Project manager’s failures to understand or comply with their contractual obligations
STUDENT PAPER
By Pauline Vanneste
SKEMA Business School
Lille, France
ABSTRACT
Contracting imposed on the project manager and the contractor to agree and linked them to one another. However, the project manager doesn’t always succeed to understand or comply with its contractual obligations and that is the major disputes cause. To help to solve or at least reduce the problem, we must understand how it happens, the reasons why project managers fail to understand or comply with their contractual obligations and then find a solution to each reason. After findings several solutions, we will define attributes to measure and evaluate the solutions and finally resume our findings. We will see that the failures from the project manager result from him or her directly. But that we can put solutions in contracts to incent the project manager to comply with its contractual obligations.
Key words: Disputes, Contractual obligation, Clauses enforcement, Risk management, Technical skills
INTRODUCTION
“Contract is important during every step of the project” according to Jean-Charles SAVORNIN[1]. “The contract contains the term of a mutually binding agreement”[2]. But sometimes after the mutual agreement, it doesn’t go as it should be and disputes appear. “Disputes are disagreements not settled by mutual consent which could be decided by litigation or arbitration”[3] .
According to ARCADIS, the main disputes clause in the contract is the failure to properly administer the contract in construction area[4]. That comes from the issue that a party fails to understand or comply with its contractual obligations. The disputes value and duration will have a bad impact for both parties with more or less on each one or both. Try to avoid or reduce the disputes that can arise is part of risk management, a major concern of the project manager. “Risk management is an organized assessment and mitigation of project risks as well as pursuit of consequential opportunities”[5]. And managing those risks could be done through the contract. Here our interest will be focused on project manager’s misunderstandings and failures to comply with their contractual obligations in the construction area.
“Disputes could be as complex as contracts and the reasons why disputes arise are many”[6]. That’s why as future managers, contractors or even investors, understand the disputes in the project linked to the contract can allow us to avoid delays, involving our responsibilities with bad actions or decisions, avoid failures… Simpler, it could help to improve project contracting in general. Giving a review of the reasons why, even possible solutions and consequences of project managers failures to understand or comply with their contractual obligations, will allow us to find solutions to put in place in the contract. In the first time, focusing on the construction area that we are studying here would give more specific and accurate results. Thanks to those results the application of those results on other fields and areas could be studied and a solution might be found to solve the first disputes clause in the contract. Moreover, the number of construction project is increasing over the years[7] and so it would be a good and large based to study the causes of disputes.
As we know, “the costs of construction disputes are huge especially in the Middle East, $82m”[8] and so deleting the disputes or at least find some ways to reduce them and their impact could save a lot of time and money. “The misunderstandings and failures to comply with contractual obligations of project managers are the first cause of disputes”[9] so find solutions to the first cause of disputes could importantly reduce a lot of disputes themselves. It is logical. Contracting would be easier and safer for both parties reducing that much risks. In studying this subject, we will also find the problems coming from the project manager part but it doesn’t mean that he or she is entirely and only responsible for it. For example, project manager over-optimism of the project manager lead to a quick review of the risks or the requirements and a thought that “everything would be ok no matter how but over-optimism often lead to delays”[10]. The schedule is part of the contract and so delays represent a failure to comply with a contractual obligation. The study will reveal if the project manager is responsible most of the time, the contractors, both parties or just the contract itself. Because the issue could come from the contract and not the parties. “Develop the contracting policies and processes”[11] to avoid disputes causes and so disputes themselves is our main point here.
In the construction area and especially in the construction project, project management, program management, portfolio management, and asset management are involved. As the table below (figure 1) prove it because the assess define if a project can continue or not. Managing the risks and so the disputes causes are essential to improve the analysis of dispute causes and also prevent risks and avoid disputes that would create a time and money waste.
