Contracts & Procurement

1. Contracts & Procurement
Dr. Dimitrios P. Kamsaris

2. Oil and gas industry
• Companies in the oil and gas industry cannot
control the market price of oil.
• To produce oil, they have investment costs,
– including exploration and
– extraction, by external suppliers.

3. Oil And Gas Risks
• When a problem occurs, the effects are
dramatic for everyone impacted.
– Environment
– Local people,
– Employees.
– Companies themselves, as they have to pay for
repairs.
– Pay huge fines, even to their own shareholders.

4. Oil And Gas Challenges
• Challenges:
– Revenue = Very limited control over selling prices
– Cost exposure due to high dependency on
external suppliers
– High risks with huge consequences

5. Procurement and Supply Chain
Management
• Oil and gas supply chain practices clearly lag
behind those of some other industries that
use advanced techniques.
• McKinsey report:
– energy and utilities as less mature than travel
logistics and financial institutions.

6. Opportunities To Reduce Risks
• Many opportunities for oil and gas to boost their
performance and reduce their exposure to risk.
• They can do this by working on their
Procurement capabilities.
• They can look at the materials and services they
buy to run their businesses
• They have no control over raw material prices
because they do not buy it - they extract it
directly.

7. Demand Management
• The costs of extraction are enormous and
constructing a well is in itself a very large project.
• This means they can be a source of savings.
Procurement has a key role to play by managing
stakeholders to make sure that there are no over-
specifications.
• It can also ensure that specifications are written
to foster competition between suppliers.

8. Market Intelligence
• Really knowing your costs is a good starting point.
• Oil and gas companies would be able to better
understand current and future trends and
benchmark their suppliers against market prices if
they had better information about the cost
structure of materials and services they buy. In
addition to this, TCO (Total Cost of Ownership)
would help them to make better informed
sourcing decisions.

9. Market Intelligence
• Extraction means constructing wells and I
cannot even imagine how costly the
decommissioning of such installations is.
• Cost knowledge and management would
ultimately increase the quality of sourcing
decisions.
• It would also help oil and gas be more
opportunistic whenever they expect a
favorable trend.

10. Risk Management
• Some of the risks that oil and gas companies
are exposed are directly linked to suppliers.
• Companies can avoid working with poor
suppliers by assessing suppliers not only on
delivery performance, but also on aspects like
– risk,
– sustainability, and
– financial health.

11. Procurement On Road to Strategic in
Oil and Gas Industry
• Recognizing a sense of urgency in the oil and gas
industry for procurement to be more strategic,
procurement professionals are collaborating,
exchanging best practices and communicating
their value within their organizations and along
the supply chain.
• Procurement and supply chain management
professionals shared their experiences with their
peers. Suppliers and service providers offered
industry expertise, and there was plenty of
opportunity for everyone attending to network.

12. Reset supplier relationships
• As prices dropped, oil and gas suppliers’ inboxes filled with
letters from customers asking for price reductions of as
much as a third.
• These initiatives helped to reclaim some of the margins
that had shifted to service providers in the boom times.
• But the best buyers also understand their suppliers’ cost
structures and strategic importance to their business.
• They avoid squeezing so hard they put suppliers out of
business, which benefits no one, especially where strategic
relationships have been carefully cultivated over many
years.

13. Strategies to reduce costs:
• Aggregate demand. Combine purchases across the entire portfolio,
rather than individual projects, to get bigger volume discounts.
• Embrace standardization and modularization. Remind engineers
and the front line of the cost advantages of working with existing
equipment, especially in lean times. Reuse designs and avoid
introducing new complexity.
• Avoid onerous terms. When buyers squeeze suppliers on price or
other purchasing terms, suppliers have to find ways to mitigate
these risks by purchasing insurance or raising prices down the line.
• Adopt low-cost solutions for shared activities. Identify areas where
buyers and sellers can cooperate to realize joint savings. For
example, a helicopter contractor and its oil company client could
cooperate to jointly plan their schedules to ensure better utilization
of their transport service, reducing costs for both.

14. • Increase capex efficiency. Most if not all oil and gas
companies have already reviewed their capital spending,
deferring or canceling new projects. Long-term capital
efficiency will require more extensive changes, including
reducing complexity throughout the organization.
Strategically minded procurement teams get involved in the
early stages of design, when decisions determine long-term
costs.
• Develop a culture of cost-consciousness. As cost pressures
increase, procurement teams attack discretionary spending
with a fine-tooth comb, cutting small luxuries such as
coffee machines or canceling training. But these moves
usually have little effect on spending, and they can damage
morale and weaken capabilities.

15. Toward a more strategic approach
• Procurement teams can make a more
sustainable contribution to their companies’
success by taking a more proactive and
strategic approach, which requires building up
three critical capabilities.

16. Plan for uncertainty
• Given the broad range of outlooks for the sector,
a scenario-based approach is the best strategy for
dealing with evolving market conditions.
• Leading procurement teams develop a set of
scenarios based on various market conditions.
• Under each scenario, they determine changes in
demand and their appropriate response.
• They then continuously monitor signposts that
indicate the likelihood of the various scenarios
materializing and adjust their actions accordingly.

17. Strengthen category management
• Procurement teams become more effective as
they gain expertise about the industries from
which they source.
• As experts, they should be able to offer deep
insights about their suppliers’ businesses,
including market size, growth patterns and the
market share of competitors.
• By developing a good understanding of the value
drivers in a category, teams learn what products
and services should cost and how events will
affect their suppliers and costs.

18. Best-in-class category managers
answer questions such as:
• Which suppliers generate superior returns and
why?
• Where will consolidation occur, and what role
will their suppliers play?
• How will disruptive technologies and changing
customer preferences shape the market?

19. • Improve ability to detect risk: Procurement
teams can take steps to get better at assessing
the risks faced by their suppliers.
• Assess midterm market risks. Looking ahead
can help identify potential supply risks from
consolidation, regulatory constraints,
geopolitical risks or other wild cards

20. • Audit supplier performance. An audit can help identify
potential performance, financial or capability risks.
Frank discussions with suppliers can help procurement
understand their position and assess their ability to
continue to deliver.
• Look after emerging suppliers. In many countries,
contractors select suppliers in line with local content
goals. Sometimes contract requirements with national
oil companies or other resource owners may entail
supporting these suppliers through difficult economic
periods.

21. Common types
• Some common types of contracts are used in
the engineering and construction industry:
• Lump Sum Contract
• Unit Price Contract
• Cost Plus Contract
• Incentive Contracts
• Percentage of Construction Fee Contracts

22. Lump Sum Contract
• With this kind of contract the engineer and/or
contractor agrees to do the a described and
specified project for a fixed price. Also named
"Fixed Fee Contract". Often used in
engineering contracts.
• A Fixed Fee or Lump Sum Contract is suitable
if the scope and schedule of the project are
sufficiently defined to allow the consulting
engineer to estimate project costs.

