Commercial and Contractual Management of Projects


Project management can be defined as the process, skills, methods, knowledge and experience to attain specific project objectives and goals that are lined up by an organisation.

The crucial factor that defines the significant difference between project management and just management is that project management has a finite time span and final deliverables (Radujković and Sjekavica, 2017).

On the other hand, management is considered an ongoing process that requires continuous updates and innovation. For this purpose, project managers must have appropriate skills, people management skills, technical skills and effective business awareness.

Three essential building block of any project is time, quality and cost. It will help a manager to identify the future needs that will be required to complete the project effectively.

Significant components of project management include managing the risk, changes and issues of the project, keep an eye on the progress, managing budgets, effective communication with stakeholders and motivate the project team to attain success.

Further, commercial management can be defined as the growth and recognition of project chances and supervises the entire contracts and project (Papke-Shields 2017). Contract management refers to the supervision of contracts that are made with other business people.

The primary issue that a contract manager will face is related to legal as they must be aware of all the legal laws and rules that need to be implemented in the country where a project is processing.

In today’s emerging world, many contractors are adopting digital technologies to cope up with risk. The report also focuses on the utilisation of procurement and contracts to deliver significant projects adequately.

The significant issues that are faced by contract and commercial management are also there in the report (Padalkar and Gopinath, 2016). Different tools are there that helps them to measure the problem and to solve them on time as well.

Content analysis

Ways project managers utilise procurement in delivering significant projects:

The primary purpose of the procurement manager is to maintain a healthy relationship with suppliers of services and projects in the entire life cycle. It is considered a significant part of project management as maintaining a relationship is the basic need for completing any project successfully (Borkovskaya, 2018).

Procurement purposes are the mandatory part of any supply chain management. In this way, procurement is utilised by project management effectively.

The procurement process in any project management is divided into four essential elements. It includes planning, selection, administering and closing process.

All these four processes play a critical part in project management, and the manager needs to take care of these key elements critically. The four elements and their utilisation in project management are described below:

1. The planning process:

It includes the creation of the whole project management plan. In this, decisions made involve the items that are externally outsourced and internally procured (Ma al. 2018).

The information gathered in this process will help in managing the budget and financial scope. After that, sample documents will be developed that helps in selecting essential vendors. Other than that, risk assessments and financial constraints will also be there.

2. The selection process:

In this process, all the vendors chosen in the first process will be compared, and all the other factors such as disadvantages, advantages and contractual offering will be performed (de Araújoal. 2017).

An essential tool such as video conferencing with bidders will be performed to make them understand all the significant requirements for the project and queries will be discussed. Resource calendars will be made the will give details about the usage of resources.

The remaining project is done based on the resource calendar. Evaluation of the entire proposal is made, and if no bids are there, then the team will use online ads to attract new bidders.

3. The administration process:

All the tools and procedures are determined that are used for managing the relationship with vendors. It helps in the preparation of all the procurement spreadsheets and documents that will drive the changes in a project (Shokr and Torabi, 2017).

A centralised system for monitoring contact changes and control are used to analyse whether the requirement of changes in contracts is needed. Other than that, formal inspections, review of the entire operation and internal audits that generated performance reports for providing feedbacks if necessary. It is an essential process as it is managed through project management software.

4. The closing process:

It is not about closing the completed project but also note the entire weaknesses, evaluating the future project needs and documenting successful procedures (Fleming, 2019).

The tool used for measuring the performance of the whole project, many companies use performance metrics by conducting simple audits. Preparing documents at the end of projects is necessary as it will help in future projects.

At last, all of these suppliers are the key actor, and it is essential to maintain a healthy relationship with shareholders and supply chain partners that helps in working closely for improving projects and coordinate various activities.

In this way, project managers utilise procurement that helps in supporting the delivery of significant projects. Procurement, like any other function, is the critical element to support and run various tasks (Rahimian, 2020).

For instance, for attaining the best outcome planning and execution of any project must be done excellently. It helps in maintaining a healthy relationship with stakeholders and suppliers by providing the best outcomes.

Procurement also helps in identifying the risks and manages it appropriately. Many different organisations use the decentralised procurement function to bring out the project manager as an outsourced PMO.

Other than that, primary responsibilities that fall under procurement are about coordinating vendors and stakeholders to complete the project successfully.

Along with that, a proper logical order is followed in procurement management.  Initially, managers need to plan the requirements of the contract and then the process to complete that.

After that, project managers will use procurement as they access high skills and resources that they can provide to their team (Darr, 2019). A project manager will have to create a procurement plan as it is an essential role that will align stakeholders and define expectations.

