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The Truth About Contracts & Commercial Management

August 18, 2010

I have just returned from a symposium on complex project management, hosted by the business school in Lille, France. The event brought together some of the leading minds from the world of project management, including a number of acclaimed authors and the leadership from the International Centre for Complex Project Management (ICCPM). I was honored to present the perspective of the contracts and commercial world in this forum.

I perceive project managers having similar challenges to those of contract and commercial managers. While they moved down the road to ‘professionalization’ several years before IACCM, they are still wrestling with many open questions regarding their exact role and status. They also face some problems that conract management does not – such as competing professional associations with their varied views on the underlying body of knowledge.

However, I find ICCPM has many ideas and approaches in common with those of IACCM. Not least of those is its openness to collaboration and the view that, as non-profit associations, we are often helping organizations achieve competence, rather than dictating an organizational model that involves hiring more and more of our professional community.

Among the many interesting aspects of ICCPM research has been a recent study that led to a paper titled ‘The conspiracy of optimism’. They found that organizati0ns – both customer and supplier – consistently over-estimate their capabilities to deliver complex projects and consistently under-estimate the associated costs and time required. In addition, even though these experiences occur consistently, management only accepts and welcomes those who reinforce their own optimistic view.

So maybe that explains why contracts, commercial and project staff are often not the most popular. It is our tendency to highlight the challenges and question assumptions that makes us unwelcome team members. And so at the end of the process, when it may have slightly cold feet, management calls us in to protect them from the worst ramifications of that optimism, by ensuring some fall-back clauses that limit the consequences when it all goes wrong. Sadly, they overlook the greatest value we can offer – of helping to structure such deals in ways that they would be far more likely to succeed – or sometimes, of course, of avoiding them altogether.

  1. Tim, this is so true. Our very recent experiences managing complex IT project streams in very large organisations shows without a shadow of a doubt that Project and Programme Managers must possess insights in Contract Management which few are taught as PMs. The interplays between contracts and suppliers to multiple projects and the dependencies on one work stream which others may have are largely missed by all except the most diligent and mature PMs -with the well documented consequences of overruns and failed projects.

  2. Scott FitzGerald permalink

    Agreed. As a commercial manager and a certified PMP, I find that if I focus efforts on the front end and ensure the PM like staff engaged in our process are well versed in the commercial aspects of the contracts appropriate to their roles, this provides them with the knowledge and ability to know when to engage the appropriate specialist commercial folks and ask better questions. I have a meeting next week to do just this with a new starter.
    I whole agree with the notion of the “Conspiracy of Optimism” (There might be a book deal in that topic!) and taking as written the comment that “commercial and project staff are often not the most popular”, we need to accept that we may be able to better engage with our colleagues if we can learn to communicate the same information in a more receivable manner. As a simple illustration, how many different ways can you convey the message “No”. If you take 2 minutes to think about it you will come up with several variations just using words let alone without having to bring tone or inflection in to the picture. After all, how many people have not heard someone utter the expression “What part of No don’t you understand?”

    • Scott, thanks for your comment. I agree completely that it is up to us to change our image. Leaders never welcome ‘problems’ unless they are accompanied by solutions. Nor do they welcome lists of ‘issues’ which have not been scrubbed and prioritized. So when we have the opportunity to participate early in opportunities, it is essential that we contribute our expertise in the form of good ideas rather than obstacles.

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