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The world is unpredictable

February 15, 2016

“We are living through a time of rupture, initiated by fast, dramatic changes in technology, institutions and values, and accelerated by IT innovations, globalization and deregulation in many areas. As a result, projects are now more than ever subject to complexity, change and unpredictability.”

Add to this quote the fact that deregulation is now accompanied by waves of new regulation, that globalization has resulted in geopolitical chaos, and that complexity, change and unpredictability apply as much to business relationships as they do to projects. Overall, we are left having to accept – and deal with – an environment of real uncertainty.

In the world of project management, this realization is steadily leading to new thinking about the processes, tools and skills needed to deliver successful results. One consequence of this new thinking is an increasing overlap between the role of the project manager and the role of the contract manager, together with recognition that the contract models and typical approaches to the management of uncertainty are not ‘fit for purpose’.

Contract managers and project managers tend to seek control and they see their approaches as providing a platform for certainty. While they may be good at initial planning within an established framework of business goals and stakeholder values, the instruments and methods they then use are not suited to the fast-changing environment in which they operate. In other words, current project management methodology and contract management disciplines tend to constrain change rather than anticipate and enable it. As a result, performance is often either derailed or delivers an outcome that no longer meets requirements.

For those in Project Management, there is a growing belief that new and better forms of contract, along with more flexible contract and relationship governance procedures, may hold the key to managing unpredictability. Indeed, they can point to an array of available contract models (NEC3, FIDIC, Relational) that already exist, but have largely been ignored by the commercial community. In consequence, there are early signs that professional associations for project management are steadily moving to the view that project managers may themselves need to become contract managers, or at the very least become proficient in this field.

Historically, many contract management groups were subservient to project management. But this was at a time when the role was in fact about contract administration and formed part of the control culture mentioned above. I welcome the fact that project managers are awakening to the importance of contract and commercial skills and the tools and instruments that this discipline can offer. I am also pleased that they want to include increased content in their training. And I hope the contracts and commercial community will respond by building closer relationships with project managers and in answering their needs for delivering successful projects in an unpredictable world.

One Comment
  1. John Jorgensen permalink

    It’s challenging to even think far ahead in terms of designing longer term agreements, let alone plan and cost for contingencies or document them! It is for this very reason that relational aspects of trade is ever more important. We create agreements to limit our behaviours, hence the need for greater transparency to understand the self enforcing range of an agreement, or the point at which one party considers the cost of exit as more preferential to remaining within the relation. This enables parties to create more sustainable agreements and incentives that deter a ‘renege’ and bias future trade terms. Project management is absolutely key in this endeavour by bringing an implementation mind-set to those afflicted with purely a deal making mentality!

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