23. Unit Price Contract
• This kind of contract is based on estimated quantities
of items included in the project and their unit prices.
The final price of the project is dependent on the
quantities needed to carry out the work.
• In general this contract is only suitable for construction
and supplier projects where the different types of
items, but not their numbers, can be accurately
identified in the contract documents.
• It is not unusual to combine a Unit Price Contract for
parts of the project with a Lump Sum Contract or other
types of contracts.

24. Cost Plus Contract
• A contract agreement wherein the purchaser agrees to
pay the cost of all labor and materials plus an amount
for contractor overhead and profit (usually as a
percentage of the labor and material cost). The
contracts may be specified as
– Cost + Fixed Percentage Contract
– Cost + Fixed Fee Contract
– Cost + Fixed Fee with Guaranteed Maximum Price Contract
– Cost + Fixed Fee with Bonus Contract
– Cost + Fixed Fee with Guaranteed Maximum Price and
Bonus Contract
– Cost + Fixed Fee with Agreement for Sharing Any Cost
Savings Contract

25. Cost +
• Cost + Fixed Percentage Contract
• Compensation is based on a percentage of the cost.
• Cost + Fixed Fee Contract
• Compensation is based on a fixed sum independent the final project cost. The customer agrees to
reimburse the contractor's actual costs, regardless of amount, and in addition pay a negotiated fee
independent of the amount of the actual costs.
• Cost + Fixed Fee with Guaranteed Maximum Price Contract
• Compensation is based on a fixed sum of money. The total project cost will not exceed an agreed
upper limit.
• Cost + Fixed Fee with Bonus Contract
• Compensation is based on a fixed sum of money. A bonus is given if the project finish below
budget, ahead of schedule etc.
• Cost + Fixed Fee with Guaranteed Maximum Price and Bonus Contract
• Compensation is based on a fixed sum of money. The total project cost will not exceed an agreed
upper limit and a bonus is given if the project is finished below budget, ahead of schedule etc.
• Cost + Fixed Fee with Agreement for Sharing Any Cost Savings Contract
• Compensation is based on a fixed sum of money. Any cost savings are shared with the buyer and
the contractor.

26. Incentive Contracts
• Compensation is based on the engineering and/or contracting
performance according to an agreed target - budget, schedule
and/or quality.
• The two basic categories of incentive contracts are
– Fixed Price Incentive Contracts
– Cost Reimbursement Incentive Contracts
– Fixed Price Incentive Contracts are preferred when contract costs and
performance requirements are reasonably certain.
• Cost Reimbursement Contract provides the initially negotiated fee
to be adjusted later by a formula based on the relationship of total
allowable costs to total target costs. This type of contract specifies a
target cost, a target fee, minimum and maximum fees, and a fee
adjustment formula. After project performance, the fee payable to
the contractor is determined in accordance with the formula.

27. Tendering
• Tendering is the process by which bids are
invited from interested contractors to carry
out specific packages of construction work.
• It should adopt and observe the key values of
fairness, clarity, simplicity and accountability,
as well as reinforce the idea that the
apportionment of risk to the party best placed
to assess and manage it is fundamental to the
success of a project.

28. single-stage selective tendering or
two-stage selective tendering
• The two most commonly used methods of tendering are single-stage
selective tendering or two-stage selective tendering.
• Both involve the invitation of tenders from firms on a pre-approved or ad
hoc list, chosen because they meet certain minimum standards in general
criteria such as financial standing, experience, capability and competence.
• The competition element of the tender is provided on the basis of price
and quality.
• The main difference between the two is that in the two-stage process, the
contractor becomes involved in the planning of the project at an earlier
stage, so the tenders are submitted on the basis of minimal information,
and in the second stage the employer's team will develop the precise
specification in conjunction with the preferred tenderer.
• This method is favored in more complex projects, where the contractor
may have significant design input.

29. Tender processes
• A tender is a submission made by a prospective supplier in
response to an invitation to tender. It makes an offer for the supply
of goods or services.
• The main tender process is generally for the selection of the
contractor that will construct the works.
• As procurement routes have become more complex, so tenders
may be sought for a wide range of goods and services (for example
on a construction management contract the works are constructed
by a number of different trade contractors each contracted to the
client) and contractors may take on additional functions such as
design and management.
• There is also an increasing tendency for suppliers to be aggregated
into single contracts, for example, 'integrated supply teams' on
public projects may include; the main contractor, designers, sub-
contractors, suppliers, facilities mangers and so on.

30. Open tendering
• Open tendering allows anyone to submit a tender to supply the
goods or services that are required. Generally an advert will be
placed giving notice that the contract is being tendered, and
offering an equal opportunity to any organization to submit a
tender.
• On larger projects, there may then be a pre-qualification process
that produces a short-list of suitable suppliers who will be invited to
prepare tenders. This sort of pre-qualification process is not the
same as selective tendering (see below).
• However, open tendering offers the greatest competition and has
the advantage of allowing new or emerging suppliers to try to
secure work.
• For a more detailed description of the procedures for open
tendering see Tender.

31. Selective tendering
• Selective tendering only allows suppliers to submit tenders by
invitation.
• A pre-selected list of possible suppliers is prepared that are known
by their track record to be suitable for a contract of the size, nature
and complexity required.
• Consultants or experienced clients may maintain ‘approved’ lists of
prospective suppliers and then regularly review performance to
assess whether suppliers should remain on the list.
• Selective tendering can give clients greater confidence that their
requirements will be satisfied and should reduce the wasted effort
that can be involved in open tendering.
• It may be particularly appropriate for specialist or complex
contracts, or contracts where there are only a few suitable firms.
• It can exclude smaller suppliers or those trying to establish
themselves in a new market.

32. Negotiated tendering
• Negotiating with a single supplier may be
appropriate for highly specialist contracts, or for
extending the scope of an existing contract.
• It can reduce the costs of tendering and allow
early contractor involvement, but the competitive
element is reduced, and unless the structure of
the negotiation is clearly set out there is the
potential for an adversarial atmosphere to
develop, even before the contract has been
awarded.

33. Framework tendering
• Clients that are continuously commissioning work might reduce
timescales, learning curves and other risks by using framework
agreements. Such arrangements allow the client to invite tenders from
suppliers of goods and services to be carried out over a period of time on
a call-off basis as and when required.
• Framework tender documents are likely to include a request for a
schedules of rates and time charges and a breakdown of resources and
overheads to be applied (including any proposed subcontractor or sub-
consultant details).
• One or more suppliers are then selected and appointed. When specific
projects arise the client is then able to simply select a suitable framework
supplier and instruct them to start work. Where there is more than one
suitable supplier on the framework, the client may introduce a secondary
selection process to assess which supplier is likely to offer best value for a
specific project. The advantage of this process to the client is that they are
able instigate a selection procedure for individual projects without having
to undertake a time-consuming pre-qualification process. This should also
reduced tender costs.

