Most Project Problems Don't Start with the Contract

When projects begin experiencing difficulty, the contract often receives much of the attention.

Parties review contractual provisions. Lawyers are consulted. Questions arise about risk allocation, obligations and responsibilities.

Sometimes the contract is part of the problem.

More often, however, the issue started somewhere else.

Across complex projects and transactions, a recurring pattern is that significant effort is invested in negotiating and executing the agreement, but far less attention is given to what happens once delivery begins.

The deal team completes its work.

The delivery team inherits the outcome.

That transition is often where difficulties start to emerge.

The people responsible for delivering the project may understand what the contract says but not necessarily why particular positions were negotiated. Key commercial assumptions may be forgotten. Certain risks may have been consciously accepted. Specific mechanisms may have been included for important strategic reasons.

Over time, that context can be lost.

The contract remains in place, but the commercial reasoning behind it gradually disappears.

What tends to happen in practice is that important provisions are overlooked. Escalation pathways are not used. Early warning signs are missed. Discussions that should occur early are deferred until options become limited.

The issue is not usually the document itself.

The issue is the gap between the people who negotiated the deal and the people responsible for delivering it.

Contracts are intended to support delivery.

They are not simply records of negotiations.

The strongest outcomes occur when the thinking behind the deal carries through into implementation. Delivery teams understand not only what the contract requires, but why it was structured the way it was.

Good contracts matter.

So does ensuring the people responsible for delivery understand how to use them.