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International Journal of Management Science and Engineering Research Volume 2, Issue 2, 2015 doi: 10.14355/ijmser.2015.0202.03
Research on the System Construction of the Railway Enterprise Project Contract Management Qin Yebin Economics and Management School of Wuhan University, Wuhan 430072, Hubei, China naru502@126.com Abstract Contract management is the core of project management in the railway construction. It’s particularly important to strengthen the construction of railway project contract management. In order to construct the contract management system of railway enterprise in our country, this paper makes some suggestions on the basis of in-depth analysis current situation of contract management of railway enterprise, such as establishing a sound system of contract management system, making the contract management stylized, staying whole process tracking management, attaching great importance to personnel training in contract management, and improving employees' comprehensive quality. Keywords Contract Management; System Construction; Procedural Work; Personnel Training
Introduction In the railway engineering construction of our country, whether it is a new or renovative project, it should be a system engineering, which concludes characteristics of capital-intensive, long construction cycle, complex environment, a lot of construction risk and so on. Starting from the investment decision to the stages of the operation, every aspect of the railway construction project involves the signing and implementation of the contracts of the construction projects. Once the contract appears minor errors, it is likely to cause significant economic losses to the enterprise, so to strengthen the contract management is an important measures, which can make the railway enterprise guard against legal risks, reduce economic disputes, and improve the economic benefit. To ensure contracts’ standardization and promote long-term healthy development of the railway companies, railway companies should strengthen contract management, and construct a contract management system with its own characteristics. Contract Management Contract for construction project refers to an economic contract, in which the project development, survey, design, construction, material supply and other units are signed to accomplish a certain number of construction engineering tasks. Its content includes the conclusion, performance, alteration, termination and dispute resolution of the construction contract, business contract, subcontract, lease contract, loan contract and so on. In the process of railway project construction, the construction progress, the quality and cost of each new project or renovation project determines the speed of the recovery of funds, products’ own life cycle and corporate profit margins. While the performance of the contract determines the Project price, time and quality and specifies the responsibilities, rights and interests between the parties, the enterprise can control the construction progress of the project, quality and cost to a certain extent. Therefore, contract management is the core of the project management. Different from the industrial enterprises, companies have their own characteristics on contract management railway: a) It has long project duration, big project quantity, high price. In this process, contract is a continuous and uninterrupted, which starts from the planning contract until the contract is completed. Contract management has a direct impact on the implementation of the project investment cost and budgets. A tiny 38
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deviation can cause significant investment losses. b) The work of the contract management is extremely complex and cumbersome. The contract types of Railway enterprise involve passenger and cargo transport and dealing, contracting, engineering, construction, technology, investment, loan guarantees, leasing, commission and other contracts. A large number of the signed types, big quantity, complex contract conditions, plenty of contract terms and contract documents, require the high engineering technology and quality standards of the railway enterprise, and also require the appropriate level of technical management on the contract implementation to be higher. Implementation of the contract must be timely adjusted according to actual changes in the construction, so the contract management must be dynamic, the efforts of contract control and change management need to be continuously strengthened. c)
Contract management involves multiple units. Railway enterprise contract type are various, and it involve multiple business units such as the main contractor, subcontractors, material suppliers, equipment suppliers, design units, supervision units, transport units and insurance companies more than a dozen or even dozens. And because the dynamic performance of the contract in the contract process changes a lot, contract management not only ensures the legitimate rights and interests of the railway companies, but also ensures the legitimate rights and interests of the participating units and cooperative unit.
