Commercial Project Management
Spectrum of Contractual Agreement
The spectrum of contractual agreements refers to the scope of agreements made by stakeholders in a project to the extent of their responsibilities and the nature of activities that will be undertaken during the project delivery process (Lorenz & Skotiniotis, 2003). All details that parties agreed to during the negotiation process are captured in a contract and form the basis for the implementation process.
Legal Conditions for a Contract
A contractual agreement must meet several legal conditions for it to be valid. There must be an offer by one party to another. The offer states what a stakeholder commits to doing in the contract and the activities that would not be done (Lorenz & Skotiniotis, 2003). There must also be a consideration- that is what each party will pay as part of the implementation process of the contractual agreements. Furthermore, the contract must intend to perform an activity that is legally acceptable (PMI, 2013). A contract that is designed to perform an illegality is void and therefore unenforceable. Another condition for a contract to exist that all parties to the contractual agreement must be competent. Competency applies to the legal age and mental capacity to know the contractual agreement.
The Tunnel Channel Project
The Tunnel Channel contract was cost reimbursable kind of contract. Many of important contract performance details were not defined and agreed prior to the commencement of the project. For example tunnel air-conditioning that was later deemed to be important for the project was not defined during the negotiation process but would later add to the contract budget an estimated $200 million (Wikipedia Channel Tunnel, n.d). Project designs that were not initially considered during the negotiation process were later allowed by the involved government which put further strain on the implementation.
Formalization of a Contract
Formalization of contract defines the scope of the project and the expectations for each stakeholder. This formalization creates a sense of certainty that may lack in other projects such as the Tunnel Channel that are left open-ended.
Contracts that Govern Stakeholder Behavior
A contract that governs buyer and contractor behavior has many advantages. The buyer and contractor all know the expectations of the other party regarding their inputs into the project. Such projects also define the damages each party would pay the other in case of breach of terms of agreement (Lorenz & Skotiniotis, 2003). Importantly, it creates certainty in the performance and expected outcomes. Communication process also tends to be clear when all stakeholders know what to expect from each other.
Existence of a Contract
For a contract to exist, there are certain contractual elements that must be in place. There must an intention to perform contract terms. Parties to the contract must be agreeable to the contents of the contract and sign the contract out of free will (Kerzner & Kerzner, 2017). All stakeholders to the contract negotiation process must be willing to act out of their free will without any coercion.
Inclusion of Other Knowledge Areas
Project procurement process is a wide ranging affair. the process requires an in-depth understanding of other areas of knowledge so that all decisions regarding the procurement are made within sufficient and objective framework (Lorenz & Skotiniotis, 2003). The complexity of the procurement process requires consultation of professional and experts from different fields that contribute to the holistic understanding of the process.
Selling to the Government
An organization that sells to the government can standardize its procurement, sales, and response process. This fact is however only possible where the organization has a certain level of dominance in product or service being sold (Kerzner & Kerzner, 2017). Similarly, if the product requires a certain level of expertise that is a preserve for a limited number of organizations, such organization could still control its sales and response process when dealing with the government.
References
Kerzner, H., & Kerzner, H. R. (2017). Project management: a systems approach to planning, scheduling, and controlling. John Wiley & Sons.
Lorenz, D. H., & Skotiniotis, T. (2003). Contracts and aspects. Technical Report.
PMI. 2013a. A Guide to the Project Management Body of Knowledge (PMBOK Guide) 5th Edition. USA: Project Management Institute.
Wikipedia Channel Tunnel https://en.wikipedia.org/wiki/Channel_Tunnel