310-PROJECT MANAGEMENT

FACULTY:

Dr. CH. VENKATAIAHB.Tech, MBA, PhD

Associate Professor (Operations, Quality & Project Management)

PROJECT CLOSEOUTUNIT

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CONTRACT MANAGEMENT & PARTNERING

Dr. CH. VENKATAIAH

Associate Professor

310-Project Management

A contract is a formal agreement between two parties

wherein one party (the contractor) agrees to perform a

service and the other party (the client) agrees to do

something in return.

A contract is legally binding.

It defines the responsibilities of both the parties and the

conditions under which it is operative.

It defines the rights of the parties in relationship to each

other and the remedies available to the parties in case

the other party breaches the contract and fails to

discharge its obligations.

Contract

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Dr. CH. VENKATAIAH

Associate Professor

310-Project Management

Fixed price contract :

A price is agreed upon in advance and remains fixed as long as there are no changes to the scope or provisions of the agreement.

Cost plus contract:

the contractor is reimbursed for all or some of the expenses incurred during the performance of the contract.

Contracts - Types

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Dr. CH. VENKATAIAH

Associate Professor

310-Project Management

Fixed Cost Contracts

The contractor agrees to carry out all the work specified in the contract at a fixed price.

The client can obtain a minimum price through competitive bidding.

Preferred when scope of the project is well defined, the costs can be estimated fairly accurately, and the project has low implementation risks.

Variations Economic price adjustment contracts. – Inflation clauses and /or

provision for price revision is included.

Fixed price incentive contracts – Incentives may be on a cost sharing ratio basis, schedule based incentives or performance based incentives.

Dr. CH. VENKATAIAH

Associate Professor

310-Project Management

The contractor is reimbursed for all direct allowable costs, like materials, labour, travel and so on and an additional fee to cover overheads and profit.

The fee is negotiated in advance and is usually in the form of a percentage of the total costs.

Cost Plus Contracts

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Dr. CH. VENKATAIAH

Associate Professor

310-Project Management

It is a contract awarded to one or more

vendors to deliver supplies and services. It

may be in the form of:

Definite Quantity Contract

Requirements Contract

Indefinite Quantity Contract

Indefinite Delivery Contracts

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Dr. CH. VENKATAIAH

Associate Professor

310-Project Management

Tenders

Tendering is the process in which a detailed specification of goods or services to be provided is circulated to a number of potential contractors.

The contractors bid for the work by providing a tender document that includes the price for the work, a timetable, and an explanation of how it will be carried out.

The tendering authority is free to select from the tenders supplied, though public bodies are generally forced to accept the lowest bid or the cheapest tender on grounds of principle.

Sometimes selection may be based on quality, reliability, projected speed of operations, and the track record of the contractor rather than the price.

The main focus through tender is on competition of price and quality.

Dr. CH. VENKATAIAH

Associate Professor

310-Project Management

Tenders - Types

Global Tender

Open Tender

Limited or Restricted Tender

Single Tender

Negotiated Tender

Dr. CH. VENKATAIAH

Associate Professor

310-Project Management

Tendering Process

Issue advertisements to the press/ magazines inviting expression of interest for the project.

Receive response to pre-qualification questionnaires from interested contractors.

Analyse pre-qualification responses and shortlist potential contractors based on selection criteria as stated in the advertisements.

Carry out negotiations or competitive dialogue with potential contractors identified in previous step. This may be required only in the case of negotiated contracts. In some cases even pre-qualification requirements may not be necessary.

Invite all contractors identified (after negotiations or competitive dialogue, if undertaken), to bid for the contract.

Dr. CH. VENKATAIAH

Associate Professor

310-Project Management

Tendering Process

A site visit for identified contractors may be arranged in case of projects involving construction or other work at site.

Receive filled in tenders from selected contractors along with earnest money as specified in the tender documents. Earnest money is a sum of money deposited at the time of submitting tenders to ensure the seriousness of the contractor towards the bidding process. The earnest money is refunded to unsuccessful bidders, while it is converted to guarantee money in the case of the successful bidder. Tender boxes for receiving tenders are sealed by the authority appointed for the purpose at the time intimated in the tender documents. Late tenders are not allowed to be put in the tender box.

Dr. CH. VENKATAIAH

Associate Professor

310-Project Management

Tendering Process

Open the tenders together at the place and on the date and time fixed for the same. Tenders are opened in the presence of bidders and the person opening them reads out the amounts quoted by each bidder. The opening authority makes a comparative statement and hands over the same to the contract section for their further action.

Evaluate the tenders against the award criteria.

Select the successful tender.

Issue contract to the successful contracting firm.

Inform the unsuccessful contracting firms about their non-selection.

Dr. CH. VENKATAIAH

Associate Professor

310-Project Management

Registration of Contractors –

Public Sector Undertakings and Govt Agencies

Constitution of the firm, its legal status, and partners

Immovable, movable properties and bank deposits held by the firm. This gives an idea about the financial standing of the firm and whether it shall be able to undertake the project with the payment schedules envisaged.

Turnover during last five years, balance sheets.

Valid ITCC

Performance from previous employers

Major equipment held

Qualifications and experience of key personnel

Information regarding litigations

List of works carried out in time

Engineers proposed to be employed and technical capability of the firm.

Whether proprietorship or partnership firm.

Dr. CH. VENKATAIAH

Associate Professor

310-Project Management

Contract Law

All contracts in India are subject to The Indian

Contract Act 1872.

