CHAPTER 8

CONTRACT
MANAGEMENT
 CONTRACT
• A contract exist when an offer is made and
accepted
• It may take different forms such as:
▫ A written document
▫ A digital document
▫ A fax
▫ A verbal agreement
 CONTRACT..Cont
• The basis for all event management
documentation
• It is the goals and objectives of the event frozen
in time
• Each contract specify who will do what, when it
will be done and for whom it will be done
• It can be detailed or as simple as letter of
agreement or purchase order (PO)
EVENT SPECIFIC CONTRACTS
• A contract with suppliers
• Hotel contract
• Key concepts:
▫ Ensure all contract conform to local, state and federal
regulations
▫ Determine the time frame for final execution
▫ Prepare original for each signer and use the signed
original as the official documents not facsimiles
▫ Create a separate checklist to track approval records
for all written agreements
▫ Identify arbitration and dispute resolution methods
TYPES OF CONTRACTS
• COST-PLUS CONTRACTS
• FIXED-PRICE CONTRACTS
• INCENTIVE CONTRACTS
• MIXED CONTRACTS
COST PLUS CONTRACTS
• Cost plus percentage or cost plus fixed fee
contract.
• The contractor passes on any costs directly to the
client.
• It is common contract made between the event
company and its client/ sponsor
• The event company charges the client a
percentage of the gross amount (total cost of the
event or a mark up)
COST PLUS CONTRACTS …Cont
• The event company overhead could be absorbed
by the fixed fee or could be a separate cost to the
client
• It can also structure it so that it can be paid on
an hourly basis
• It means that many of the risk are borne by the
client
• The client assume that the contractor will get the
best price for the goods and services
• Examples???
FIXED-PRICE CONTRACT
• Also known as lump-sum contract
• One price is determined for the whole resource
• It allows the supplier and contractor the freedom
to use its own subcontractors to produce
deliverable
• It transfer the risk of variation in cost to the
supplier
• The good and services have to be carefully
described and the manager need to know the
market price of the goods and services
• Examples ????
INCENTIVE CONTRACT
• A percentage share of profit is common for
entrepreneurial events or corporate-sponsors
events that have an admission price
• The entertainment supplier might get
percentage of the door
• Incentives can be included in the cost-plus or the
fixed price contract
• If certain cost or schedule targets are met, then
the contractor or supplier gains an extra fee
• Examples???
MIXED CONTRACT
• It is a mixture of all three type described
• A venue could be a contracted for a fixed fee plus
cost with a percentage of profits
• It is advisable to secure the services in the case
of unique contracts.
• Examples ????
THE CONTRACT MANAGEMENT
PROCESS
NEGOTIATION
SPECIFICATION AND EVALUATION
ADMINISTRATION
THE DEGREE OF ADMINSITRATION
• Will vary depending on such factors :
▫ The uniqueness of the event
▫ The experience and skills of the contractors
▫ The confidence of the client or sponsor on the
event management abilities
▫ The magnitude and the visibility of the event
CONTRACT VARIATIONS
COMMON PROBLEMS
• Too much time spent on negotiation
• Lack of sufficient knowledge regarding the event element
• Lack of contract knowledge
• Not realizing the implication of a variation in the contract
• Settling for a cost plus contract
• Not requiring the suppliers to make timely progress reports
• Not realizing that both bidding and administration are cost to
the event
• Not settling disputes
• Not obtaining a signed release form at the time of any dispute
settlement
• Not asking questions
• Not getting any changes
END OF CHAPTER 8
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