CONTRACT MANAGEMENT

P R Swarup
Director General

Construction Industry Development Council

 Defining Contracts

• A Mechanism For Procuring Goods and Services

• Definition as per Chambers 21st Century Dictionary

• A legally binding agreement

• A document setting out the terms of such an

agreement

• In criminal circles : An agreement to kill some

one in return for a usually considerable sum of
 Why Contracts
• To conserve and effectively utilize the time and
costs involved in transactions

• To get best out of resources available in the

Context of performance

• To eliminate risks arising out of limited prowess’s

of procurement agency.

• To build capabilities in the situations having

multifaceted requirements.
 Parties to enter in contracts for
Project Execution
Direct

• Owner

• Contractor

• Advisor/Consultants

Conti….
Indirect

• Specialized Service providers

• Banks/Financial Institutions

• Insurance Companies
 Types of Contracts
• Good

• Bad

• Ugly

Conti….
• Good Contracts are rare to find like good
people

• Bad Contracts are common place

• Ugly Contracts are every where and ultimately

graduate to Bad Contracts
 Onus of making contracts
Good/bad/ugly
• Owners - 60%

• Contractors - 30%

• Others - 10%

The opinions, however differs, where most of us

believe that share is larger, when it comes to
Contractors.
 Contract Management

A skill all of us possess, but none has mastered.

Myths

• Drawing good CPM/PERT Charts makes a

good Contract Manager

• Saving lots of money makes a good Contract

Manager
Conti….
• Adhering to laid down rules and sticking to good
and impressive formats for reporting makes a
good Contract Manager.

• Using advance soft wares and computer driven

techniques such as prima Vera, MS Projects
makes a good Contract Manager.

• Interpreting Contract provisions verbatim makes

a good Contract Manager.

Conti….
Realities

• Understanding the Costs, requirements,

limitations of employed technology, materials,
keeping in view the overall delivery, makes a
good Contracts Manager.

• Having more reliance on softer nuances rather

than being rule bound makes a good Contracts
Manager.

• Using Simpler, objective tools to monitor various

stages of progress leading to overall performances
makes a good Contracts Manager. Conti….
• Dividing the task in various small accomplishable
milestones, and monitoring the achievements
both at micro as well as macro level makes a
good Contracts Manager.

• Taking Speedy decisions, and resorting to

required mid Course corrections makes a good
Contracts Manager.
 Recipe to make a Bad Contract
(Partial)
• Be very legal and verbose while drafting the text of
Contract documents.

• Keep the provisions as inequitable and amorphous

as possible

• Make sure that your Contractor is responsible for

any thing, which may or not effect the performance.
Conti….
• Make sure your Contractor is selected through a
very subjective process.

• Never check and verify the antecedents physically,

rely only on the paper submitted by him to you.

• Keep changing your project team as frequently as

possible.

• Always remain indecisive, for CBI/CVC is watching

you.

• Insure your communication with other constituents

and also in house is scanty vague.
 Examples of some simple but
effective and good Contracts.
• Transactions between you and your Panwallah

• Your marriage ( some time this too does not

work)

• Conventional Marwari Style of Contract

Management.
Thank You