more prominent meetings. The UK is considered to have a collectivist subculture that impacts the negotiation results; they are stronger than their matters in the regional association camaraderie. In contrast to monetary income or misfortune, the standard negotiation process decides whether the mediators are happy with the UK negotiation, predicting whether they can continue with any approach to business venture relations. From the negotiator’s perspective, the enhancement of honourability is considerably more notable than the search for profit, and that they are looking for a mutually beneficial agreement. The six negotiation techniques include; the commencement on which the exchange expressions and instructions are laid; the specialized set in which the British use deferred abilities contrary to their gathering abroad; the terms of settlement conversation; contract marking; post-contract exchange through which the British negotiators operate more noteworthy necessities in the region that were not currently, said at this stage within the contract’s former substance material through demanded meetings (Martill & Staiger 2018).

In the event of cost-satisfaction and time and texture contracts, programme managers routinely lead dealings anyway the buyer, despite vendor undertaking managers, they are also stressed in contract exchanges extraordinarily. Negotiation to conclude the contract fee theoretically occur and project manager is accountable for fostering project monitoring and spine of specialized inconveniences at the endeavour. Without the association of a project manager in negotiation, a settlement needs to be marked, and later findings of the manager undertaking will not be completed (Jung & Krebs 2019).

Conclusion

From the report, it can be understood that contracts and procurement serve a significant part for managers in leveraging the project delivery. In the UK, the construction industry plays a comprehensive role in the economy, and therefore the project managers and programme managers are supposed to supply timely delivery. Without procurement, no contract can start, and without a contract, no negotiation can be done. The presence of the project manager is relevant to meet the demands of the entities while agreeing. Several challenges occur during bidding and contracting, but that is where the project manager and the regulations come in the picture.

References

Bienhaus, F. and Haddud, A., 2018. Procurement 4.0: factors influencing the digitisation of procurement and supply chains. Business Process Management Journal.

de Araújo, M.C.B., Alencar, L.H. and de Miranda Mota, C.M., 2017. Project procurement management: A structured literature review. International Journal of Project Management, 35(3), pp.353-377.

Hampton, J., 2017. Contract and consent. A companion to contemporary political philosophy, pp.478-492.

Hanák, T., Drozdová, A. and Marovi?, I., 2021. Bidding Strategy in Construction Public Procurement: A Contractor’s Perspective. Buildings, 11(2), p.47.

Al-Shammar, M.A., 2018. Using the new engineering contracts (nec3) to consider and evaluate the legal liabilities arising from contractual failures: a case study research. Journal of Engineering and Sustainable Development, 21(03), pp.1-1.

Jung, S. and Krebs, P., 2019. The Essentials of Contract Negotiation. Springer.

Kamrad, B., Ji, R. and Schmidt, G.M., 2017. Managing Supply Risk in Fixed Price Contracts: A Contingent Claims Perspective. Foundations and Trends® in Technology, Information and Operations Management, 11(1-2), pp.65-88.

Kembleton, R., Morris, A.W., Federici, G. and Donné, A.J.H., 2020. Design Issues for Fusion Commercialization. IEEE Transactions on Plasma Science, 48(6), pp.1703-1707.

Khan, S.U. and Khan, A.W., 2017. Critical challenges in managing offshore software development outsourcing contract from vendors' perspectives. IET software, 11(1), pp.1-11.

Kharynovych-Yavorska, D., 2018. ANALYTICAL PROCUREMENT OF ECONOMIC ENTITIES COMPETITIVE SRATEGY DEVELOPMENT. Bulletin of the Cherkasy Bohdan Khmelnytsky National University. Economic Sciences, (3).

Le?niak, A., Kubek, D., Plebankiewicz, E., Zima, K. and Belniak, S., 2018. Fuzzy AHP application for supporting contractors’ bidding decision. Symmetry, 10(11), p.642.

LI, H., YANG, D. and WANG, J., 2017. Co-production Contract Models of Knowledge-intensive Service. Journal of Dalian University of Technology (Social Sciences), p.01.

Mackie, S., MacDonald, D., Azzopardi, L. and Moshfeghi, Y., 2019, July. Looking for Opportunities: Challenges in Procurement Search. In Proceedings of the 42nd International ACM SIGIR Conference on Research and Development in Information Retrieval (pp. 1397-1398).

Martill, B. and Staiger, U., 2018, September. Cultures of Negotiation: Explaining Britain’s hard bargaining in the Brexit negotiations. In Disponible en www. dahrendorf-forum. eu/wp-content/uploads/2018/09/Cultures-of-Negotiation-3. pdf [fecha de consulta: 15 de marzo de 2019].

Marzouk, M. and Enaba, M., 2019. Text analytics to analyze and monitor construction project contract and correspondence. Automation in Construction, 98, pp.265-274.

Negara, K.P., Lamari, F., Susilawati, C. and Trigunarsyah, B., 2019. Identifying client project manager competency in Indonesian construction project. In MATEC Web of Conferences (Volume 276): Proceedings of the International Conference on Advances in Civil and Environmental Engineering (ICAnCEE 2018) (pp. 1-7). EDP Sciences.

Nguyen, H.T. and Hadikusumo, B.H., 2018. Human resource related factors and engineering, procurement, and construction (EPC) project success. Journal of Financial Management of Property and Construction.

Norta, A., Vedeshin, A., Rand, H., Tobies, S., Rull, A., Poola, M. and Rull, T., 2017. Self-aware agent-supported contract management on blockchains for legal accountability. URL: http://whitepaper. agrello. org/Agrello_Self-Aware_ Whitepaper. pdf, p.89.

Rehman, A., 2019. Competencies of a project manager in executing a lumpsum contract.

Reindorp, M., Tanrisever, F. and Lange, A., 2018. Purchase order financing: Credit, commitment, and supply chain consequences. Operations Research, 66(5), pp.1287-1303.

Verweij, S. and van Meerkerk, I., 2020. Do public-private partnerships perform better? A comparative analysis of costs for additional work and reasons for contract changes in Dutch transport infrastructure projects. Transport Policy, 99, pp.430-438.

Wang, C., Yap, J.B.H., Wood, L.C. and Abdul-Rahman, H., 2019. Knowledge modelling for contract disputes and change control. Production Planning & Control, 30(8), pp.650-664.