The plan also includes all the post procurement activities that require an effective transition in business operations.

Commercial and Contract management

Contract management is defined as managing contracts with partners, vendors, employees or customers. Effective contract management is essential to maintain and understand every process in the entire contract process, such as creating and utilisation of appropriate data (Adami, 2020).

For the correct handling of contact management, some essential elements are included such as legal playbooks, legal templates, self-service portals and electronic signature. Other than that, requesting, generating, negotiating, approving, executing, searching, complying and reviewing all fall under contract management.

These steps will support commercial management by managing all the processes essentially. Many companies are now getting in contact with each other by signing different contracts that process the transfer of relevant information and data.

It is necessary for every organisation to have appropriate information when needed (Geppert 2020). Many issues and challenges are faced by contract and commercial management that are described below:

Contract management tool and systems

Out of 51% of contractors are handling this risk that is related to tools and systems. Inappropriate functioning of tools will lead the project to failure, so it becomes essential for them to tackle this issue seriously (McCoyal. 2018).

Many contractors have taken a plunge for meaningful automation, and some are thinking of replacing or augmenting the existing systems.

Adopting new tools and techniques is essential and becoming diverse as many organisations are looking at developing bots, apps and enable new devices that include clause libraries and dynamic playbooks. Other than that, machine-based negotiations are also adopted by contractors to solve this issue.

1. Providing measurable business values:

Many contractors are not capable of solving these issues and don’t able to develop a new strategy that helps them in resolving such problems (Ganapathy, 2020).

Managers need to develop essential risk management techniques that help them in providing adequate business value. Inspirational leaders are categorising based on their potential that takes the inappropriate project direction using the wealth of data that is generated during the contracting process.

Along with that, the training and development part will also help them in applying common techniques and methods.

2. Development of new contract standards and terms:

In today’s world, contracts are changing rapidly, and these frequent changes need to be adopted by contractors effectively. Other than that, market-changing speed is also forcing them to take reviews and feedback rapidly to ensure competitiveness in the market (Misra, 2019).

Many contractors are thinking of adopting new commercial offerings and templates, such as supporting performance-based agreements and cloud services. It becomes essential for them to adopt new standards constantly for maintaining the competitive nature in the market.

3. Contract simplification:

Many potential drivers and simplification perceptions can take different forms (Drinks al., 2020). For some contractors, it is all about greater standardisation; some thinks it is the increased sequence of the contract with robotic process automation (RPA).

Thinking as per the leader’s point of view, it is more than this, and it is about fundamental re-design and re-assessment of their contracts.

They must focus on the designing process that should be designed that can reduce the cycle time, risk and enhance the ease of doing business. Contractors need to think in a way that must fulfil the demand of consumers.

4. Inadequate risk management:

The performance of every individual is dependent on the skills and capabilities they access. A project manager will highly manage and creates an ideal environment for working (Five essential contract management tools, 2020).

It is essential to identify potential scenarios that can result in arising risk and make plans for that are adequate parts of the project management. No single project will go the same as planned, and there is a probability of facing unlimited possibilities due to different variables.

It is mandatory to make alternative plans that can cope up with the project to resolve the risk. An organisation must have a risk management system as it helps in identifying and mitigating risk.

5. Budgeting issues:

The primary issue that an organisation faces while signing the contract is budgeting issues (Kogut-O’Connellal. 2017). It could be considered a financial issue that can become the biggest hurdle in completing any project successfully as contract managing is the first step of the project.

They need to analyse the entire cost management system before signing any deal. It will help them in resolving future issues related to budget problems.

Other than that, it is essential to have an appropriate planning process and make a real assumption that helps in avoiding different cost issues.

Many different tools and techniques can be used to measure and evaluate the issues that a contract manager will face. For instance, a risk management system will help in identifying and mitigating risk appropriately.

It is the tool that helps the contract managers to recognise and analyse the risk appropriately and also reduces the probability of risk (Rendon and Snider, 2019).

After that, contract managers are using digital contract and documentary storage tools for managing the essential data efficiently. It will help in monitoring all the documentation related data frequently and also helps the contractors to attain adequate business values.

Additionally, digital technology also helps organisations in saving the data securely and also maintains version control. For this purpose, the contract respiratory system is used that helps contractors in storing the data of different contracts adequately.

It helps the company to reduce risks, increase savings and revenues, makes search easy and organise contracts essentially.

