Plan for Negotiations
Contract negotiations are time-consuming and intensive but are key to the success of the project in achieving the
right deal with the right vendor. Planning is essential to ensure they stay on track. Identify the order in which
parts of the contract are to be tackled, the review points, and who is involved in developing and reviewing them.
Identify specialist resources, legal, financial, technical, and so forth, and ensure they are available when
required.
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Ensure the Right Contract is in Place
A good contract should set out the obligations of the parties in a way that is clear, complete, concise, and
unambiguous.
The contract should also form the foundation for a productive relationship built on communication and trust. If the
contract was poorly constructed, it will be much more difficult to make the relationship a success.
The foundations for contract management are laid in the stages before contract award, including the procurement
process.
The content and focus of an Contracting Vehicle depends on the type of agreement it represents. For
additional contract management details, refer to the following:
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Facilitate Dispute Resolution
Contractual disputes are time-consuming, expensive, and unpleasant. They can destroy client/vendor relationships
painstakingly built up over a period of time and can impact the supply chain. They can add substantially to the cost of
the contract, as well as nullify some or all of its benefits or advantages. They can also impact on the achievement of
value for money.
It is in everyone's interest to work at avoiding disputes in the first place, and emphasis should be placed on
improving relationships between the client and vendor through teamwork and partnering. Inevitably, however, they do
occur; and when they do, the importance of a fast, efficient, and cost effective dispute resolution procedure cannot be
overstated.
Dispute resolution techniques include:
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Negotiation - the most common form of dispute resolution where the parties themselves attempt to resolve the
dispute.
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Mediation - a private and structured form of negotiation assisted by a third party that is initially non-binding.
If settlement is reached, it can become a legally binding contract.
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Neutral evaluation - a private and non-binding technique whereby a third party, usually legally qualified, gives an
opinion on the likely outcome at trial as a basis for settlement discussions.
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Expert determination - a private process involving an independent expert with inquisitive powers who gives a
binding decision.
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Arbitration - a formal, private and binding process where the dispute is resolved by the decision of a nominated
third party, the arbitrator, or arbitrators.
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Litigation - the formal process whereby claims are taken through the civil courts and conducted in public. The
judgments are binding on parties subject to rights of appeal.
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Prepare for Change
Define change control procedures for maintaining and updating the contract. Change control procedures are essential if
the contract is to be kept up to date with a clear audit trail of decisions taken; failure to do so can put the
organization and project at risk.
There will be a lot of documents exchanged with the vendors, so ensure there is a configuration management plan in
place to cover version control, routing, storage, and so on, and resources to implement and manage it.
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