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Editor’s note: Student papers are authored by graduate or undergraduate students based on coursework at accredited universities or training programs. This paper was prepared as a deliverable for the course “International Contract Management” facilitated by Dr Paul D. Giammalvo of PT Mitratata Citragraha, Jakarta, Indonesia as an Adjunct Professor under contract to SKEMA Business School for the program Master of Science in Project and Programme Management and Business Development. http://www.skema.edu/programmes/masters-of-science. For more information on this global program (Lille and Paris in France; Belo Horizonte in Brazil), contact Dr Paul Gardiner, Global Programme Director paul.gardiner@skema.edu.
How to cite this paper: Vanneste, P. (2019). Understand and find solutions to the main cause of disputes in construction: Project manager’s failures to understand or comply with their contractual obligations, PM World Journal, Vol. VIII, Issue VIII, September. Available online at https://pmworldlibrary.net/wp-content/uploads/2019/09/pmwj85-Sep2019-Vanneste-main-cause-of-disputes-in-construction.pdf
About the Author
Pauline VANNESTE
Lille, France
Pauline Vanneste is a young business student in Project Management with just a few years of experience, certified with Prince 2 and AgilePM. Born in the north of France, she spends two years in a preparatory class to the best business schools in France and succeeds to enter SKEMA. She lived 6 months in Sweden and 6 months in Brazil during her master’s degree. After two years studying management, finance, marketing and business she decided to specialize in Project Management by doing an MSc Project Management and Business Development during she studied International contracts. Studying the contracts and especially the causes of disputes in international contracting, she focused on the construction area. The main topic of her study was to understand the main cause of disputes in the contract: the project manager failures to understand or comply with its contractual obligations, propose solutions and evaluate them in order to have a review of the reasons why it happens and solutions for each reason.
She just completed his last assignment in December of 2018 under the tutorage of Dr. Paul D. Giammalvo, CDT, CCE, MScPM, MRICS, GPM-m Senior Technical Advisor, PT Mitrata Citra Graha, to attain Guild of Project Controls certification.
Pauline Vanneste lives in Lille, France and can be contacted at Pauline.vannest@skema.edu
[1] SAVORNIN, J.C. (2016) Contract Management Outils et Méthodes, Pratiques d’entreprises. Retrieved from http://www.scholarvox.com/catalog/book/docid/88833617?searchterm=contract
[2] R. Max Wideman. (2017). Wideman Comparative Glossary of Project Management Terms v5.5. (n.d.). Retrieved from http://www.maxwideman.com/pmglossary/
[3] R. Max Wideman. (2017). Wideman Comparative Glossary of Project Management Terms v5.5. (n.d.). Retrieved from http://www.maxwideman.com/pmglossary/
[4] Global construction disputes report 2017. (2017). ARCADIS. Contract Solutions.
[5] R. Max Wideman. (2017). Wideman Comparative Glossary of Project Management Terms v5.5. (n.d.). Retrieved from http://www.maxwideman.com/pmglossary/
[6] HAMON, K. (2003, October). Resolution of Construction Disputes: a review of current methodologies. Leadership and Management in Engineering. Retrieved from https://ascelibrary.org/doi/pdf/10.1061/%28ASCE%291532-6748%282003%293%3A4%28187%29
[7] US DEPARTMENT OF TRANSPORTATION. (December 2011). Work Zone Road Users Costs. Concepts and applications. Retrieved from https://ops.fhwa.dot.gov/wz/resources/publications/fhwahop12005/fhwahop12005.pdf
[8] LOFTHOUSE, S. (2016, August 31). The cost of disputes in the middle east. MeConstruction News. Retrieved from https://meconstructionnews.com/16782/the-cost-of-construction-disputes-in-the-middle-east
[9] Global construction disputes report 2017. (2017). ARCADIS. Contract Solutions.
[10] PRATER, J. KIRYTOPOULOS, K. MA, T. (2016). Optimism bias within the project management context: a systematic quantitative literature review. International journal of managing project in Business. Retrieved from https://www.researchgate.net/publication/315933641_Optimism_bias_within_the_project_management_context_A_systematic_quantitative_literature_review
[11] Guild of Project Controls Compendium and Reference | Project Controls – planning, scheduling, cost management and forensic analysis (Planning Planet). (n.d.). Retrieved from http://www.planningplanet.com/guild/GPCCAR-modules