Tools and techniques used to measure and solve the business issues:

Further, inefficient tracking of contracts can become a threat in achieving goals, low level of security, responsible for operational and regulatory risk. Manual filing systems, spreadsheets and emails are not capable of keeping the contractors appropriately (Park and Kim, 2018).

Many companies are using contract management software to resolve this issue and enhance the contract management lifecycle essentially.

The tools that can be used to solve this issue are contract drafting, improved collaboration, performance insights and improved collaboration.

With the help of this software, contract managers will be able to see contracts at close rates. It is user-friendly, automated task reminders/key dates and also enhances the success of any contract (Safa 2017).

At last, e-signatures will help the contractors to resolve the issues of fraud. Using this, they don’t have to keep any physical copies with them. E-signatures help them in saving the documents online, and it also saves cost and time.

They are also capable of providing enhanced security and is helpful in improving business visibility and relationships with vendors.

In today’s world, every project management company are trying to improve internal processes using different technologies. It will help them in solving a number of issues quickly, but it is not easy to implement digital technology rapidly (Five essential contract management tools, 2020).

Before adopting technology, they need to organise consulting sessions that help in overseeing the new workflows. In large organisations, contract managers have to manage many contracts at the same time, so it makes it difficult for them to manage every deadline and renewal date.

In traditional lifestyle, documentation and paper but nowadays, organisations are adopting digital technologies. For coping up with the heavy workload, a contract manager can use artificial intelligence equipped contract lifecycle management technology as it offers an intelligent and single repository for contracts.

The technology allows managers to manage the entire process at any stage adequately (Misra, 2019). These are some tools and techniques that are helpful for resolving such issues appropriately also guides the contract manager to stay on top with deadlines and key dates.

Tools to develop contractual and commercial plans

In simple terms, contract management can be defined as the process that manages the lifecycle of contracts administered by an organisation (Rendon, 2019).

The primary objective of contract management is to meet the goal that is asked by both parties essentially and effectively.

A contract management plan essentially consists of three phases that include transition, contract management and contract close-out. Various benefits are linked with contract management that are:

1. It effectively delivers the decided products and services at the agreed stage.

2. They have to reduce the risk using robust contract management practices.

3. It focuses on maintaining a healthy relationship with the supplier for delivering the best outcome (Contract management framework, 2018).

4. The management also system delivers contracts under the fixed cost.


Figure 1: Contract management lifecycle:

(Source: Contract Management framework, 2019)

Contract management planning is done before signing the contracts. Activities performed before the contract award puts an impact on the way conflict will be managed. After that, the phase of the contract management lifecycle has begun:

1. Transition:

It is the process that falls between service commencement and contract execution. The crucial point that is focused on in this phase is to ensure that AHPRA and supplier both will deliver the terms made during specification and contract (Faraji, 2019).

In this process, contract hand-over is done that includes appointment with contract manager, reviewing the scope and outcome to be achieved, make sure that the contract is legally registered under the Unit4 contract management system.

After that, roles will be assigned based on different skills and capabilities the contract management team needed. All the key contacts, performance managements using KPIs/SLAs should be done; risk management and responsibility must be defined clearly (Safa al. 2017).

A structure named information management is used to store all the essential data such as bank guarantees, insurance certificates, signed contracts and many more.

2. Contract management:

Implementing performance management techniques is a must for delivering the values that are expected (Yasin and Liu, 2016). Quality, cost, responsiveness and savings are done to ensure the delivery of the contract on time.

Managers need to collect all the KPIs/SLAs information, develop meeting materials, reviewing previous meetings and set the objectives. Another tool that can be used to measure performance is termed the SMART method.

Performance measures will help in driving better outcomes and also ensures if any additional data is needed. Other than that, the contract manager’s needs to manage the performance that is not meeting the expected criteria (Rendon and Snider, 2019).

They can use various techniques such as informal discussions, liquidated damages, using dispute-resolution and initiating litigation. They need to manage risk by monitoring all the alternatives and use of different technologies to collect their data as discussed above.

3. Contract close-out:

It is the last phase of any contract that means closing the deal, ensuring the liabilities and obligations with the suppliers have been met.

A contract can also be closed when the legally signed documents expire (Park and Kim, 2018). At this time, the contract manager needs to identify whether there is a need for specific goods and services in the market. In this case, re-procurement will be done.

At last, performance will be reviewed to store the data appropriately. It can be done by taking feedbacks, reviews, customer performance, audit reports and weaknesses in planning.


It has been concluded in this report that there are significant issues and challenges a contract and commercial manager can face while completing any project.

The primary issue was about managing workloads and numerous data at the same time. At this time, they can use contract management software to keep the details of all the contractors and due dates as well.

