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What is a project management contract?

What should be included in a project management contract template?

Projects have always been part of our lives; in schools, workplaces, and even at homes. Projects are unique, and they are meant to be completed within specific constraints. These constraints include budget, resources, time, among other factors. Hence, the reason for a project management professional is to initiate, plan, control, monitor, and close a project successfully in the business world. In that case, nothing happens if you have not signed a contract.

Else, you may carry on with the project at a cost should anything go wrong in the course of execution. Every manager needs a solid project management contract template to work with customers. 

A project management contract is an agreement between a project manager and an employer or owner. You don't want to be involved in managing a project that would cost you a fortune because you sealed the agreement with a handshake rather than a written contract. A project management contract template is useful because you don’t have to start crafting one at the eleventh hour of sealing a contract.

You want to ensure there's a solid template on the ground that you can always edit to make a particular need. If you have none, there's no need to worry. You can either download a ready template from our gallery or get quick tips to create your own.

Project Management Contract Template
Image Credits: andrewazzopardi.org

Read on to find out about the basic information in a project management contract, writing a project management contract template and what information to include.

A robust project management agreement captures major information needed for decision making regarding the project. These include the deliverable, scope and strategies, compensation, performance measure, timeframe, authorization, among others. Let’s see the information in each section of a project management contract template.

1. Introduction in the project management contract

Include a title page that identifies the document as a project management contract, then identify the parties involved in the agreement. Add personal information of parties, including name, contact and mailing address, and phone number.

2. Executive summary in the project management contract template

Just like the name, summarize the problem, goal, and objective of the project so that a ready can rapidly grasp what the document is all about without going through the entire write up.

3. Detailed project scope in your project management contract sample

The project's purpose is to achieve a planned functionality in carrying out the project within its constraints. Hence, the need for a comprehensive definition of functions and deliverables.

Project Management Contract Template Sample
Image Credits: formsbirds.com

4. Schedule in the project management contract template

The contract has to specify the project start and completion date. It is advisable to break down the project into manageable bits and assign milestones to them. A better schedule gives room for effective tracking and monitoring of delays.  

5. Compensation in your project management contract

A project management contract must include payment and other expenses associated with the project. It includes project management fees and pricing models. Settlement may take into account whether the project is an on-time activity or recurring type.

6. Limitation of liability in the project management contract template

This is the section of the project management contract template where you add a clause that limits the amount of exposure you face or liability in cases of damages or loss when performing your duty. As a project manager, you want to know if the project has insurance cover for personnel and resources before agreeing to take up the job.

7. Performance measure in the project management contract sample

A good project management contract gives room for rewarding superior performance. Hence, define indexes to measure performance and to track the progress of work. Your performance index may also be useful to the client in measuring profitability or carrying out a cost-benefit analysis.

A project manager is an independent professional who is employed to perform a broad range of services. These may include planning, budgeting, controlling, and documenting all aspects of a specific project.  If you work as a project manager for a client, you will act on behalf of your employer and ensure you adequately manage the project/service of your client. To do that effectively, you’d need to write and get the client to sign a project management agreement with you.

The agreement is a contract that obligates you as the project manager and the contractors involved to provide the deliverables of a project. Also, the agreement also obligates the client or owner of the project to pay for the services and bear the cost of materials needed to achieve its goal. It is important you have a project management agreement in place before commencing any job because of there no legal contract without the agreement. 

Project Management Agreement Template
Image Credits: biztree.com

What are the essentials of a project management contract?

The task requiring your service as a project manager may be simple or complex, depending on the nature and scope of work. The complexity of the review process of a project management agreement varies with scope as well. A complex project belonging to a large organization may be subjected to a series of public review. At the same time, that of a small business may require just the owner and the project manager to review the agreement.

There are no hard and fast rules to project management agreement writing. The content of the agreement is often dependent on the scope and complexity of the project management contract type. We will give you the basic information that should be captured in your agreement irrespective of the nature or scope of the project. 