34. Single-stage and two-stage tendering
• Single-stage tendering is used when all the information
necessary to calculate a realistic price is available when
tendering commences. An invitation to tender is issued
to prospective suppliers, tenders are prepared and
returned, a preferred tenderer is selected and
following negotiations they may be appointed.
• Two-stage tendering is used to allow early
appointment of a supplier, prior to the completion of
all the information required to enable them to offer a
fixed price. In the first stage, a limited appointment is
agreed to allow work to begin and in the second stage
a fixed price is negotiated for the contract

35. Public procurement
• Public projects or publicly-subsidised projects
may be subject to OJEU procurement procedures,
enacted in the UK by The Public Contracts
Regulations. The regulations set out rules
requiring that contracts must be advertised in the
Official Journal of the EU (OJEU).
• This is of particular importance because the time
taken to advertise contracts can be up to 52 days.
• The regulations also describe allowable
procedures for the selection of contractors.

36. Request for tender
• Request for tenders (RFT) is a formal, structured
invitation to suppliers to submit a bid to supply
products or services.
• In the public sector an official fee is needed to
fortify and secure the tender bid
engagement/win documents, such a process may
be required and determined in detail by law to
ensure that such competition for the use of
public fund is open, fair and free from bribery
and nepotism

37. Related proposal types
• Other types of proposals include:
• EOI - expression of interest
• IFB - invitation for bids
• ITT - invitation to tender
• ITV - invitation to vendors
• RFA - request for applications
• RFD - request for documentation
• RFI - request for information
• RFO - request for offers
• RFP - request for proposal
• RFQ - request for quotation or request for qualifications
• RFN - request for negotiation
• RFS - request for services

38. Functional specification
• The documentation typically describes what is needed
by the system user as well as requested properties of
inputs and outputs.
• A functional specification is the more technical
response to a matching requirements document, e.g.
the Product Requirement Document "PRD".
• Thus it picks up the results of the requirements analysis
stage.
• On more complex systems multiple levels of functional
specifications will typically nest to each other, e.g. on
the system level, on the module level and on the level
of technical details.

39. Functional specification topics
• There are many purposes for functional specifications.
One of the primary purposes on team projects is to
achieve some form of team consensus on what the
program is to achieve before making the more time-
consuming effort of writing source code and test cases,
followed by a period of debugging. Typically, such
consensus is reached after one or more reviews by the
stakeholders on the project at hand after having
negotiated a cost-effective way to achieve the
requirements the software needs to fulfill.
– To let the developers know what to build.
– To let the testers know what tests to run.
– To let stakeholders know what they are getting.

40. Specifications
• A requirement specification is a set of documented requirements to be
satisfied by a material, design, product, or service.[1]
• A functional specification is closely related to the requirement
specification and may show functional block diagrams.
• A design or product specification describes the features of the solutions
for the Requirement Specification, referring to the designed solution or
final produced solution. Sometimes the term specification is here used in
connection with a data sheet (or spec sheet). This may be confusing. A
data sheet describes the technical characteristics of an item or product as
designed and/or produced. It can be published by a manufacturer to help
people choose products or to help use the products. A data sheet is not a
technical specification as described in this article.
• A "in-service" or "maintained as" specification, specifies the conditions of
a system or object after years of operation, including the effects of wear
and maintenance (configuration changes).

41. Contractual Language & Terms
• Acceptance - the unconditional agreement to an offer. This
creates the contract. Before acceptance, any offer can be
withdrawn, but once accepted the contract is binding on
both sides. Any conditions have the effect of a counter
offer that must be accepted by the other party.
• Arbitration - using an independent third party to settle
disputes without going to court. The third party acting as
arbitrator must be agreed by both sides. Contracts often
include arbitration clauses nominating an arbitrator in
advance.
• Breach of contract - failure by one party to a contract to
uphold their part of the deal. A breach of contract will
make the whole contract void and can lead to damages
being awarded against the party which is in breach.

42. • Comfort letters - documents issued to back up an agreement but
which do not have any contractual standing. They are often issued
by a parent or associate company stating that the group will back
up the position of a small company to improve its trading position.
They always state that they are not intended to be legally binding.
Also known as letters of comfort.
• Company seal - an embossing press used to indicate the official
signature of a company when accompanied by the signatures of
two officers of the company. Since 1989 it has been possible for a
company to indicate its agreement without use of the seal, by two
signatures (directors or company secretary) plus a formal
declaration. However, some companies still prefer to use a seal and
the articles of a company can override the law and require a seal to
be used.

43. • Conditions - major terms in a contract. Conditions are the basis of
any contract and if one of them fails or is broken, the contract is
breached. These are in contrast to warranties, the other type of
contract term, which are less important and will not usually lead to
the breach of the contract - but rather an adjustment in price or a
payment of damages.
• Confidentiality agreement - an agreement made to protect
confidential information if it has to be disclosed to another party.
This often happens during negotiations for a larger contract, when
the parties may need to divulge information about their operations
to each other. In this situation, the confidentiality agreement forms
a binding contract not to pass on that information whether or not
the actual contract is ever signed. Also known as a non-disclosure
agreement.

44. • Consideration - in a contract each side must give some
consideration to the other. Often referred to as the quid
pro quo - see the Latin terms below. Usually this is the price
paid by one side and the goods supplied by the other. But it
can be anything of value to the other party, and can be
negative - eg someone promising not to exercise a right of
access over somebody else's land in return for a payment
would be a valid contract, even if there was no intention of
ever using the right anyway.
• Due diligence - the formal process of investigating the
background of a business, either prior to buying it, or as
another party in a major contract. It is used to ensure that
there are no hidden details that could affect the deal.

45. • Exclusion clauses - clauses in a contract that are intended to
exclude one party from liability if a stated circumstance happens.
They are types of exemption clauses. The courts tend to interpret
them strictly and, where possible, in favour of the party that did not
write them. In customer dealings, exclusion clauses are governed by
regulations that render most of them ineffective but note that
these regulations do not cover you in business dealings.
• Exemption clauses - clauses in a contract that try to restrict the
liability of the party that writes them. These are split into exclusion
clauses that try to exclude liability completely for specified
outcomes, and limitation clauses that try to set a maximum on the
amount of damages the party may have to pay if there is a failure of
some part of the contract. Exemption clauses are regulated very
strictly in consumer dealings but these don't apply for those who
deal in the course of their business.

