Over the last few weeks we have set out how to approach making sure that the wishes of the client have been captured and made clear. The next stage is to make sure that the contract documents actually capture this intent. The documents that you use for tender or negotiation are the first impression that the supply chain will get of the client and the project team. If these documents are vague or ambiguous it creates risk and the price and the programme will go up or tenderers may be put off tendering altogether. One of my first bosses always told me that a lot of questions about your tender and contract documents suggests poor preparation. So let’s have a look at what good contract preparation should include:
Time is a critical element in contract preparation. It might be for familiarisation with the scheme, assurance checking, clarifying risk ownership or even time to reflect and scenario test its use. The contract is the culmination of months or even years of work and will be the vehicle for ensuring that you get what you want. This will become the mechanism for resolution of any misunderstanding that may follow and the phrase that should always be applied is measure twice and cut once. The alternative is to measure once and cuss twice! A key thing to remember is that any new member of the supply chain has to be given the time to understand what you have been working on for a few years; so give them a chance or they will estimate and speculate and they might be negatively influenced by the quality of the documents and your behaviours.
Signed documents are the only way to go. If you don’t want to sign them it means that you don’t like the risk and in which case why are you taking on the contract? If you sign them with a view to sorting out all your worries down the road then don’t be surprised or fed up if you spend more time in contractual meetings and these might not go your way. The very best thing you can do is make sure you and your delivery team fully understand the contract and then sign with a high level of confidence of the outcome. If anyone is unsure, then stop and listen. The people that have the skills to drive a project are only as good as the people who have taken the time to analyse or reflect upon the documents. They are rarely the same person (see our blog on behavioural muscle memory link). If in doubt, imagine you have an issue that is key to delivering the project but you cannot get on and resolve it because the contract was never signed and no one is sure what happens next.
Effective legal advice is an essential part of contract preparation. I often compare this to having my car serviced – I take the car into the garage whilst it is working fine and it comes out and it works just as well. I get miles of worry-free motoring; or the garage spots something that is not quite right, and provides me advice on something I ought to fix. At my last service my garage spotted an engine fault which was cheap to fix, but if not addressed would have been really costly and may have left me stranded. The cost of pro-active legal input to contracts is always less for the same reason. It is better to find out if there is something wrong before you sign a contract whilst you have a chance to address it and a choice over how you do it, than to find out that you set things up wrong in the first place. The fact you may have saved a few pounds on early legal advice is of little comfort when facing a tricky contractual claim. Compare the inconvenience and cost of a breakdown on the motorway to a phone call advising a repair.
If you have a well-prepared contract in place then all you then need do is administer it properly but that is next week’s topic.