An interview with Jerry Pessah and Andre Ritz
Contract management is an essential yet often overlooked aspect of project-based industries. As industries evolve and professionals pivot between sectors, the need for sound contract management practices becomes more crucial than ever. In this article, we explore insights from a recent discussion on the challenges and growth of contract management, particularly within South America, and how the industry is adapting to meet modern demands.
The Changing Career Landscape
South America, especially Chile, has seen a significant shift in industries, with professionals from mining transitioning into renewable energy projects. This shift highlights the adaptability of professionals within project-based industries, where experience in one sector can be applied to another. In recent years, renewable energy projects, such as those involving green hydrogen, have begun to attract talent from sectors like mining, where highly qualified professionals have honed their skills on world-class projects.
These professionals bring with them invaluable project management expertise and a deep understanding of complex industry needs. This trend reflects how industries can benefit from cross-sector experience and how professionals are able to carve out new paths despite market fluctuations.
The Disconnect: Technical vs. Commercial Alignment
One of the most significant challenges in contract management is the misalignment between technical teams and commercial or contract management professionals. In many cases, contract management is an afterthought in the project lifecycle. Engineers and technical teams often dominate the process, with contracts being finalized only once the technical solutions have been established. This misalignment can result in inefficiencies, cost overruns, and legal complications that could have been avoided with earlier integration of commercial considerations.
As Jerry pointed out during the discussion, "there's still not enough knowledge transferred to understand that contract management is extremely important," especially in a rapidly changing work environment. The generational shift in management, with younger professionals taking leadership roles, exacerbates this issue. The younger generation often lacks the experience and understanding of the importance of aligning technical and commercial efforts, leading to recurring mistakes and challenges.
The Evolution of Contract Management
Despite the challenges, contract management as a discipline has grown significantly over the years. Experienced professionals who have worked in this field for decades have built up a wealth of knowledge. They understand the intricacies of contracts, claims processing, and change management — and, importantly, what works and what does not.
The issue, however, lies not within the contract management teams themselves but in the broader project management landscape. Many stakeholders, particularly from legal backgrounds, remain resistant to change. As Jerry noted, "lawyers still have a different point of view that it's difficult for them to accept certain things from our side." This barrier can obstruct the effective integration of contract management within project teams.
Standardization: The Key to Progress
To improve the overall efficiency of contract management, professionals in the field are advocating for standardization. Just as engineering disciplines have well-documented processes and practices, contract management can benefit from the same approach. By creating standardized practices, teams can avoid confusion and ensure that tasks are handled by the right people.
For example, tasks such as tracking equipment hours should be handled by the project management team, not the contract manager. "These kinds of tasks shouldn’t be part of your activity as a contract manager," said Andre. "Contract administrators shouldn’t be chasing hours between contractors; they should be tasked with collecting and invoicing their cross-services between themselves." Clear delineation of responsibilities helps streamline operations and allows contract managers to focus on more strategic tasks.
The Path Forward: Knowledge Transfer and Collaboration
Moving forward, contract management needs to focus on knowledge transfer and collaborative working. Experienced professionals should make it a priority to pass on their expertise to younger generations, ensuring that they understand the importance of a robust contract management strategy. At the same time, greater collaboration between legal, technical, and contract management teams will be essential to overcome the current barriers.
"We need to start working with stakeholders to help them understand how to work together," Andre emphasized. By fostering a culture of collaboration and continuous learning, the industry can begin to break down the silos that prevent effective contract management.
Conclusion
The future of contract management is bright, but there is still work to be done. By recognizing the value of standardized practices, encouraging better knowledge transfer, and fostering collaboration between departments, the industry can unlock its full potential. For those professionals navigating this evolving landscape, the key to success will be the ability to adapt, collaborate, and prioritize both technical and commercial perspectives throughout the project lifecycle.
Jerry and Andre were in conversation with Tara Bevan and Cinthia Navarez Martin from WorldCC.
Jerry Pessah, Senior Director in Contracts Management, Fluor Corporation
Jerry started his career in Peru and has travelled the world undertaking major projects within the Mining and Metals, Energy and Chemicals and Advanced Technologies industry. He has since immigrated to Canada and is a Contracts and Claims Management Subject Matter Expert (SME) at Fluor and a distinguish Fellow of the World Commerce and Contracting and co-author of the International Construction Contract Law book 2nd Edition.
Andre Ritz, Contracts Lead/ Manager, Fluor Corporation
Andre is a Contracts Manager, steering high-stakes projects in Chile’s dynamic mining sector. His journey began as a Project Engineer in the salmon farming industry, where he navigated the complexities of diverse construction ventures. He then honed his procurement expertise at the European Southern Observatory, ensuring seamless acquisitions for groundbreaking scientific projects. Now at Fluor, he has further consolidated his expertise across all aspects of Contacts Management, at home office and on site, working in projects in Chile, Peru and Argentina.