d) Contract implementation process is complex, and it is difficult to execute the contract management. Throughout the process of the contract from planning to the end, the contract implementation contains contracts’ documents for acquisition and processing, contracts’ proper execution, handle and waiting of the contract disputes, and a little negligence will lead to direct economic losses. In engineering process, the various contract documents and range relevant information lead to a certain degree of difficulty on the work of obtain them timely, handle them seriously and preserve them properly. And contract management involves a number of units. To overally coordinate and manage the perform acts of these units and ensure their legitimate rights and interests, the enterprise has to pay a certain amount of manpower, material and financial resources so that the smooth implementation of the contract can be ensured. Meanwhile, with the increasing of contract disputes in recent years, the railway companies need to enhance human rights awareness, and ensure that their rights are not violated. These factors have determined that the difficulty of railway enterprise contract management to achieve a comprehensive, systematic, dynamic scientific management can’t be imagined. Situation Analysis on the Project Contract Management of Railway Enterprise Railway construction enterprise projects contract has large bid amount, which involves a wide law range; and respect and relationships involved are many and complex. Only clearly to write down the complex relationships and responsibilities between the parties and regulate the behavior of all parties by the contract management can the project success be ensured. For our current situation, the important role of contract management is far from widespread attention and management level is uneven, although our country also has a series of regulations to emphasize according to contract to manage the project, but the reality is still poor. First, the contract management system is not perfect. At present, the railway enterprise contract management system has been established, but still not perfect. And managers’ consciousness of controlling the entire process of contract management is seriously enough. All of these leads to extensive contract management. On the one hand, railway enterprises generally lack the appropriate management system or there are loopholes in contract management system, and enterprise can’t take effective management on the contract; on the other hand, many companies do not realize the dynamics of contract management, so that it is difficult to control risk throughout all aspects and entire process of contract management, achieve full control, full management, overall grasp of the whole process of the contract management, resulting in frequent occurrence of contractual risk accidents. At the same time, management institutions are not perfect, responsibilities and rights system are not clear, contract risk prevention system is not complete, these lead to the difficulty to ensure layers control on the contract management. Unreasonable contract management system is difficult to effectively control contract legal risk from the source, and restricted the long-term healthy development of the railway companies to some extent, so railway companies of our country urgently need to improve contract management system of construction project.
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Second, the contract management system implementation does not reach the designated position, the whole process control consciousness is not strong. At present, railway enterprise has established a contract management system, but due to lack of knowledge of literacy education on the contract law, insufficient promotion and implementation of the contract management system, inadequate execution of the assessment and accountability system on contract management and so on, especially the lack of the attention to controlling the whole process of contract management, there comes lots of problems, including the corporate staff ‘s weak legal awareness, less attention to the contract and unawareness about the contents of the contract management system, ineffective reaching of contract management system implementation to the designated position, and the existence of the phenomenon ,that is, signing a contract without observing contract management system is often occurred. Third, the enterprise management personnel is lack of legal consciousness, and their comprehensive quality is not high. Parts of the railway enterprise managers are accustomed to the old planned economy management mode, and do not set up the concept of contract and legal consciousness performing the contract strictly. Meanwhile, part organ of railway administrations and stations' management personnel lack knowledge of the contract and the relationship of the market with the contract, the contract and contract management, which result in the poor quality of contract management and the weak contract risk awareness. At present, the contract management personnel's overall quality is not high, especially the legal quality is low, which has become one of the main obstacles to improve the railway enterprise contract management. Fourth, the professional contract management personnel is absolutely starved for talent. Contract management is a professional, highly technical requirements work, and it need high-quality talent to assume this task, who is able to grasp the overall situation. Contract management personnel should not only be familiar with legal knowledge, but also be proficient in the operation of the project. However, in reality the railway enterprise legal affairs administration is equipped with legal counsel focuses on the Railway Bureau, and the proportion of professional contract management personnel is extremely low in the establishments, so that the force of law is very weak in basic units. The most prominent contradiction is at the basic units, due to the staff’s lack of appropriate legal knowledge and professional practice, they are unable to participate credit investigation contract negotiations, drafting, signing, perform and other work in the whole process, and then it is difficult to make management work on contract effective and strict and it even has some adverse effects on project quality, construction progress and project costs, or may leads to more serious loss of control of project management. Establish and Improve the Railway Enterprise Contract Management System Combined with the present situation of the railway enterprise contract management, from the perspective of railway project management within the enterprise, the enterprise should pay attention to the contract management, improve the contract management system, ensure the implementation of contract signing (advance prevention), the contract performance (in-process control), contract disputes (remedial), attach importance to talent cultivation on contract management, improve the overall quality of staff, construct the contract management system with its own characteristics, and enhance the level of legal risk management on contracts. Improve the Contract Management System Contract management system is an important condition for institutionalized, standardization and legalization of the contract management. On the one hand, railway enterprise shall be in accordance with relevant laws and regulations to guide enterprises to improve the effective contract management system and the operational procedures, improve the cooperation constraints accountability mechanisms between the various departments within the enterprise, and form a more complete contract management system. Through the management standard to strengthen execution of management system to achieve the clear management level, clear responsibilities and program specification in the managing process, the enterprise can avoid companies suffered economic losses when the contract is in the signing, performance or change, then make the contract signing, performance, disputes, assessment and other in the effective control state. Achieve the Procedural Contract Management and Track Management of the Whole Process The entire document (with the exception of setting Level-1 headings in Arial Black) should be in Palatino Linotype
