A Project Manager’s Guide to Contract Management

Responsibilities between project managers and contract managers can also vary widely. The contract management profession is a specialized career field, which requires insight into federal, state and local regulations, and the U.S. legal system. That said, it’s difficult for a project manager to learn everything he or she may need to know about contract management without extensive education and/or experience.

The focus of this article is on the problems encountered by project managers that could be alleviated by a greater understanding and participation in contract management. Furthermore, this article specifically highlights the types of things project managers should learn about contract management, and how to learn them. It also deals with techniques that could be used to overcome knowledge and experience gaps.

Contract Management vs.  Project Management

Contract management is generally defined as, “a continuous process, starting with analysis and evaluation of the customer’s inquiry, and carrying on until contract closure, upon fulfillment of all contractual obligations.” The fields of contract management and project management have significant overlap. This can result in confusion as to who is responsible for some tasks.



For many companies, the division of tasks optimally balance the responsibilities between contract managers and project managers.  The above figure 1 depicts this division of responsibilities.



However, some companies place most the responsibilities on the project manager as seen in the above figure 2.



Lastly, there are other organizations where contract management is almost non-existent. For example, this includes companies, where most software is built in-house by the IT department and the contracts are written, negotiated, and signed without anyone from contracting ever talking to a project manager or engineer (Figure 3).

PMs and Contract Managers, Working Together

The following are several areas that can optimize how project managers and contract managers work together.

  1. Clearly defined roles and responsibilities
    1. PMs serve as multifunctional team leaders on one or more projects, shouldering the responsibility for achieving the desired results for these projects. When it comes to contracting, PMs in most companies lack the authority to sign, modify, or cancel contracts that legally bind companies to buy or sell products or services.
    2. Contract managers, however, are seldom in charge of the day-to-day project planning or operations. Yet, as individuals authorized to enter into legally binding contractual arrangements, they may be responsible for having the resources available as needed under tight, often conflicting or unrealistic time frames.
    3. An optimal division of labor would put the contract manager in charge of anything related to writing, approving, signing, modifying, and canceling the contract, while the project manager would be in charge of anything related to actual performance and meeting the contract objectives (FIGURE 1). However, the contract manager works best when the project manager is involved in the contracting process and vice versa.
  1. Early involvement of the project manager
    1. PMs can give contract managers critical insights into the value of certain requirements and the realistic opportunities of achieving the results the customer desires. PMs can, for example, assess whether cost and schedule estimates are realistic, analyze the risks and opportunities the project provides, and recommend special terms and conditions for tailoring the contract to the project goals.
  1. Continuing involvement of the contract manager
    1. Contract managers should also be involved late in the project to help with any issues that might arise. Having a contract manager involved throughout the process would have made such issues easier to resolve.
  1. Understanding each other’s responsibilities and processes
    1. Every contract manager should understand the role, responsibilities, and challenges that PMs face.
    2. PMs must work closely with contract managers to achieve the desired business results. By understanding the “role, responsibilities, and challenges” that a contract manager faces, they can help the contract manager create and approve optimal contracts, and know how the contract manager can help them fulfill their clients’ needs.
  1. Simplifying the process
    1. A simple contract is easier to manage. It reduces confusion and increases the chance of successfully completing the project
  1. Contract management tools
    1. Integrate change management into the contract
    2. Know the legal framework
    3. Define the requirement
    4. Establish clear roles and responsibilities
    5. Manage relationships
    6. Manage risk


There are multiple things project managers can do to excel at working with contract managers, and to use the contract management processes and tools in the successful completion of projects.

  1. Make lists and take notes,
  2. Education and certification,
  3. Mentors,
  4. Internet resources, and
  5. Real-life experience.


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