46. • Implied terms - are terms and clauses that are implied in a contract
by law or custom and practice without actually being mentioned by
any party. Terms implied by custom and practice can always be
overridden by express terms, but some terms implied by law
cannot be overridden, particularly those relating to consumers (see
exemption clauses).
• Incorporate - inclusion in, or adoption of, some term or condition
as part of the contract. It differs from its company law definition
where it refers to the legal act of creating a company.
• Injunction - a remedy sometimes awarded by the court that stops
some action being taken. It can be used to stop another party doing
something against the terms of the contract. Injunctions are at the
court's discretion and a judge may refuse to give one and award
damages instead - see the finance contract terms below.

47. • Joint and several liability - where parties act together in a contract
as partners they have joint and several liability. In addition to all the
partners being responsible together, each partner is also liable
individually for the entire contract - so a creditor could recover a
whole debt from any one of them individually, leaving that person
to recover their shares from the rest of the partners.
• Joint venture - an agreement between two or more independent
businesses in a business enterprise, in which they will share the
costs, management, profits or benefits arising from the venture.
The exact shares and responsibilities will be set out in a Joint
Venture Agreement.
• Jurisdiction - a jurisdiction clause sets out the country or state
whose laws will govern the contract and where any legal action
must take place. Don't forget that England and Scotland have
different legal codes, and this may need to be specified.

48. • Liability - a person or business deemed liable is subject to a legal
obligation. A person/business who commits a wrong or breaks a
contract or trust is said to be liable or responsible for it.
• Limited liability - usually refers to limited companies where the
owners' liability to pay the debts of the company is limited to the
value of their shares. It can also apply to contracts where a valid
limitation clause has been included in the terms.
• Liquidation - the formal breaking up of a company or partnership
by realising (selling or transferring to pay a debt) the assets of the
business. This usually happens when the business is insolvent, but a
solvent business can be liquidated if it no longer wishes to continue
trading for whatever reason (see receivership in the financial terms
below).

49. • Misrepresentation - where one party to a contract makes a
false statement of fact to the other which that other person
relies on. Where there has been a misrepresentation then
the party who received the false statement can get
damages for their loss. The remedy of rescission (putting
things back to how they were before the contract began) is
sometimes available, but where it is not possible or too
difficult the court can award damages instead.
• Offer - an offer to contract must be made with the
intention to create, if accepted, a legal relationship. It must
be capable of being accepted (not containing any
impossible conditions), must also be complete (not
requiring more information to define the offer) and not
merely advertising.

50. • Service contract - directors and officers of a company
are usually given service contracts that are different to
a contract of service or employment contract. This is
because directors and officers are not always
employees and the effect of employment law is
different.
• Unfair terms - some terms are made unfair by
legislation and will not be enforced by the courts and
may even be interpreted against the person who
included them in the contract. The legislation mainly
protects consumers, but can also apply where there is
a business-to-business contract in which one party is
significantly more powerful than the other.

51. • Warranties - promises made in a contract, but which
are less than a condition. Failure of a warranty results
in liability to pay damages (see the financial terms
below) but will not be a breach of contract unlike
failure of a condition, which does breach the contract.
• Without prejudice - a term used by solicitors in
negotiations over disputes where an offer is made in
an attempt to avoid going to court. If the case does go
to court no offer or facts stated to be without prejudice
can be disclosed as evidence. Often misused by
businesses during negotiations when they actually
mean subject to contract.

52. • Bankruptcy - the formal recognition that a person cannot pay their debts
as they are due. Note this only applies to individuals, companies and
partnerships that become insolvent are wound up.
• Damages - money paid as the normal remedy in the law as compensation
for an individual or company's loss. If another type of remedy is wanted
(such as an injunction - see general contract terms below) but cannot be
or is not given by the court, then damages will be awarded instead.
• Debenture - a formal debt agreement. It refers to both the agreement and
the document that verifies it. It is usually issued by companies and is
generally supported by security over some property of the debtor. If the
debtor defaults, the creditor can take and sell the property. Debentures
are often transferable, so the creditor can sell it and there are markets on
formal stock exchanges that deal in types of debenture. It is sometimes
referred to as debenture stock. A mortgage is a type of debenture but one
that is always secured, usually against land.

53. • Floating charge - a form of security for a debt. Instead of naming a
specific property, which can be taken by the creditor if the debtor
defaults (as in a fixed charge like a mortgage), a class of goods or
assets is named, such as the debtor's stock. This allows the debtor
to trade in the assets freely, but if the debtor fails to make
repayments then the floating charge becomes a fixed charge
(known as crystallisation) over all the stock at that time. The
creditor can then take and sell it to recover the debt.
• Guarantee - a secondary agreement by which one person promises
to honour the debt of another if that debtor fails to pay. Banks and
other creditors often call on directors of small companies to give
their personal guarantees for company debts. A guarantee must be
in writing. The guarantor can only be sued if the actual debtor can't
pay, in contrast to indemnity.

54. • Indemnity - a promise by a third party to pay a debt owed, or repay
a loss caused, by another party. Unlike a guarantee, the person
owed can get the money direct from the indemnifier without
having to chase the debtor first. Insurance contracts are contracts
of indemnity: the insurance company pays first, and then tries to
recover the loss from whoever caused it.
• Insolvency - the situation where a person or business cannot pay its
debts as they fall due (see bankruptcy, liquidation and
receivership).
• Liquidation - the formal breaking up of a company or partnership
by realising (selling or transferring to pay a debt) the assets of the
business. This usually happens when the business is insolvent, but a
solvent business can be liquidated if it no longer wishes to continue
trading for whatever reason (see receivership).

55. • Remedy/Remedies - payments or actions ordered by
the court as settlement of a dispute. The most
common is damages (a payment of money). Others
include specific performance (of an action required in
the contract), injunction (see the general contract
terms above) and rescission - putting things back to
how they were before the contract was signed.
• Stamp duty - a tax on transactions. Only applied to
specific types of transactions eg dealings in land and
buildings, shares and ships.
• Wound up - winding-up is the formal procedure for
disbanding a company.

56. Common Problems in Post-Award
Contract Management
• Because the award phase of the contracting
process can be so long and onerous, it is easy to
forget that getting the contract signed is the first
piece in a massive puzzle.
• Risk increases in the post-award, management
phase of the contract and generally, a contract
that fails to deliver in the first six months of the
contract fails to deliver overt the life of the
contract.
• Because of the, it is critical that the post-award
team is ready and informed.

57. Ensure A Smooth Handover
• One of the biggest problems companies encounter post-award is making
the transition from deal team to a management team.
• There are many risks for error, and there usually isn’t continuity with the
people involved.
• There are also usually problems regarding general knowledge surrounding
the contract and familiarity with its risks and obligations.
• Because a smooth handover is key to contract execution and compliance,
it is imperative for companies to think about the potential risks during the
handover and take steps to avoid unnecessary issues.
• This requires one or more handover meetings during which the deal team
can explain unique aspects of the contract and give a rundown of what
sort of things the management team should expect and for which they
should be on the lookout.
• Copies of the master contract must be handed over or stored in a secure
contract repository that is easily accessible, along with any pertinent
statements, appendices, negotiation documents, and summaries.

