Spectrum of Contractual Arrangements

Description of topics including reading samples Learning outcomes of the unit Learnings from your experience, this and prior unit reading, assignments Supporting documentation including your prior learning

Contractual Arrangements in Commercial Projects.

Case Study for the Chunnel Project;

Australia National Audit Office (2012) Developing and Managing Contracts – Getting the right outcome, achieving value for money;

Kerzner (2013) Chapter 19 Contract Management;

Wikipedia Australian Contract Law;

PMBOK (2013) Chapter 12 Project Procurement Management;

-Australian;

– Victorian;

– WA;

– NSW;

– QLD;

– USA.

Guardian News article 7th April 2004 Deep in debt.

1.Describe the operation of diverse and complex government and non-government project contractual arrangements relevant to a range of managed services, ICT, and build agreements.

The objective of this week’s topic is to make sure you have abroad understanding of commercial planning and commercial projects. 

Try to ask yourself the questions that were posed in the 10thweek’s lecture :-

1.What is the spectrum of Contractual Arrangements?

Contractual Agreement refers to a formal contract which is required to engage an evaluator form external sources.   An agreement is writing including the same issues can also be termed as contractual agreement for an internal evaluator.

2.What are the legal conditions for a Contract?

The contract must be legal under which there is need to meet 5 conditions. It includes offer, consideration, legal capacity, intention and legal purpose

3.What kind of contracts existed in the Channel Tunnel?

The shareholders of Eurotunnel ‘s met at a convention center in Paris to vote for a radical proposal.  Generally such type of meeting was held for the purpose of voting powers in respect of pension funds and financial institution. But in case of Eurotunel the idea was different. The small investors were ruling in the Tunnel channel at that time. Most of the investors were French investors of which about one million hold 65% of the share which made other disappointed. The investment fell to 90% because of the same.

Eurotunnel also admitted that the company will not be able to pay the debt or interest payment at the end of the financial year. Late , the company gone to insolvency. Here, the company could have applied the principle of good faith while negotiating the contract but it failed to do so.

In the aforesaid case there is formal contract between the company and creditors of the company. Here, when the company went into liquidation it was unable to pay the debts it owes to the creditors which is considered as the  breach of contract.

Legal Conditions for a Contract

There was also a contract between the company and its shareholders that they will act as the agents of the company on the company’s behalf. The company as a separate entity has its own legal status.

4.What was the impact of some of those Contracts?

Analysis of the Australian Contract Law revealed that good faith is an important element while negotiating and commercial contracts. According to the provisions of the Australian Contract Law, there no basic or general principle in Australia for the use of good faith while negotiating a contract.

However, the courts of Australia have provided judgments that an express contractual obligation to negotiate a case in good faith can be enforceable by law. Provided an express obligation to negotiate in good faith required to be drafted with utmost care and ensure that all the clauses are applicable is capable of providing a meaning.

To negotiate a commercial agreement in good faith has been imposed by the Australian law makers in case of selected circumstances only. A franchising code of conduct is required while applying the good faith concept including the negotiation of the franchise agreement.  

It is essential thing to note that the legislation of the country prohibits the misleading and deceptive conduct is sometimes relevant while negotiating a contract. According to the provisions of the Australian Consumer Law any person engaged in trade and commerce does some act which is misleading or similar to it. It is also concluded that silence can also be misleading. The dispute arising between the commercial parties includes that the claim made by a party is misleading while entering into a contract by means of insufficient disclosure of information while negotiating a contract.

5.What do others say about Contracts?

In the recent years, normal people who do not have knowledge about the formation and legal requirements of the contract. Most of the people are of the opinion that only written contracts are considered as a valid contract in the eyes of law. However, implied contracts are also considered as a valid contract as per the Australian Contract Law.

Australia National Audit Office (2012) try to explain:

6.What benefits flow from the formalisation of the contract process?

The formalisation of a contract is necessary these days to avoid any kind of dispute and disagreement in future between the parties entered in to the contract.  As explained earlier the essential elements of the contract i.e. offer, acceptance, consideration, mutual consent and capacity to perform the contract must be present to an agreement a valid and formal contract.  It is not mandatory that the contract must be in written form. However, it is good to keep the written record of the contract to avoid any dispute and disagreement between the parties who are involved in a contract.

Contracts in Channel Tunnel

7.How hard is the process and what training is required?

HB 140-2000  try to explain:

8.Do organisations really implement this?

9.What kind of organisations?

Kerzner (2013) Chapter 19 Contract Managementtry to explain:

10.How important is the type of contract for governing contractor and buyer behaviours?

11.What is the relationship between the contract and ownership of risk?

Law handbook & Wikipedia Australian Contract Law try to explain:

12.What needs to be in place for a contract to exist?

13.Can any element be absent for the contract to be still valid?

PMBOK (2013) Chapter 12 Project Procurement Management try to explain:

14.How much interaction is there between the other knowledge areas and the procurement processes?

15.Might the interaction make the project fail?

Government Procurement Rules try to explain:

16.Are all of the processes the same?

17.For an organisation selling to government is it possible to standardise the sales, procurement, and response process?

In the Case Study for the Chunnel Project  and the Guardian News article 7th April 2004“Deep in debt”try to explain:-

18.By 2004 was the Chunnel a success?

19.In hindsight by 2004 would the project have been undertaken if the clock could be turned back? PPMP20011Unit Profile

Have you any insights you can add from other units you have studies or readings you’ve made?

Are any of the activities above relevant to your reflections for the learning outcomes on the right? 2. Analyse common arguments using logic, persuasion and influence factors as commonly applied to conflicting and/or competing stakeholder agendas. Have you any insights you can add from other units you have studies or readings you’ve made?

Differentiate methods of project negotiation, conflict management, and stakeholder engagement across projects consisting of differing technology standards and asset lifecycles. Have you any insights you can add from other units you have studies or readings you’ve made?

Are any of the activities above relevant to your reflections for the learning outcomes on the right? 4. Explain and apply methods of identifying and reconciling inconsistent and conflicting objectives and drivers that develop, maintain, mange relationships and communication with key stakeholders. Have you any insights you can add from other units you have studies or readings you’ve made?

Are any of the activities above relevant to your reflections for the learning outcomes on the right? 5. Explain the consequences of project delays, disruptions, and changes to planned activities and the methods for claims variations, liquidated damages, contract entitlements, and arbitration. Have you any insights you can add from other units you have studies or readings you’ve made?

Are any of the activities above relevant to your reflections for the learning outcomes on the right? 6. Evaluate project management tools that help avoid or provide conflict resolution via negotiated solutions.

Have you any insights you can add from other units you have studies or readings you’ve made?

References

Anbari F.T., Giammalvo P., Jaffe P., Letavec C., and Merchant R. (Date Unknown) “The Chunnel Project”. PMI Case Studies in Project Management. https://www.pmi.org/~/media/PDF/Academic/case%20studies/Chunnel%20Project.ashx Visited …../…/…

Kerzner H. 2013.Project Management: A Systems Approach to Planning, Scheduling, and Control, 11th Edition.  Hoboken, USA: John Wiley & Sons.

Peña-Mora F., and Tamaki T. 2001. “Effect of Delivery Systems on Collaborative Negotiations for Large -Scale Infrastructure Projects”. Journal of Management in Engineering. Vol:April 2001 pp.105-121

PMI. 2013a.A Guide to the Project Management Body of Knowledge (PMBOK Guide) 5th Edition. USA: Project Management Institute.