Guide to Contract Management

Published on January 2017 | Categories: Documents | Downloads: 21 | Comments: 0 | Views: 275
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Contracts are legally binding agreements between two or more parties. Contracts are pervasive and used in many aspects of life such as protecting property. They form the cornerstone of commerce in the modern economy. Contract terms are enforceable by the legal system and courts of any modern state. Effective contract management is an important function in many businesses.

Contracting Process
There are four stages in the contracting process: 1) Requisition process: At this stage, specifications of the work are determined, and qualified contractors are identified. 2) Solicitation process: This entails asking for bids or proposals. Various vendors or service providers will be asked to participate in this process. When purchasing commodities, price might be the deciding factor, but when buying a specific service or product various factors such as quality and warranties are taken into account in accepting a bid or proposal. 3) Award process: At this stage, a vendor is selected and a contract is negotiated and signed. 4) Contract process: Finally the contract is actually carried out. The vendor and purchaser follow the terms of the contract, organize the work and monitor progress.

Types
Some common types of contracts are as follows: 1) Fixed price or lump sum: In this type of contract there is an agreed price for the performance of work. It provides a degree of certainty for both parties because the contract clearly defines what is involved and at what price. 2) Unit rate: Here the pay is directly proportional to the volume and range of work. An example is supply of timber where the monetary amount would be defined by the volume of units supplied.

3) Reimbursable or cost plus: There is an upfront payment to the contractor. These types of contracts are used when the scope of the work is ill-defined, such as in some military contracts.
4) Financing contracts: These contracts are used for financing of a project. The financing contractor assumes the risk of profitability of the contract. They are used in mining, building, oil and gas, transportation and infrastructure projects. 5) Project management: Here the contractor management agrees to manage a project for a specific duration of time

Structure
Generally a contract should contain the following headings: 1) Definition of contract terms: This section defined terms and field-specific word. 2) Project scope: This section provides information on the whole project to give context to the services that the contract is going to provide. 3) The services and work to be performed. 4) Facilities that should be provided by the client (e.g. office space). 5) Warranties and guarantees of the services provided. 6) Definition of fee base i.e. cost of the project. 7) Terms of payment: Time of payments and conditions that should be met for the payment are clarified. 8) Taxes (e.g. sales and use tax). 9) Insurance coverage. 10) Other contractual provisions based on the nature of the project. 11) Miscellaneous provisions.

Source: http://www.ehow.com/way_5408271_guide-contractmanagement.html#ixzz2saL57fk1 Images: http://www.visitormanagementsystem.com.au/contractormanagement.php

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