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Some Thoughts on Contracts Management

Updated: Dec 10, 2020

Project Managers know that a thorough understanding of contracts and agreements is fundamental to project success. We have heard the axiom that contracts are meant to be broken. Well, that is a generality and is not always true. However, we do know that contracts are often bent, twisted, rearranged and viewed through filters and interpreted selectively.

There are two interesting and common contract risks that a project management must be aware of. These are shirking and opportunistic renegotiation. Shirking occurs when the contractor does less than what was in the agreement and/or executes the work with less diligence and skill than was intended and/or utilizes lower quality resources (or less experienced personnel) than are required. Opportunistic negotiation is another potential threat. That's when the contractor selectively dissects the contract (plans and specifications) to find gaps and opportunities to extract greater sums of money, less stringent technical requirements or a more relaxed schedule. My experience is that there is no such thing as a perfect contract. Therefore, screening contractors by verifying references and obtaining credible performance evaluations from trusted resources is recommended, especially when working with a new contractor.

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