58. Identify And Plan
• A contract management team cannot be expected to identify the
objectives of a contract without some input from the deal team.
Together, these teams must identify risks, obligations, and
opportunities and craft a plan for addressing them. Although the
management team will oversee the day to day execution, the deal
team can offer a lot of insight about the other party, mutual
expectations, and where problems are likely to arise.
• A coherent approach to management planning will help avoid
problems down the road and reduce the likelihood of internal strife
if something goes wrong, as both teams were involved in the
planning process and thus share responsibility. Ultimately, analysis,
planning, and communication from all parties will promote
efficiency and accountability.

59. Kickoff meeting
• A kickoff meeting is the first meeting with the project team and the
client of the project.
• This meeting would follow definition of the base elements for the
project and other project planning activities. This meeting
introduces the members of the project team and the client and
provides the opportunity to discuss the role of team member.
• Other base elements in the project that involve the client may also
be discussed at this meeting (schedule, status reporting, etc.).
• If there are any new team members, the process to be followed is
explained so as to maintain quality standards of the organization.
• Clarity is given by the project lead if there exists any ambiguity in
the process implementations.

60. Effective dispute resolution
• A dispute exists when one or more people
disagree about something and matters remain
unresolved. A fair and balanced dispute
resolution process is important for the
effective operation of any business.

61. What is dispute resolution?
• Dispute resolution refers to the processes by
which disputes are brought to an end.
• This can occur through:
– a negotiated outcome, where the parties concerned
sort out things themselves
– a mediated outcome, where the parties use the
services of an independent mediator to help them
arrive at their own agreement, or
– an arbitrated or adjudicated outcome, where an
independent arbitrator or court determines how the
dispute is to be resolved and makes a binding decision
or order to this effect.

62. Best practice dispute resolution
• Best practice dispute resolution outcomes should
be:
– quick - the issues should be resolved quickly rather
than allowing them to escalate through inaction
– fair - all relevant parties should be consulted so that
all sides of the story are taken into account
– handled sensitively - disputes should, where possible
and appropriate, be resolved in a confidential context
in order to minimise impact on employees not
affected by the dispute
– transparent - the procedure should be made known to
every employee.

63. Methods for Resolving Conflicts and
Disputes
• We are all familiar with the most traditional
dispute-resolution process of our civil justice
system: litigation and trial with a judge or jury
deciding who is right or wrong - where
someone wins and someone loses. However,
there are many other options available.
Negotiation, mediation and arbitration - often
called ADR or alternative dispute resolution-
are the most well-known.

64. Negotiation, mediation and arbitration
ADR or alternative dispute resolution
• ADR procedures are excellent options for you
in dealing with controversy, allowing you to
reach resolution earlier and with less expense
than traditional litigation. In fact, many courts
require parties to consider some form of ADR
before going to trial. The following processes
describe ways to resolve disputes.

65. NEGOTIATION
• Definition: Negotiation is the most basic means of settling
differences. It is back-and-forth communication between the
parties of the conflict with the goal of trying to find a solution.
• The Process: You may negotiate directly with the other person. You
may hire an attorney to negotiate directly with the other side on
your behalf. There are no specific procedures to follow - you can
determine your own - but it works best if all parties agree to remain
calm and not talk at the same time. Depending on your situation,
you can negotiate in the board room of a big company, in an office
or even in your own living room.
• Negotiation allows you to participate directly in decisions that
affect you. In the most successful negotiations, the needs of both
parties are considered. A negotiated agreement can become a
contract and be enforceable.

66. When and How Negotiation Is Used
• Negotiation is the first method of choice for
problem-solving and trying to reach a mutually
acceptable agreement. If no agreement is
reached, you may pursue any of the other
options suggested here.
• This process can be appropriately used at any
stage of the conflict - before a lawsuit is filed,
while a lawsuit is in progress, at the conclusion of
a trial, even before or after an appeal is filed.

67. Characteristics of Negotiation:
• Voluntary
• Private and confidential
• Quick and inexpensive
• Informal and unstructured
• Parties control the process, make their own
decisions and reach their own agreements (no
third party decision maker)
• Negotiated agreements can be enforceable
• Can result in a win-win solution

68. Advantages of negotiation
• is sometimes referred to as a “win-win” approach.
• Negotiation is a voluntary process. No one is required to
participate in negotiations should they not wish to do so.
• There is no need for recourse to a third-party neutral.
• Assuming that the parties are negotiating in good faith,
negotiation will provide the parties with the opportunity to
design an agreement which reflects their interests.
• Negotiations may preserve and in some cases even
enhance the relationship between the parties once an
agreement has been reached between them.
• Opting for negotiation instead of litigation may be less
expensive for the parties and may reduce delays.

69. Disadvantages of negotiation
• A successful negotiation requires each party to have a clear understanding of its
negotiating mandate. If uncertainty exists regarding the limits of a party's
negotiating authority, the party will not be able to participate effectively in the
bargaining process.
• The absence of a neutral third party can result in parties being unable to reach
agreement as they be may be incapable of defining the issues at stake, let alone
making any progress towards a solution.
• The absence of a neutral third party may encourage one party to attempt to take
advantage of the other.
• No party can be compelled to continue negotiating. Anyone who chooses to
terminate negotiations may do so at any time in the process, notwithstanding the
time, effort and money that may have been invested by the other party or parties.
• Some issues or questions are simply not amenable to negotiation. There will be
virtually no chance of an agreement where the parties are divided by opposing
ideologies or beliefs which leave little or no room for mutual concessions and
there is no willingness to make any such concessions.
• The negotiation process cannot guarantee the good faith or trustworthiness of any
of the parties.
• Negotiation may be used as a stalling tactic to prevent another party from
asserting its rights (e.g., through litigation or arbitration).

70. Negotiating Styles
• Generally speaking, although the labels may vary from one commentator
to the next, negotiating styles can be divided into two categories:
– Competitive/Positional-Based Negotiation In the competitive model, the
parties try to maximize their returns at the expense of one another, will use a
variety of methods to do so and view the interests of the opposing party or
parties as not being relevant, except insofar as they advance one's own goal of
maximizing returns. Competitive bargaining has been criticized for its focus on
specific positions rather than attempting to discern the true interests of the
parties[3]. Among the criticisms which have been levelled at the competitive
model are its tendency to promote brinkmanship and to discourage the
mutual trust which is necessary for joint gain[4].
– Cooperative/Interest-Based Negotiation Cooperative or problem-solving
negotiation starts from the premise that the negotiations need not be seen as
a “zero-sum” situation, i.e., the gains of one party in the negotiation are not
necessarily at the expense of the other party[5]. Common interests and values
are stressed, as is the use of an objective approach, and the goal of the
negotiations is a solution that is fair and mutually agreeable[6].

