The 4C's of Contract Management

Paper / Program and Project Management

The 4C's of Contract Management
Khalil Shahriari PMP , Management Consultant, Iran


In future, the pro-active and effective management of cost, contracts, communication and claims - the four Cs - will consistently become more important to developers and facilitators involved in physical structures and property.

The Contract Manager and Cost Engineer should understand the challenges and opportunities presented by the needs of clients in relation to cost, contracts, communication and claims and perhaps focus their development on the important links between these functions .

Changes and developments in the industry and market will also influence the way in which these functions are managed. For those professionals who deliver these services to the industry, the focus should be on client satisfaction and a positive experience for all concerned. Establishing a link and effectively managing the process to ensure success should be the primary aim of the manager. This should be done in close partnership with all functionaries, engaged in the process.

Planning, controlling and co-ordinating budgets and cost plans, as well as communicating results will limit claims and facilitate the processes of contract management. The contract should also facilitate partnerships and the system should be aimed at satisfying needs, seeking opportunity and pursuing growth.
It is recommended that Contract Managers should position themselves to perform a more dynamic role in respect of cost, contracts, communication and claims (or disputes):
• Cost Management: The Contract Manager is educated and trained to perform an effective cost-management function, but should be able to utilize all the methods, tools and techniques to best effect and to the advantage of the project as a whole. An integrated approach, utilizing all the methods, is suggested.

• Contracts: Contract Managers should be able to analyse the client’s needs as well as the designer’s approach and the environmental influence when suggesting alternative procurement methods. Quality contract documentation remains a non-negotiable part of future services. Although many new methods may be used in the future, the project manager should continuously ensure that contractual expertise remains part of the service provided. This can only be a reality if they remain sensitive to changes in the industry and the real needs of the client. Training remains a key performance area.

• Communication: This is an area where the Contract Manager may need development, but effective communication with all role players will be a major part of future day-to-day activities. One has to note the importance of communication aimed at achieving results as one negotiates for client - and also contractor-satisfaction in an industry which is known for its claims, disputes and conflict.

• Claims and disputes: The Contract Manager must know, understand and be able to advise, use and apply claims-adjudication and dispute-resolution methods. This is an area of growth because an effective dispute-resolution process will enable the parties and all role players to spend more time, money and energy on the project. The dispute-resolution process to be implemented should allow for various alternatives, but be based on a real understanding of how the effective management of costs, contracts, communication and claims may limit the frequency of disputes and maximize project-directed energy.
Costs, contracts, communication, claims and project management

Diagram 1 shows the relation of the four elements as determinants of the model to project management knowledge areas.

Diagram 1: Project management, knowledge and skills areas
Source: (PMBOK)

The above diagram shows the importance of cost, contracts, communication and claims within the body of knowledge of project management.

The basic elements of the proposed Contract Managing Model are cost, contracts, claims and communication as shown in Diagram 2.

Diagram 2: Basic elements of the proposed Contract Managing Model

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