In today’s world, many contractors are using digitally developed e-signature facilities to reduce the chances of fraud; E-signatures don’t require any physical copies they can be stored in the memory.

It also enhances the security of contracts made. Further, many issues of contract and commercial management face such as budgeting issues, inadequate risk management, contractor tools and systems and many more. They are developing technology that helps them in facing these challenges.

Further, the report also concluded that various tools and techniques could be used to process a contractual plan. The report has used a contract management framework consists of three phases.

It includes transition, contract management and contract close-out. All three steps must be followed adequately, and they need to manage risk and performance that helps them in acquiring the best results.


Books and Journals

Adami, R.D., 2020. Contact Management System and Method. U.S. Patent Application 16/112,851.

Borkovskaya, V., 2018. Project management risks in the sphere of housing and communal services. In MATEC Web of Conferences (Vol. 251, p. 06025). EDP Sciences.

Darr, W., 2019. Advanced Issues of Procurement Management. tradition.

de Araújo, M.C.B., Alencar, L.H. and de Miranda Mota, C.M., 2017. Project procurement management: A structured literature review. International Journal of Project Management35(3), pp.353-377.

Drinks, I., Reality Technology Inc, 2020. Contract management, compliance and financial reporting system and method. U.S. Patent Application 16/783,605.

Faraji, A., 2019. Smart Contract-Based Conceptual Model for Optimizing Risk Distribution in Construction Industry. In 3rd International Conference on Applied Researches in Structural Engineering and Construction Management (pp. 1-10).

Fleming, Q.W., 2019, January. Project procurement management: contracting, subcontracting, teaming. Project Management Institute.

Ganapathy, S., 2020. System and method for digital contract management. U.S. Patent Application 16/439,551.

Geppert, B. and Roessler, F., Avaya Inc, 2020. System and method for graphically managing a communication session with a context-based contact set. U.S. Patent 10,574,623.

Kogut-O’Connell, J.J., Pradhan, S.V., Sinha, A. and Sridhar, S., International Business Machines Corp, 2017. A predictive approach to contract management. U.S. Patent 9,646,354.

Ma, X., Xiong, F., Olawumi, T.O., Dong, N. and Chan, A.P., 2018. Conceptual framework and roadmap approach for integrating BIM into lifecycle project management. Journal of Management in Engineering34(6), p.05018011.

McCoy, E.D.V., Genesys Telecommunications Laboratories Inc and Interactive Intelligence Group Inc, 2018. System and method for managing contact centre system. U.S. Patent Application 15/847,483.

Padalkar, M. and Gopinath, S., 2016. Six decades of project management research: Thematic trends and future opportunities. International Journal of Project Management34(7), pp.1305-1321.

Papke-Shields, K.E. and Boyer-Wright, K.M., 2017. Strategic planning characteristics applied to project management. International Journal of Project Management35(2), pp.169-179.

Park, S.H. and Kim, Y.S., 2018. An assessment of contract management capabilities for overseas construction projects. KSCE Journal of Civil Engineering22(7), pp.2147-2158.

Radujković, M. and Sjekavica, M., 2017. Project management success factors. Procedia Engineering196, pp.607-615.

Rahimian, R., 2020. Providing Risk Management Strategies in Procurement and Supply Processes. Advanced Journal of Chemistry-Section B2(4), pp.247-253.

Rendon, R.G. and Snider, K.F., 2019. Management of defence acquisition projects. American Institute of Aeronautics and Astronautics, Inc..

Rendon, R.G., 2019. Enhancing professional and technical excellence: Analysis of contract management competency models. Acquisition Research Program.

Safa, M., Shahi, A., Haas, C.T. and Hipel, K.W., 2017. Construction contract management using value packaging systems. International Journal of Construction Management17(1), pp.50-64.

Shokr, I. and Torabi, S.A., 2017. An enhanced reverse auction framework for relief procurement management. International journal of disaster risk reduction24, pp.66-80.

Yasin, A. and Liu, L., 2016, June. Online identity and smart contract management system. In 2016 IEEE 40th Annual Computer Software and Applications Conference (COMPSAC) (Vol. 2, pp. 192-198). IEEE.


Contract management framework. 2018. [Online]. Accessed through: < file:///C:/Users/HP/Downloads/AHPRA—Framework—Contract-Management-Framework.PDF> [Accessed on; 17 December, 2020].

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Misra. S. 2019. Overcoming five common contract manager challenges. [Online]. Accessed through: <> [Accessed on: 17 December 2020].











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