71. Dealing With Differences
• Underlying any successful relationship is the principle of mutual
respect. This is particularly true during negotiations, where cultural
and/or linguistic differences between the parties may occasionally
result in misunderstandings between them.
• Differences in gender may also play a role in the negotiating
process, whether the parties are of the same or different cultural
backgrounds[.
• Reliance on stereotypes, whether they be based on gender,
cultural, physical or racial differences or physical disability, will
cause and reinforce misunderstandings between the parties.
• The ability to deal with others who are not of the same gender or
cultural origin or who differ in some way from one's self varies with
each individual and the degree to which she or he has been
exposed to and is willing to accept diversity.

72. Dealing With Difficult or Deceptive
Conduct
• At any point during negotiations, one party may decide to use a variety of tactics in
order to obtain an advantage over another party.
• This behavior can range from pressure tactics (attempting to force a party to
accept specific terms), intimidation (implicit or explicit), deliberate ambiguity
regarding the scope of the negotiating mandate to blatantly unethical behavior
(misleading or false information, lies, etc.)[.
• Advance preparation is essential in order to respond effectively to these tactics,
whenever they may arise. In devising strategies to counter such behavior, each
situation must be viewed as unique.
• Previous experience of others can provide useful guidelines in formulating a
suitable response.
• Awareness of basic communication techniques and strategies on how to
communicate with difficult or deceptive individuals may also be extremely helpful.
• The choice of tactic for difficult or unethical conduct is a question of personal
judgment, as what may be an appropriate response in one situation may be
excessive or too conciliatory in other circumstances.

73. Preparing for a Negotiation
• Take into account the following factors:
– the desire to resolve the dispute;
– whether a negotiated solution is in the interests of any or all of the
parties in question;
– the credibility of the other party(ies);
– the willingness of the parties to establish or preserve a relationship;
– whether or not there is a disparity between the parties to the extent
that it would be impossible to bargain equally, i.e., there is a marked
contrast between the parties in terms of the level of education or the
resources of the parties;
– the desirability of using another form of alternative dispute resolution,
such as mediation or arbitration; and
– proper authority to enter into negotiations and to reach an agreement
or settlement.

74. Appropriate course of action
• arrangements that must be made with the other parties include:
– outlining the agenda and the scope of the negotiations;
– fixing the timetable, i.e., whether or not there will be a fixed period for
the talks as well as the frequency and the duration of the negotiations;
– determining the identity of the participants, ensuring that all
interested parties have been consulted;
– choosing the locale for the negotiations (preferably a neutral location)
and arranging necessary support services;
– specifying the official language(s) to be used for the purposes of the
negotiations, as well as the need for translation and interpretation
services (please refer to the discussion of the Official Languages Act).
– deciding whether or not the negotiations and any resulting agreement
will be confidential (please see the discussion of the Access to
Information and Privacy Acts).

75. Steps of a Negotiation
• [Negotiation Session During any negotiation, the following considerations should
be kept in mind:
– Concentrate on interests, not positions. Try to focus on the underlying interests of all the
parties, i.e., their needs, desires, concerns and fears, and how they might be acknowledged
and reconciled.
– Separate the people from the problem. Avoid blaming the other side for the problem(s) one
has encountered and discuss the perceptions held by each side. Ensure that there is effective
communication between all parties.
– Listen carefully and actively to what the other side is saying and acknowledge what is being
said. This can be done through methods such as asking questions and by making frequent
summaries
– Try to make the negotiations a “win-win” outcome by creating options for mutual benefit.
• There is no need to wait until negotiations have begun, however, in order to develop these options.
They can and should form part of the development of the negotiating strategy, although they are
subject to modification in the course of the negotiation.
• Creating these options implies a willingness to look beyond the limits of the issue(s) in question. Doing
this can be achieved through means such as brainstorming sessions with one's negotiating team.
Brainstorming can also be a joint exercise involving all the parties. These sessions should be structured
so as to allow all participants the opportunity to voice ideas in a non-adversarial and non-critical
environment.

76. Use objective standards
• Evaluate proposals of the other party and the progress of the negotiations
in light of the BATNA (Best Alternative To a Negotiated Agreement).
• It may become necessary to break off the negotiations if there appears to
be no way of achieving an outcome which is superior to the BATNA.
• This can occur when it becomes apparent that the underlying interests
between the parties are irreconcilable or that the other side does not
really want an agreement.
• When necessary, feel free to stop the negotiations if there is a need for
the members of the negotiating team to confer on a new development.
• To avoid revealing the content of these discussions, the caucus should be
held in a private location which is preferably not visible to the other side.
Stay within the limits of one's negotiating mandate.
• Ensure that there is constant communication with the client when acting
on the latter's behalf.

77. MEDIATION
• Definition: Mediation is a voluntary process in which an
impartial person (the mediator) helps with
communication and promotes reconciliation between
the parties which will allow them to reach a mutually
acceptable agreement. Mediation often is the next
step if negotiation proves unsuccessful.
• The Process: The mediator manages the process and
helps facilitate negotiation between the parties. A
mediator does not make a decision nor force an
agreement. The parties directly participate and are
responsible for negotiating their own settlement or
agreement.

78. When and How Mediation Is Used:
• When you and the other person are unable to negotiate a resolution to
your dispute by yourselves, you may seek the assistance of a mediator
who will help you and the other party explore ways of resolving your
differences.
• You may choose to go to mediation with or without a lawyer depending
upon the type of problem you have. You may always consult with an
attorney prior to finalizing an agreement to be sure that you have made
fully informed decisions and that all your rights are protected. Sometimes
mediators will suggest that you do this.
• Mediation can be used in most conflicts ranging from disputes between
consumers and merchants, landlords and tenants, employers and
employees, family members in such areas as divorce, child custody and
visitation rights, eldercare and probate as well as simple or complex
business disputes or personal injury matters.
• Mediation can also be used at any stage of the conflict such as facilitating
settlements of a pending lawsuit.

