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Projects and Contracting

May 31, 2011

Last week I participated in a meeting called by the International Centre for Complex Project Management (ICCPM).

In his introduction, Professor Mike Jackson emphasized the need for project management to embrace ‘holism’ and to “Escape reductionist thinking”. As we talked, I was struck by the similarities to contracting and commercial management – and also the interdependencies between our disciplines.

‘Holism’ is based around systems thinking and the need to synthesize, rather  than analyze. It therefore seeks to avoid focus on component parts and to concentrate on the interactions needed to secure the overall desired outcome. Such an approach would – for example – place far more emphasis on the importance of sustained leadership, communication, commitment and planning to project success, and less on requirement management and individual components.

As I thought about this in the context of contracts, a number of points struck me.  First, a ‘holistic’ contract is made up from many clauses and terms which exist individually, but impact outcomes cumulatively. Second, the input to contracts comes from many and varied sources, each of which may have a distinctive view of what it considers ‘success’. Third, projects (and therefore the contracts that underpin them) are ‘incomplete’ until they are finished and therefore require continuous oversight and revision to maintain ‘holism’ or integrity.

The meeting discussed the challenges faced by Project Managers. Some of these related to a lack of the skills and knowledge needed to undertake ‘holistic’ management. Others involved issues such as the timing of engagement and failure to focus on critical dependencies, such as leadership risk or cultural risk.

As I listened to the problems, it caused me to reflect on similar issues in contract and commercial management – and in particular, the question of’ ‘excellence’. It struck me that an excellent contract or commercial manager is someone who engages in holistic thinking. They see the big picture and the interdependencies. They do not allow themselves to be side-tracked into excessive debate on individual clauses and functional positions. They see their role as communicating, leading, planning and gaining commitment. To do this, they must understand individual ‘reductionist’ stakeholder views and find a way to reconcile these with the broader needs of the project. They emerge with a balanced contract which is designed to cope with change.

Of course, this excellence is far from universal and many contracts groups remain tied to specific interests (for example, legal or finance) and lack the vision to expand from a focus on ‘requirements’ to a vision of ‘outcomes’. Often, there is no synthesis of the entire contract; different groups produce different parts and ‘quality’ simply means that it has been checked for inconsistencies, not that it is truly ‘fit for purpose’. As a result, project teams are given contract forms and standards that provide poor and inadequate tools for on-going management.

How might we improve? One approach will be to focus on continuing improvement in the standards of contract and commercial managers. In this regard, the growing adoption of a common perception of the role and a consistent body of knowledge is a major step.  But it strikes me that a second critical aspect is the creation of collaborative relationships with others within our ‘reductionist’ universe. Functional specialism is by its nature ‘reductionist’. What all of us must do is to understand better how we fit our specialism into a holistic frame. And it may well be that commercial managers and project managers are key to creating this synergy, since each of them may have the role of harmonizing across specialist groups to ensure a level of reconciliation is achieved and maintained, to allow desired outcomes to be achieved.

This vision is not new so far as contracts and commercial management are concerned – IACCM has espoused this position from its inception. What is new is the idea that perhaps contracts and project management together lie at the core of this synthesis and success might be achieved through their willingness to coalesce and learn together.

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