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font. Type 3 fonts must not be used. Other font types may be used if needed for special purposes. Working the contract management programmed is in favor of the contract and the contract analysis file to reach the responsible person, achieve the implementation of the management on each contract, and clear the powers stipulated in the contract and so on. Thus the enterprise can implement the tracking and diagnosis to the project, control the project schedule, cost and quality, then ensure the execution and the implementation of the contract management system, and make the contract management system continuously improve and perfect further in the operation process. a) Contract signing. Each work is put in place to ensure the contract signing process mainly from the following aspects of the control. The first is the contract subject management, which must strictly examine the main contract signing qualifications, qualifications, reputation and economic status. The second is the text management of the contract. Enterprises regards engineering contracts as a crucial part, and the completeness and applicability of the contract text is essential. The third is the contract triage management. After the contract text is drafted, the contract review process should be fulfilled, then consult and modify in accord with the advice which is solicited by the business, plan, finance, and contract management units to ensure that funding sources of the contract is implement, the contract is legal, and there is no legal risk in the contractual terms. The fourth is the official seal management of the contract. Foreign contracts, should use contract official seal, and execute commissioner management and the registration system based on the system content. b) Contract performance. Each work is put in place to ensure the contract performance process mainly from the following aspects of the control. The first is disclosure of the contract. The contracts contractor sector and contractors should be carried out comprehensive disclosure for all contracts, and all of the contract shall be in the form combined with meeting and reading report to introduce problems to participants that what should be paid attention to in the contract performance. Then breaking down the responsibility of the contract, and fulfilling functional departments and individuals concretely. The second is the full implementation of the contract. In addition to tracking contract contractors and supervise the contract, the contract management staff should also supervise and inspect the performance of the contract. We can learn the fulfillment of the contract through monitoring, detect the problems affecting the contract performance, take timely and effective measures to solve the problem, remove the obstacles, and prevent the occurrence of default. The third is the contract’s file management, contract files cover the original contract, the supplementary agreement, meeting minutes and contract form, etc., and the storage contracts file should follow the principle of timely filed, scientific classification, complete custody. c)
Contract disputes. When contract disputes occur, the contract contractor, departments and contractors should promptly report to the unit leaders and contract management agency, and determine the response the principle of equality and mutual benefit and seeking truth from facts rather than simply ignorance. If the situation is complex, we should promptly consult with legal staff strive and then consult with adversary to solve it. When negotiations fail in the resolution process of contract dispute between the parties, we should apply for arbitration or bring a lawsuit to the people's court proceeds from safeguarding the legitimate rights and interests of enterprises.
Maximize the Personnel Training and Improve Employees' Comprehensive Quality Contract management is a highly professional work, and it requires the contract management personnel to be equipped with appropriate professional quality and legal awareness. At present, more efficient method mainly has the following three functions which can improve the overall quality of contract management staff of the railway enterprise. a) Strengthen recruitment and training of the special talent on the contract management. Contract managers should be transferred between the person who possesses high quality, learning ability, extensive knowledge and strong sense of responsibility, and before induction he should pass the examination and professional training of the railway organization. b) Enhance the overall quality and legal awareness of employees. According to business and market practice, the railway enterprise should organize on-the-job learning of the contract management staff, improve contract management personnel's responsibility consciousness, and strengthen training and assessment of 41
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the relevant personnel. Then perfect the certificates system, and let them increased their business level, carries on education of professional ethics and legal knowledge, and improve the legal consciousness of the contract. c)
Establish incentive mechanism. The railway enterprise should establish and improve the mechanism of job competition and incentive mechanisms, clear the responsibilities, rights and interests of contract management staff, and inspect, assess and evaluate the work of the various departments of enterprises, units of the contract management and operational staff according to contract management assessment and reward system. Finally, honors will be given to recognition and reward; for persons with poor performance, notice of criticism, and economic sanctions must be given depending on the seriousness.
Conclusions Contract management is the basic work of enterprise management, which always runs through the whole process and all aspects of project construction, and it can control the entire project management, while controlling and ensuring the implementation and investment of the project. In order to improve the level of contract management of railway enterprise, the railway enterprise should try its utmost to construct the normative contract management system, ensure the implementation of contract signing (advance prevention), the contract performance (in-process control), contract disputes (remedial), attach importance to talent cultivation on contract management, improve the overall quality of staff, construct the contract management system with its own characteristics, and enhance the level of legal risk management on contracts. REFERENCES
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Qin Yebin (1973- ) is a MBA in Economics and Management School of Wuhan University. His primary interests are project management.
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