79. Characteristics of Mediation:
• Promotes communication and cooperation
• Provides a basis for you to resolve disputes on your own
• Voluntary, informal and flexible
• Private and confidential, avoiding public disclosure of
personal or business problems
• Can reduce hostility and preserve ongoing relationships
• Allows you to avoid the uncertainty, time, cost and stress of
going to trial
• Allows you to make mutually acceptable agreements
tailored to meet your needs
• Can result in a win-win solution

80. ARBITRATION
• Definition: Arbitration is the submission of a disputed matter to an
impartial person (the arbitrator) for decision.
• The Process: Arbitration is typically an out-of-court method for
resolving a dispute. The arbitrator controls the process, will listen to
both sides and make a decision. Like a trial, only one side will
prevail. Unlike a trial, appeal rights are limited.
• In a more formal setting, the arbitrator will conduct a hearing
where all of the parties present evidence through documents,
exhibits and testimony. The parties may agree to, in some instances,
establish their own procedure; or an administrating organization
may provide procedures. There can be either one arbitrator or a
panel of three arbitrators. An arbitration hearing is usually held in
offices or other meeting rooms.

81. Characteristics of Arbitration:
• Can be used voluntarily
• Private (unless the limited court appeal is made)
• Maybe less formal and structured than going to court, depending
on applicable arbitration rules
• Usually quicker and less expensive than going to court, depending
on applicable arbitration rules
• Each party will have the opportunity to present evidence and make
arguments
• May have a right to choose an arbitrator with specialized expertise
• A decision will be made by the arbitrator which may resolve the
dispute and be final
• Arbitrator’s award can be enforced in a court
• If nonbinding, you still have the right to a trial

82. LITIGATION
• Definition: Litigation is the use of the courts and civil justice system to resolve legal
controversies. Litigation can be used to compel opposing party to participate in the
solution.
• The Process: Litigation is begun by filing a lawsuit in a court. Specific rules of
procedure, discovery and presentation of evidence must be followed. The attorney
for the other side will want to take your deposition to learn more about the facts
as you see them and your position in the case. There can be a number of court
appearances by you and/or your lawyer. If the parties cannot agree how to settle
the case, either the judge or a jury will decide the dispute for you through a trial.
• A trial is a formal judicial proceeding allowing full examination and determination
of all the issues between the parties with each side presenting its case to either a
jury or a judge. The decision is made by applying the facts of the case to the
applicable law. That verdict or decision can conclude the litigation process and be
enforceable; however, if appropriate, the loser can appeal the decision to a higher
court. In some cases, the losing party may have to pay the costs of the lawsuit and
may have to pay the other party’s attorney fees.

83. How and When Litigation Is Used
• Our Constitution gives us the right to a fair trial. If you want your day in court with
a judge or jury of your peers deciding the outcome, then the pursuit of litigation
and trial of the case is for you.
• You may be in a municipal court, state district court or a federal court depending
on the type of dispute you have and where your attorney files your case or where
you get sued. State court trial judges are elected on a nonpartisan ballot, though
vacancies are filled through an appointment process from highly qualified
applicants. The district courts also appoint special judges, who handle certain
kinds of cases, such as small claims and divorces. These judges are selected by the
district judges from qualified applicants. Federal district judges are nominated by
the president and confirmed by the U.S. Senate. Federal magistrates are selected
by the federal district judges. In all courts, cases are randomly assigned to the
various judges. You have no choice concerning which judge will hear your case.
Juries are randomly selected from a jury wheel of licensed drivers within each
state judicial district and, in the case of federal court juries, from a jury wheel of
registered voters and drivers license holders.
• If you cannot settle your differences through negotiation, mediation, arbitration or
some other means, then you should pursue litigation through the courts with your
lawyer.

84. Characteristics of Litigation:
• Involuntary - a defendant must participate (no choice)
• Formal and structured rules of evidence and procedure
• Each party has the opportunity to present its evidence
and argument and cross-examine the other side - there
are procedural safeguards
• Public - court proceedings and records are open
• The decision is based on the law
• The decision can be final and binding
• Right of appeal exists
• Losing party may pay costs

85. • Include assessments of how well the delivery of the
project performed against key performance indicators
such as:
– The quality of briefing documents.
– The effectiveness of communications.
– The performance of the entire project team.
– Quality issues.
– Health and safety issues.
– Certification.
– Variations.
– Claims and disputes.
– Collaborative practices.

86. Post-contract appraisal
• To improve performance over time, a contractor must continually
learn from the past.
• One of the most important ways is through post-project reviews.
The focus of a post-project review is to improve the construction
process and build teamwork on future projects.
• It will create better relationships and knowledge sharing among
your estimators, project managers, and superintendents. The
review also answers how well or poorly your company has done on
a particular project.
• The best post-project reviews also include feedback from
customers.
• The review process capitalizes on the “intellectual equity” gained
from each project to ensure that “lessons learned” are captured
and the information made available to the entire organization, not
just the few directly involved.

87. Evaluate
• Evaluate the project in the following categories on a scale of one to ten:
– Quality of plans and specifications
– Original estimate
– Project scheduling
– Job layout and start-up
– Material ordering and staging
– Productivity of the crew as a team
– Productivity of the individuals on the team
– Tools/formwork ordering and deliveries
– Change order management
– General Contractor responsiveness to requests
– Job cleanup
– Job closeout
– Punch list
– Warranty
– Project manager's performance
– Job safety
– Customer satisfaction

88. Steps to conducting a post-project
review
• Financial performance from each job is determined and communicated to estimators, project
managers, and foremen.
• Personnel strengths and weaknesses are identified and opportunities for training and improvement
are defined.
• Communication from upper management through the foreman level is greatly improved and
performed on a consistent and structured basis.
• Project measurement standards are developed and consistently applied.
• Individual performance is evaluated, and top performers with promotion potential are identified.
This process feeds into the annual employee review.
• All of the team members focus on critical success factors for project performance.
• Project safety is emphasized by quantifying the value of safety and developing a safety mentality.
• Support and communication from the office to the field are improved.
• Employee innovation is encouraged by constantly seeking input on opportunities for improvement
that create employee involvement and buy-in.
• Sharing performance information throughout the company increases internal competition for
project profitability.
• The process provides “closure” on each contract and a vehicle for continuous quality and profit
improvement.

89. Close Out of Contract
• Project Closeout is the process or activities associated
with finalizing the hand off of the project deliverables
to the business team and completing the
administrative aspects of closing the project.
• Most of the project management activities at this time
are administrative and are unique to the organization.
• They involve gaining stakeholder acceptance of the
project deliverables, integrating project resources back
into the organizations pool of resources, and capturing
any lessons learned from the project for use on future
projects.

90. Closeout Approach
• The Closeout Approach considers the method
that the project deliverables are being hand
off to stakeholders and changes the
administrative activity accordingly.
• Any supplier contracts must be closed with
the procurement department.
• The internal closeout process of other
activities will vary.

91. Project Inclusion
• This form of closeout is the simplest from an administrative
standpoint.
• The project team, who has developed the project deliverables, now
become the primary users/ maintainers of the deliverables.
• The team essentially hands off the project deliverables to itself.
• The project management team needs to close any administrative
accounts or files that are associated with development and reopen
them for operational deployment of the deliverables.
• The transition is virtually seamless and administrative in nature.

