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Contract
Management , usually referred to as Project
Execution means monitoring and completing a
project as per the terms and conditions governing
that Contract.
Thus, Contract Management means progressing a
contract to ensure timely completion of all the
specified jobs and work as per the terms and
conditions incorporated in the contract
The essential requirement for ensuring trouble
free contract management is placement of contract
with transparent terms and conditions which have
already been agreed to by both the purchaser and
the supplier in writing.
After placing a contract , obtaining the
suppliers' unconditional acceptance of the
contract is the first step
All the functionaries named in and / or directly
connected with a contract are to play their roles
in terms of the contract. Such functionaries ,
apart from the contractor , may be the
contract operating /executing authority , paying
authority etc.
The purchaser is to watch and review the work of
all such functionaries to avoid any slippage or
bottleneck in the progress of the contract
The purchaser is also to locate the key areas of a
contract for special watch
Many a time, even a properly concluded contract
may need modifications and amendments due to
negligence and inaction of the supplier and / or
the purchaser in handling the contract or due to
some genuine unforeseen reasons
Any amendment issues to a contract may have :
- Commercial impact and
/ or TECHNICAL IMPACT AND/OR
- Financial impact and
/ or
- Legal impact on the
contract
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To avoid any
future complication, the purchaser should examine
all such issues thoroughly before issuing any
amendment
The most frequent amendment asked for by a
supplier is extension of delivery schedule of
contract.
Depending on the merits of the case and when
ordered good are still needed, the following three
broad techniques are adopted for extending the
contractual delivery schedule :
1) Extension
of delivery period without imposing any liquidated
damages but denying any increase in the cost and
and at the same time , availing of the benefit of
any lower trend in the price of the ordered goods.
2) Sometimes , the delivery period of a contract
expires without any supply or with part supply and
the supplier does not request for delivery
extension but the purchaser needs the pending
ordered goods In such a case, performance notice
may be served on the supplier. The conditions
incorporated in a performance notice are similar
to those as incorporated in
a delivery extension letter with imposition of
Liquidated damage and reservation of rights and
denial clauses
3) Sometimes, suppliers ask for amendments to the
specifications of the contracted goods. This
usually happens in Turn key contract an contracts
for industrial plants. While examining such an
issue on merits, the purchaser should also ensure
:
- Modified
specification not substandard
- The utility ,
performance and efficiency of the goods in
question are not affected
- Purchaser does not
face any Financial repercussion
- The supplier does not
gain at the cost of its competitors, whose
offers were rejected while deciding the
contract in favour of this supplier
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Appropriate
administrative as well as legal safeguards are
incorporated in a contract to tackle various
complications during the tenure of the contract.
Some such provisions are:
- L.D. clause
- Performance security
clause
- Force Majeure clause
- Warranty clause
- Termination for
default by the supplier
- Termination of
contract for the convenience of the
purchaser
- Applicable law
governing the contract
- Settlement of
disputes
- Through sole
arbitrator appointed by the purchaser
- In accordance with
Indian Arbitration and conciliation act,
1996
- In accordance with
UNcritical or ICC arbitration rules
- Through court of law
of competent jurisdiction
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