Engineers Should View Contracts as Allies, Not Adversaries

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Monday, June 6th, 2016
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Many engineering professionals continue to lack the knowledge and skill needed to properly engage with legal contracts and use them to their full advantage.

While non-lawyers often find legal contracts to be complex and intimidating, they can serve as invaluable tools for members of the engineering profession when it comes to managing client relationships as well as ongoing work projects.

According to Sean McCarthy, senior associate at Lovegrove Smith & Cotton, many engineering professionals continue to have a poor grasp of legal documents even when placed in contract management positions.

“While teaching courses I often encounter engineers who are bright and au fait with the technical side of projects and contracts, but lack a strong understanding of the legal contracts themselves,” said McCarthy, who serves as a facilitator for Engineering Education Australia’s Contract Management course.

“This is often because they’re thrown into the deep end of contract management by their organisations without first being well mentored or taught about contract interpretation.”

Lack of adequate training in contract interpretation can cause engineering professionals to feel trepidation or uncertainty about these key legal documents, or even neglect them completely.

“There’s a certain fear of contracts because they’re legalistic, and can be difficult to read as well as fairly ambiguous,” said McCarthy. “People that are managing contracts often don’t even read them – they run away from them, put them in the bottom drawer of the filing cabinet hoping that they’ll go away or that no issues will arise during the project.”

Instead of treating contracts with trepidation, however, McCarthy believes engineers should embrace them as a critical tool during the process of client interactions and project management.

“Engineers should become engaged with contracts and realise that they’re not as bad as they look – they can actually be a real ally for them on projects – like a hammer in the tool belt of a carpenter,” he said.

“Contracts are nothing to be scared of, and you acquire contract skills in the same way you acquire any other technical expertise that you develop over time as an engineer.

“It’s a matter of you just confronting them, dealing with them, reading them, and do this as often as you can, and you will find that they are reasonably friendly documents that can really be your ally.”

McCarthy notes that strong contract management invariably translates into a better outcome for engineering and construction projects.

“The better the contract, the better the fiscal savings, and often the better the timelines as well,” he said. “This is something which has been empirically proven by people like Partnerships Victoria and the International Association of Contract and Commercial Managers, that have used case studies on a number of occasions to say that effectively engaging and getting people trained in contract management is going to save an organisation potentially a lot of grief and a lot of money.

“But people do need to be trained in contracts in order to reap these benefits.”

First and foremost amongst the benefits that improved contract management can bring is a stronger understanding of projects themselves.

“Obviously the biggest advantage is knowledge,” said McCarthy. “You can know at any one point in time where you stand in terms of the relationship and where you stand in terms of your rights under the particular project.

“You can be ahead of the game plan, and use your contract to look at milestones, to look at deliverables, and to look at standards and expectations. Good contract management is definitely a part of good project management, so you’ve got to read your contracts.”

Another core advantage is enhanced ability to manage client relationships, and being fully apprised of all the options at your disposal for best dealing with the other parties to projects in variable circumstances.

“The second biggest benefit is that you can assert your position either nicely or not so nicely with the fully knowledge that the contract backs you up,” said McCarthy. “You can use contracts with various techniques to be politely assertive or gently persuasive, as well as to really hammer things home or adopt quite a firm position with regards to your legal rights.

“A good contract for example will have a dispute resolution clause in it and a variation clause in it, which are not designed to be adversarial, but to be mutually cooperative so that we’ve each got mechanisms to reflect changes as we go along.”

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