92. Project Extinction
• This form of closeout is also straight forward.
• The project activities are immediately
terminated. Resources are either redeployed in
the organization or they are released.
• This condition may be created because of
problems within the project, or it may be because
of conditions that are completely outside of the
control of the project team.
•

93. Project Integration
• This form of closeout is the most difficult.
• The project deliverables are completed and the project
team believes that they meet the project objective.
• The project team must ensure that the portion of the
organization that is to make use of the deliverables is
prepared to embrace them and apply them appropriately
to achieve the business benefit.
• At times there is significant resistance to accepting the
deliverables.
• When a project team is facing this type of closeout they
need to ensure that appropriate change management
activities are being conducted at the same time they are
performing the administrative closeout activities.

94. Stakeholder Acceptance Meeting
• A Stakeholder Acceptance meeting is exactly
what the name implies.
• The project team meets with project
stakeholders to review the deliverables of the
project and ensure that the deliverables are
acceptable to the stakeholders.
• Managers with all sub-project teams on
Complex programs.

95. Project Punch List
• The Punch List is a technique borrowed from construction projects. When
conducting Stakeholder Meetings, gaps are often identified between what
the stakeholders wanted from the deliverables and what is being supplied
by the project team.
• The Punch List is used to manage the closure of those gaps.
• As a deliverables is presented - whether in a Stakeholder Meeting, pilot
run, or Beta test - any gaps or deviations are listed and placed upon the
Punch List. The project team then identifies the cost and schedule impact
of completing the Punch List items and they come to an agreement with
the stakeholders concerning which items they must complete and the end
point of those new tasks. Both the stakeholders and the project team
manage the effort to the Punch List.
• Stakeholders cannot continue to add items and the Project Team must
complete all the items on the list. This technique will quickly drive the
project to closure.

96. Closeout Steps
• While often overlooked, the project close out
step is one of the key learning experiences
and process improvement activities that can
be performed during a projects life cycle. By
actively closing out a project, you are actively
evaluating the success and missteps of a
project, as well as ensuring stakeholders are
happy and an appropriate archive has been
completed.

97. • Project Sponsor Acceptance
• Meet with the project sponsor (the customer) to discuss closure around the
defined acceptance criteria for your project.
• Conduct Project Assessment
• Performance assessment should be conducted with project stakeholders, including
team members. This step can be as easy as asking two key questions – What went
well, and what could have gone better.
• Complete Project History/Archive
• A main part of managing a project involves managing the files that go along with it
– which can become overwhelming if you wait until the end of a project to begin
creating your project history. Consider setting this up at the beginning of your
project, that way this step becomes more of a final check to ensure its completion.
• Celebrate Success
• Celebrating success is a key part of the change management process that helps all
stakeholders involved move forward with the post project state. It’s also an
important factor in making future projects go well.

98. Lessons Learned
• The Lessons Learned process is usually
tailored to the organization. If the organization
has a PMO the Lessons Learned process is
nomrally a formal part of project closeout.
• When there is no PMO, often any Lessons
Learned activities are done informally if at all.

99. Lessons Learned
• Evaluate the Business Case
• The first question I ask is whether the project
created the business benefit that was used to
justify approving the project.
• This question is less about how well the project
team did and is much more focused on senior
management and the project selection and
approval process.
• The lessons learned at this point improve the
ability of the organization to select projects and
to establish realistic project charters.

100. Lessons Learned
• Evaluate the Project Plan
• This question addresses how well the project
manager and project management team
planned the project.
• It concerns topics like:
– identification of required activities,
– cost and schedule estimates,
– risk factors, and
– team integration and communication.

101. Lessons Learned
• Evaluate the Project Management Methodology –
• This question addresses whether the
organization's procedures and systems were
beneficial for the project or not.
• It includes asking questions like:
– Are procedures current and relevant?
– Are checklists and templates current and relevant?
– Are the mandated reviews and control points
appropriate?
– Is the PMIS useful?

102. Lessons Learned
• Evaluate Team and Personal Performance – T
• he team then considers how well they executed
the plan and followed the methodology.
• This is normally a self-assessment by the team
and can be aided with techniques such as 360
reviews.
• The method for conducting the performance
appraisal must be accomplished in accordance
with local Human Resource practices.

103. Ethical Considerations in Contracting
• While business contracts are legally binding
documents, they are only effective within an
ethical framework that assumes most parties
observe and fulfill their contractual obligations.
Competing for, obtaining and satisfying contracts
ethically is the basis for an efficiently functioning
economy. If your company engages in unethical
behavior, you may lose contracts, especially those
with governments, and waste valuable resources
in legal entanglements with contractual partners
seeking damages.

104. Determining Prices Ethically
• You have to have some basis for determining your prices,
such as cost plus profit or market levels.
• Setting the prices for your contracts in this way is ethical,
while basing your prices on manipulation or hidden factors
is not.
• Once you have calculated the contract price, you have to
ensure that you present it in a transparent fashion, without
hidden costs.
• An ethically negotiated contract strikes a balance between
the benefits to the supplier and purchaser.
• The successful execution of such a contract delivers
advantages to both parties, and both parties have a stake in
avoiding problems.

105. Avoiding Conflicts of Interest
• Some conflicts of interest are ethically unacceptable,
such as bidding on work for which you decide who is
awarded the contract, but you can avoid other types of
conflict of interest with transparency.
• When a conflict of interest arises because of factors
beyond your control, such as your company
considering a contract with a supplier in which a
member of your family has an interest, you have to
address the issue publicly.
• You declare the conflict and refrain from participating
in the relevant decisions, possibly asking the family
member to do the same

106. Competing Fairly
• A competitive market gives you feedback on the value you are
offering to customers as compared with your competitors.
• When you obtain a contract through fair competition, you know
that you have been successful in presenting exceptional value.
• When a competitor receives the contract, you have to work on
reducing prices or increasing quality.
• Unfair competition through collusion or price fixing, when you
secretly agree on elevated bid prices with your competitors, is not
only unethical but hurts the effectiveness of the market.
• Companies that don't present good value receive orders at the
expense of those with the best prices and highest quality.
• Market signals are distorted and all market participants lose out in
the long term

107. Observing Laws and Regulations
• Laws and regulations protect the consumer, employees
and other market participants.
• When you develop an offer and sign a contract, you
have to keep legal and regulatory constraints in mind.
• Even if your adherence to laws is not likely to be
verified, an ethical company prepares and executes
contracts within such constraints.
• When you are in doubt as to the legality of contract
provisions, it is good ethical practice to err on the safe
side and avoid legal problems that come with trying to
define the exact legal limits and coming too close to
borderline practices