ABSTRACT

The project manager engaged in work with an external customer will inevitably become involved in the commercial and contractual aspects of the task. This aspect is a growing feature of project management work as there is a trend towards more definitive and demanding product specifications and more stringent forms of contract. Contracts let for development projects fall into two basic categories: those in which the greater risk, in cost terms, lies with the customer and those in which the greater risk lies with the contractor. Terms are sometimes inserted into contracts that provide a financial remedy to the customer for a failure by the contractor regarding some aspect of the work; they are usually referred to as liquidated damages clauses. Liquidated damages clauses are often applied to situations where delivery of hardware, either prototype or production, is vital to the customer's ability to continue the project. Protection of the intellectual assets that derive from the project is an important issue.