Project management agreement outline - the following section should be captured in a typical agreement template:

1. Title page in your project management agreement

The agreement should start with the introduction of parties after stating that it is a project management agreement. The document has to define the date the agreement would take effect between the owner and the project manager. It must contain your business name, mailing address, contact address, and the phone numbers of parties involved. 

2. Table of contents in your project management agreement template

Overview and table of content are applicable if the document is a multi-paged agreement. 

3. Executive summary in your project management agreement template

Make a statement about customer issues and the solution/service you have proposed to provide.  

4. Project details in the project management agreement example

You should describe the specific project management service you’ve been employed to render. Also, give brief information on your strategy, benefits, and budget in your project management agreement. 

5. Pricing in the project management agreement sample

The agreement should include details about fees and pricing models. Fixed contracts, also known as lump sum contracts, may be charged as a one-time service. If the project is a recurring type, you may consider a different pricing model and request a retainer fee.

Project Management Agreement Template Sample
Image Credits: sampletemplates.com

6. Performance measure in your project management agreement template

Define key performance index to measure how well you are doing in the project. This would help your client to measure how profitable the project is compared to its expenses.

7. Limitations & liability in your project management agreement template

This section makes a provision in your project management agreement, limiting your liability to potential damages and loss during the course of carrying out your service. 

8. Terms and conditions in the project management agreement sample

This section captures other conditions that have not been captured in other parts of the agreement. 

Tips to create a watertight project management agreement 

  1. Negotiate and ask specific questions about the project
  2. Document your negotiations. 
  3. Define terms 
  4. Keep it simple
  5. Plan for disputes
  6. Answer questions about conditions for termination 
  7. Work with a solicitor to review and add what you’ve missed
  8. Link payment to performance
  9. Don’t start until the agreement is signed
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The simplest way to create a legally sound contract. Check out an example below

Project Management Contract Template

This Contract is between Sample Client (the "Client") and John Doe (the "Manager").

The Contract is dated [the date both parties sign].

1. WORK AND PAYMENT.

1.1 Project. The Client is hiring the Manager to do the following: The Manager will assist the Client with project managing services.

1.2 Schedule. The Manager will begin work on August 22, 2020 and the work is ongoing. This Contract can be ended by either Client or Manager at any time, pursuant to the terms of Section 6, Term and Termination.

1.3 Payment. The Client will pay the Manager a rate of $80.00 (USD) per hour. Of this, the Client will pay the Manager $650.00 (USD) before work begins.

1.4 Expenses. The Client will reimburse the Manager's expenses. Expenses do not need to be pre-approved by the Client.

1.5 Invoices. The Manager will invoice the Client weekly. The Client agrees to pay the amount owed within 15 days of receiving the invoice. Payment after that date will incur a late fee of 5.0% per month on the outstanding amount.

1.6 Support. The Manager will not provide support for any deliverable once the Client accepts it, unless otherwise agreed in writing.

2. OWNERSHIP AND LICENSES.

2.1 Client Owns All Work Product. As part of this job, the Manager is creating “work product” for the Client. To avoid confusion, work product is the finished product, as well as drafts, notes, materials, mockups, hardware, designs, inventions, patents, code, and anything else that the Manager works on—that is, conceives, creates, designs, develops, invents, works on, or reduces to practice—as part of this project, whether before the date of this Contract or after. The Manager hereby gives the Client this work product once the Client pays for it in full. This means the Manager is giving the Client all of its rights, titles, and interests in and to the work product (including intellectual property rights), and the Client will be the sole owner of it. The Client can use the work product however it wants or it can decide not to use the work product at all. The Client, for example, can modify, destroy, or sell it, as it sees fit.

2.2 Manager's Use Of Work Product. Once the Manager gives the work product to the Client, the Manager does not have any rights to it, except those that the Client explicitly gives the Manager here. The Client gives the Manager permission to use the work product as part of the Manager's portfolio and websites, in galleries, and in other media, so long as it is to showcase the Manager's work and not for any other purpose. The Manager is not allowed to sell or otherwise use the work product to make money or for any other commercial use. The Client is not allowed to take back this license, even after the Contract ends.

