3 Steps to Create a Project Contract

By | February 2, 2021
3 Steps to Create a Project Contract

Every application, programming, and even a basic job starts with an idea. However, there are several steps between the inception and starting the development of that idea. Most important among the proceedings to fulfill a project is the project contract establishment. However, a process exists between the first meeting with the client and the signing of the contract. Read on to know more.

The importance of project contract

So, why bother going through the whole nine yards of writing and enforcing a contract for any project? The reason is simple; to keep the client and the company providing the job on the same page. As mentioned earlier, the essential details are mentioned in the project contract, but it may change depending upon the need of the client, company, or the project. Some of the other benefits provided by a project contract can be listed as;

  • Alignment of expectations

It is important to know the expectations and the requirements of the client, along with the provisions and services provided by the company. The project contract ensures the alignment of the requirements and the targets of the project between the company and the client.

  • Specifying the needed details

The project contract specifies the details of the working relationship between the client and the company with all the required details. For example, the contract can stipulate the time limit of delivery of any project or the correct time to pay the money. These specifications help in building the roadmap of the whole project.   

  • Protection of the business

A written legal contract provides a sense of security to the clients and the company. In any case, if either of them refrains or become unsuccessful in fulfilling a condition, the other party can take legal action against them. After both parties have understood and signed the document, the contract becomes officially mandatory. With a legally binding document supporting the project contract, each of the parties has a solid reason to fulfill the terms and conditions set for the job and protect their rights in official and legal matters. 

Creating a project contract

A project contract is made after the client and the service provider party agrees upon the conditions and other required points. Usually, the legal representative of each of the parties will review the conditions, change some of them if necessary, and then present it to their respective clients for final signature. The intermediate steps occurring between these events can be divided into three distinct periods. The three steps of creating a project contract can be given as;

  1. Establishment of the fundamentals

The first step of creating a project contract is to specify the basics of the job being offered.  Let us discuss this taking the development of an app as an example. Usually, the client’s concern will provide the content and the concept to the service provider. After that, the question of selecting the platform will come, whether it should be android, iOS, web, or any other. Besides, the management requirements of the contents and the vision and goal for the near future will also have to be discussed. 

The features of this app and the technical feasibility and options provided will also be a topic of discussion. Lastly, the timeline of the project will have to be selected, whether it is a stringent one or flexible; so that the steps to be taken in such cases could be decided beforehand. 

Just like the example mentioned above, any project contract will have to touch upon the several pointers mentioned above. The factors governing the project contract may change, however, the overall arrangement shall remain the same.

  1. Defining the scope

After hashing out the basics of the contact, comes the establishment of the scope of the project. Let us extend the example of the app development mentioned earlier. After the establishment of a high-level idea together, the client and the provider parties will have to go into the details and make a scope document. What would be the features of this document? It will explain and underline every feature of the app, including any back-end content management system and incorporation job. Essentially, it is an itemized list of the functions the app would include and the labor, both physical and digital- it would need to complete the project. 

Again, this principle would be feasible on any service and its related project contract. All the clients and the service provider need to get cleared about should be scoped out properly and the project contract should be designed likewise.

  1. Cost and phase determination

After the establishment of defined project scope, each of the items on the lines of the project contract is a point to reimbursement of the costs. There would be fixed proposals of costs based on an estimation of labor required for the project, along with a consolidated amount for the total project. 

In this context, the job would be needed to be broken into different phases, especially logical divisions that direct the commencing of work. However, this may or may not be driven by the budget. The service provider company can design a product with the most basic features before improving, adding, launching, or testing before adding more features. This is called a Minimum Viable Product (MVP) which can be used as the template for a functional product. Depending upon the client, the project can be phased or prepared with all the features discussed. Accordingly, the project contract is prepared which outlines all the feasible requirements of the client (agreed upon by the service provider), the time, and the total cost of the project. 

Including every detail

More than a document filled with important legal guidelines, a project contract outlines the essential details like the range of the project, deliverables, reimbursement, timeline, and other emergencies. These guidelines and their execution determine the running of the business and the ways to protect it if any problems arise in the course. So, the inclusion of all the required features and their conditions in detail would be helpful in the long run.

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