Most people enter into business arrangements with the best of intentions. Unfortunately, in many cases, selective understanding, financial and schedule pressures, and revisionist history can derail our projects and may lead to disputes and delays.
As the saying goes, good fences make good neighbours. In the same manner, if your project has a well-defined scope, a solid management plan, and a well-constructed contract, you are well on your way to a successful business relationship. As in all relationships, expectations and communication are the leading drivers of the participants’ contentment. Certifying that both sides’ expectations and responsibilities are clearly communicated up front, and then contractually encapsulating your legal responsibilities to one another, will allow you to create successful projects and maintain great business relationships.
So there you have it: a short, concise, simple article. To ensure great business relationships, simply know what you want and how you’re going to do it, and then sign a great contract. It’s that easy!
But I think we all know that the Easy Button for project management and contracting doesn’t exist, so let’s review three components to consider to aid in making your projects and business relationships successful: project scope, the management plan, and the contract.
The most important element of successful relationship development is ensuring a clear and complete business relationship scope (what is to be delivered). Creating this clarity upfront is of utmost importance. It’s worth investing the time and money at project conception to develop a comprehensive set of required documents, such as drawings or specifications of the work you’d like delivered.
Considerations for scope development include the following:
- Project name and definition;
- Opportunity statement, or the purpose for the project;
- Goals, objectives, requirements, and expectations;
- Identity of owners, sponsors, and all other stakeholders;
- Scope of work, budget, and change management procedures;
- Milestones, or stage gates; and
- Project closure requirements.
The management plan
Once the scope is clearly defined and documented, move on to the creation of a framework in which to work. That framework describes how your project will be managed and outlines both sides’ expectations for its delivery. Consider working with a professional project manager to best consider, document, and control key project items such as
- Change management
- Risk management
A good management plan will allow you to directly translate your desires and expectations to a legal contract that will help you further manage your project and relationship to successful completion.
So let’s talk a little bit about contracts. We all know that a contract is simply a legal agreement that the participating parties intend to be bound by. A contract declares that an offer was made and accepted based on agreed consideration (the price). When these elements are present, you have a contract; it’s really that simple! Contracts are a wonderful tool to help us manage our business relationships while ensuring that we eliminate surprises along the way. A simple contract can include the terms and conditions surrounding components such as payments, insurance, health and safety, warranty, and intellectual property, among many others.
Recognizing that many best practices and differing contracting experiences exist, industry associations such as the Canadian Construction Documents Committee (CCDC) and the Association of Consulting Engineering Companies (ACEC) have developed uniform, standardized contract documents for our use. These contract forms were developed to allow each party a cost effective means to work out balanced, standardized contract parity. Consider exploring these forms for your next project as they take care of standard terms and conditions quite effectively.
In simple terms, regardless of what contract form you choose to employ, the major benefit of a well-structured contract is that it allows responsibilities and accountabilities to be put clearly into print and agreed to by both sides. Following on that, if the agreed components are not delivered, are delayed, or are caused to be delayed by outside forces, you have a standardized structure for both sides to work toward a resolution.
If you have taken the time to ensure a well thought out scope, and then drafted a comprehensive project management plan, employing the appropriate contract becomes a natural next step.
Bringing the elements together
Wrapping together these three components – a clear scope, a detailed management plan, and a contract – will help ensure that the conceptualized vision of your project is transformed into reality. With the scope serving to identify and document the project, and the project management plan outlining the performance phases of the work required, you can create a contract that effectively identifies what each party agrees to deliver.
Developing a robust scope and project management plan by initially spending time and money, and engaging professionals for the specific type of work being done, is a step that many owners want to skip in the excitement of launching a project. But the lack of scope definition becomes the root cause of the grief that ultimately makes the dispute resolution portions of the contract so necessary.
While the world of project management and contracting can become complex, these can also be very simple and powerful concepts to embrace. If you have taken the time to ensure a well thought out scope, and then drafted a comprehensive project management plan, employing the appropriate contract becomes a natural next step. Consider whether standard contract forms, such as those created by CCDC and ACEC, may fit your project – they will allow you to very simply draft a mutually beneficial strategy to meet those project requirements. When each party fully understands what is to be delivered, by when, and for how much, you have performed vital due diligence for streamlining your project delivery and minimizing relationship and project disasters.
We’ve all likely experienced the phenomenon of “nothing is a problem until it is”! Let’s not allow this thinking to derail our projects. A little bit of work and knowledge will ensure that we’ve done as much as possible to reduce risk and ensure smooth project delivery. The project may not go perfectly, but establishing a well-drafted project scope and management plan and mating them to a complete contracting strategy will set your project up for success, protect your interests, and give you a robust framework with which to navigate any surprises that may come up. The real measure of project management success is how infrequently a contract is referenced during project delivery. It’s a risk management tool, but like any insurance policy, you don’t want to have to use it.
So take the time to build a solid fence, but use it to lean against while you have a friendly conversation with your neighbour!
First published in the March 2018 edition of The Business Advisor.