Disputes settled through conciliation or

arbitration.

These are governed by the Conciliation and

Arbitration Act 1996.

Dr. CH. VENKATAIAH

Associate Professor

310-Project Management

Contract Closeout

The contractor gives a notice of completion to the client.

A joint inspection of the work is carried out after which the client also issues a completion certificate.

A list of defects to be rectified is prepared. The defects are intimated to the contractor, who then rectifies the defects.

The client should be informed of completion of rectification of defects by the contractor and a request made for performance certificate on satisfactory completion of defect liability period.

Once the client is satisfied that all defects have been rectified, the security performance guarantee sum is released to the contractor.

Dr. CH. VENKATAIAH

Associate Professor

310-Project Management

Partnering

A method of transforming contractual relationships into a cohesive, cooperative project team with a single set of goals and established procedures for resolving disputes in a timely manner.

The customer, community, consultants, prime contractor, major subcontractors, and suppliers form as one project team and cooperate, share goals, communicate openly and resolve issues speedily

Dr. CH. VENKATAIAH

Associate Professor

310-Project Management

Steps in PartneringThe steps involved in partnering are as follows:

1. Introduction

2. Preparation

3. Workshop

4. Application

Dr. CH. VENKATAIAH

Associate Professor

310-Project Management

PPP Project means a project based on

contract or concession agreement between a

government or statutory entity on the one

side and a private sector company on the

other side, for delivering an infrastructure

service on payment of user charges.

PPPs are being promoted for implementation

of infrastructure projects.

Public-Private Partnership (PPP)

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Dr. CH. VENKATAIAH

Associate Professor

310-Project Management

BOT or BOOT is a form of project financing

wherein the private entity receives a concession,

that is the right to operate the business (for

example, a parking lot) from the government to

finance, design, construct and operate a facility

stated in the contract.

For instance, the new airports constructed in

India are being undertaken as BOT projects.

This enables the builder to recover investment,

operating & maintenance expenses incurred on

the project.

Build-Operate-Transfer (BOT) or Build-

Own-Operate-Transfer (BOOT

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Project Close-Out and

Termination

Dr. CH. VENKATAIAH

Associate Professor

310-Project Management

Project Termination

All activities consistent with closing out the

project

Extinction

Addition

Integration

Starvation

Dr. CH. VENKATAIAH

Associate Professor

310-Project Management

Elements of Project

Closeout Management

Putting it All to Bed

Disbanding the Team

Finishing Handing Gaining

Acceptance

for the

Product

Harvesting

the Benefits

Reviewing

How

The WorkProduct

Over the

It All Went

Dr. CH. VENKATAIAH

Associate Professor

310-Project Management

Lessons Learned Meetings

Meeting Guidelines

Establish clear rules of behavior

Describe objectively what occurred

Fix the problem, not the blame

Common Errors

Misidentifying systematic errors

Misinterpreting lessons based on events

Failure to pass along conclusions

Dr. CH. VENKATAIAH

Associate Professor

310-Project Management

Closeout Paperwork

Documentation

Legal

Cost

Personnel

Dr. CH. VENKATAIAH

Associate Professor

310-Project Management

Why are Closeouts Difficult?

Project sign off can be a de-motivator

Constraints cause shortcuts on back-end

Low priority activities

Lessons learned analysis seen as

bookkeeping

Unique view of projects

Dr. CH. VENKATAIAH

Associate Professor

310-Project Management

Dynamic Project Factors

1. Static

2. Task-team

3. Sponsorship

4. Economics

5. Environment

6. User

Dr. CH. VENKATAIAH

Associate Professor

310-Project Management

Early Warning Signs of Project Failure

Lack of viable commercial objectives

Lack of sufficient authority to make

decisions

New product developed for stable market

Low priority assigned to the project by

management

Dr. CH. VENKATAIAH

Associate Professor

310-Project Management

Early Termination Decision Rules

Costs exceed business benefits

Failure to meet strategic fit criteria

Deadlines are continually missed

Technology evolves beyond the project’s

scope

Dr. CH. VENKATAIAH

Associate Professor

310-Project Management

The Top 10 Signs of IT Project Failure

10. Best practices and lessons learned are ignored

9. Project lacks people with appropriate skills

8. Sponsorship is lost

7. Users are resistant

6. Deadlines are unrealistic

5. Business needs change

4. Chosen technology changes

3. Project changes are poorly managed

2. Scope is ill-defined

1. Project managers don’t understand users’ needs

Dr. CH. VENKATAIAH

Associate Professor

310-Project Management

Project Termination Issues

Emotional Intellectual

ClientStaff ExternalInternal

Dr. CH. VENKATAIAH

Associate Professor

310-Project Management

Claims & Disputes

Two types of claims

Ex-gratia claims

Default by the project company

Resolved by

Arbitration

Binding

Non-binding

Standard litigation

Dr. CH. VENKATAIAH

Associate Professor

310-Project Management

Protecting Against Claims

o Consider claims as part of the project plan

o Verify stakeholders know their risks

o Keep good records throughout the life cycle

o Keep clear details of change orders

o Archive all correspondence

Dr. CH. VENKATAIAH

Associate Professor

310-Project Management

Final Report Elements

Project performance

Administrative performance

Organizational structure

Team performance

Project management techniques

Benefits to the organization and customer

Dr. CH. VENKATAIAH

Associate Professor

310-Project Management

Any Queries…???

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