2.3 Manager's Help Securing Ownership. In the future, the Client may need the Manager's help to show that the Client owns the work product or to complete the transfer. The Manager agrees to help with that. For example, the Manager may have to sign a patent application. The Client will pay any required expenses for this. If the Client can’t find the Manager, the Manager agrees that the Client can act on the Manager's behalf to accomplish the same thing. The following language gives the Client that right: if the Client can’t find the Manager after spending reasonable effort trying to do so, the Manager hereby irrevocably designates and appoints the Client as the Manager's agent and attorney-in-fact, which appointment is coupled with an interest, to act for the Manager and on the Manager's behalf to execute, verify, and file the required documents and to take any other legal action to accomplish the purposes of paragraph 2.1 (Client Owns All Work Product).

2.4 Manager's IP That Is Not Work Product. During the course of this project, the Manager might use intellectual property that the Manager owns or has licensed from a third party, but that does not qualify as “work product.” This is called “background IP.” Possible examples of background IP are pre-existing code, type fonts, properly-licensed stock photos, and web application tools. The Manager is not giving the Client this background IP. But, as part of the Contract, the Manager is giving the Client a right to use and license (with the right to sublicense) the background IP to develop, market, sell, and support the Client’s products and services. The Client may use this background IP worldwide and free of charge, but it cannot transfer its rights to the background IP (except as allowed in Section 11.1 (Assignment)). The Client cannot sell or license the background IP separately from its products or services. The Manager cannot take back this grant, and this grant does not end when the Contract is over.

2.5 Manager's Right To Use Client IP. The Manager may need to use the Client’s intellectual property to do its job. For example, if the Client is hiring the Manager to build a website, the Manager may have to use the Client’s logo. The Client agrees to let the Manager use the Client’s intellectual property and other intellectual property that the Client controls to the extent reasonably necessary to do the Manager's job. Beyond that, the Client is not giving the Manager any intellectual property rights, unless specifically stated otherwise in this Contract.

3. COMPETITIVE ENGAGEMENTS. The Manager won’t work for a competitor of the Client until this Contract ends. To avoid confusion, a competitor is any third party that develops, manufactures, promotes, sells, licenses, distributes, or provides products or services that are substantially similar to the Client’s products or services. A competitor is also a third party that plans to do any of those things. The one exception to this restriction is if the Manager asks for permission beforehand and the Client agrees to it in writing. If the Manager uses employees or subcontractors, the Manager must make sure they follow the obligations in this paragraph, as well.

4. NON-SOLICITATION. Until this Contract ends, the Manager won’t: (a) encourage Client employees or service providers to stop working for the Client; (b) encourage Client customers or clients to stop doing business with the Client; or (c) hire anyone who worked for the Client over the 12-month period before the Contract ended. The one exception is if the Manager puts out a general ad and someone who happened to work for the Client responds. In that case, the Manager may hire that candidate. The Manager promises that it won’t do anything in this paragraph on behalf of itself or a third party.

5. REPRESENTATIONS.

5.1 Overview. This section contains important promises between the parties.

5.2 Authority To Sign. Each party promises to the other party that it has the authority to enter into this Contract and to perform all of its obligations under this Contract.

5.3 Manager Has Right To Give Client Work Product. The Manager promises that it owns the work product, that the Manager is able to give the work product to the Client, and that no other party will claim that it owns the work product. If the Manager uses employees or subcontractors, the Manager also promises that these employees and subcontractors have signed contracts with the Manager giving the Manager any rights that the employees or subcontractors have related to the Manager's background IP and work product.

5.4 Manager Will Comply With Laws. The Manager promises that the manner it does this job, its work product, and any background IP it uses comply with applicable U.S. and foreign laws and regulations.

5.5 Work Product Does Not Infringe. The Manager promises that its work product does not and will not infringe on someone else’s intellectual property rights, that the Manager has the right to let the Client use the background IP, and that this Contract does not and will not violate any contract that the Manager has entered into or will enter into with someone else.

5.6 Client Will Review Work. The Client promises to review the work product, to be reasonably available to the Manager if the Manager has questions regarding this project, and to provide timely feedback and decisions.

5.7 Client-Supplied Material Does Not Infringe. If the Client provides the Manager with material to incorporate into the work product, the Client promises that this material does not infringe on someone else’s intellectual property rights.

6. TERM AND TERMINATION. This Contract is ongoing, until ended by the Client or the Manager. Either party may end this Contract for any reason by sending an email or letter to the other party, informing the recipient that the sender is ending the Contract and that the Contract will end in 7 days. The Contract officially ends once that time has passed. The party that is ending the Contract must provide notice by taking the steps explained in Section 11.4. The Manager must immediately stop working as soon as it receives this notice, unless the notice says otherwise. The Client will pay the Manager for the work done up until when the Contract ends and will reimburse the Manager for any agreed-upon, non-cancellable expenses. The following sections don’t end even after the Contract ends: 2 (Ownership and Licenses); 3 (Competitive Engagements); 4 (Non-Solicitation); 5 (Representations); 8 (Confidential Information); 9 (Limitation of Liability); 10 (Indemnity); and 11 (General).

7. INDEPENDENT CONTRACTOR. The Client is hiring the Manager as an independent contractor. The following statements accurately reflect their relationship:

- The Manager will use its own equipment, tools, and material to do the work.- The Client will not control how the job is performed on a day-to-day basis. Rather, the Manager is responsible for determining when, where, and how it will carry out the work.- The Client will not provide the Manager with any training.- The Client and the Manager do not have a partnership or employer-employee relationship.- The Manager cannot enter into contracts, make promises, or act on behalf of the Client.- The Manager is not entitled to the Client’s benefits (e.g., group insurance, retirement benefits, retirement plans, vacation days).- The Manager is responsible for its own taxes.- The Client will not withhold social security and Medicare taxes or make payments for disability insurance, unemployment insurance, or workers compensation for the Manager or any of the Manager's employees or subcontractors.

8. CONFIDENTIAL INFORMATION.

8.1 Overview. This Contract imposes special restrictions on how the Client and the Manager must handle confidential information. These obligations are explained in this section.

8.2 The Client’s Confidential Information. While working for the Client, the Manager may come across, or be given, Client information that is confidential. This is information like customer lists, business strategies, research & development notes, statistics about a website, and other information that is private. The Manager promises to treat this information as if it is the Manager's own confidential information. The Manager may use this information to do its job under this Contract, but not for anything else. For example, if the Client lets the Manager use a customer list to send out a newsletter, the Manager cannot use those email addresses for any other purpose. The one exception to this is if the Client gives the Manager written permission to use the information for another purpose, the Manager may use the information for that purpose, as well. When this Contract ends, the Manager must give back or destroy all confidential information, and confirm that it has done so. The Manager promises that it will not share confidential information with a third party, unless the Client gives the Manager written permission first. The Manager must continue to follow these obligations, even after the Contract ends. The Manager's responsibilities only stop if the Manager can show any of the following: (i) that the information was already public when the Manager came across it; (ii) the information became public after the Manager came across it, but not because of anything the Manager did or didn’t do; (iii) the Manager already knew the information when the Manager came across it and the Manager didn’t have any obligation to keep it secret; (iv) a third party provided the Manager with the information without requiring that the Manager keep it a secret; or (v) the Manager created the information on its own, without using anything belonging to the Client.

8.3 Third-Party Confidential Information. It’s possible the Client and the Manager each have access to confidential information that belongs to third parties. The Client and the Manager each promise that it will not share with the other party confidential information that belongs to third parties, unless it is allowed to do so. If the Client or the Manager is allowed to share confidential information with the other party and does so, the sharing party promises to tell the other party in writing of any special restrictions regarding that information.

9. LIMITATION OF LIABILITY. Neither party is liable for breach-of-contract damages that the breaching party could not reasonably have foreseen when it entered this Contract.

10. INDEMNITY.

10.1 Overview. This section transfers certain risks between the parties if a third party sues or goes after the Client or the Manager or both. For example, if the Client gets sued for something that the Manager did, then the Manager may promise to come to the Client’s defense or to reimburse the Client for any losses.

10.2 Client Indemnity. In this Contract, the Manager agrees to indemnify the Client (and its affiliates and its and their directors, officers, employees, and agents) from and against all liabilities, losses, damages, and expenses (including reasonable attorneys’ fees) related to a third-party claim or proceeding arising out of: (i) the work the Manager has done under this Contract; (ii) a breach by the Manager of its obligations under this Contract; or (iii) a breach by the Manager of the promises it is making in Section 5 (Representations).

10.3 Manager Indemnity. In this Contract, the Client agrees to indemnify the Manager (and its affiliates and its and their directors, officers, employees, and agents) from and against liabilities, losses, damages, and expenses (including reasonable attorneys’ fees) related to a third-party claim or proceeding arising out of a breach by the Client of its obligations under this Contract.

11. GENERAL.

11.1 Assignment. This Contract applies only to the Client and the Manager. The Manager cannot assign its rights or delegate its obligations under this Contract to a third-party (other than by will or intestate), without first receiving the Client’s written permission. In contrast, the Client may assign its rights and delegate its obligations under this Contract without the Manager's permission. This is necessary in case, for example, another Client buys out the Client or if the Client decides to sell the work product that results from this Contract.

11.2 Arbitration. As the exclusive means of initiating adversarial proceedings to resolve any dispute arising under this Contract, a party may demand that the dispute be resolved by arbitration administered by the American Arbitration Association in accordance with its commercial arbitration rules.

11.3 Modification; Waiver. To change anything in this Contract, the Client and the Manager must agree to that change in writing and sign a document showing their contract. Neither party can waive its rights under this Contract or release the other party from its obligations under this Contract, unless the waiving party acknowledges it is doing so in writing and signs a document that says so.

11.4 Notices.

(a) Over the course of this Contract, one party may need to send a notice to the other party. For the notice to be valid, it must be in writing and delivered in one of the following ways: personal delivery, email, or certified or registered mail (postage prepaid, return receipt requested). The notice must be delivered to the party’s address listed at the end of this Contract or to another address that the party has provided in writing as an appropriate address to receive notice.

(b) The timing of when a notice is received can be very important. To avoid confusion, a valid notice is considered received as follows: (i) if delivered personally, it is considered received immediately; (ii) if delivered by email, it is considered received upon acknowledgement of receipt; (iii) if delivered by registered or certified mail (postage prepaid, return receipt requested), it is considered received upon receipt as indicated by the date on the signed receipt. If a party refuses to accept notice or if notice cannot be delivered because of a change in address for which no notice was given, then it is considered received when the notice is rejected or unable to be delivered. If the notice is received after 5:00pm on a business day at the location specified in the address for that party, or on a day that is not a business day, then the notice is considered received at 9:00am on the next business day.

11.5 Severability. This section deals with what happens if a portion of the Contract is found to be unenforceable. If that’s the case, the unenforceable portion will be changed to the minimum extent necessary to make it enforceable, unless that change is not permitted by law, in which case the portion will be disregarded. If any portion of the Contract is changed or disregarded because it is unenforceable, the rest of the Contract is still enforceable.

11.6 Signatures. The Client and the Manager must sign this document using Bonsai’s e-signing system. These electronic signatures count as originals for all purposes.

11.7 Governing Law. The laws of the state of Wisconsin govern the rights and obligations of the Client and the Manager under this Contract, without regard to conflict of law principles of that state.

11.8 Entire Contract. This Contract represents the parties’ final and complete understanding of this job and the subject matter discussed in this Contract. This Contract supersedes all other contracts (both written and oral) between the parties.

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