TOPIC: Contracts as a input to the Project Charter

Lesson 04.01

It seems to be a "chicken before the egg" kind of question to me. It seems like the Contract Management function cannot work on the contract until given authority to begin by the Project Charter. What am I missing?

PMBOK, pg. 78 "Described in Section 12.2.3.2. Agreements are used to define initial intentions for a project. Agreements may take the form of contracts, memorandums of understanding (MOUs), service level agreements (SLA), letters of agreement, letters of intent, verbal agreements, email, or other written agreements. Typically, a contract is used when a project is being performed for an external customer."

I think of something like a JV where two companies agree to drill for oil with some sort of risk-sharing proposition. A project has not started, but the company has formally entering into negotiations and signed a deal. Happens all the time. Now, we need to do a project to procure the land, rigs, and oil field equipment. The JV agreement/contract is an input to the develop project charter. The procurement management processes would be formally invoked to procure the services of a drilling company and other necessary equipment.

The project charter would list the risk sharing agreement and other high-level terms, operating expenses, operating company, etc.

Hope this helps.

According to PMBOK, pg. 78 "Described in Section 12.2.3.2. Agreements are used to define initial intentions for a project. Agreements may take the form of contracts, memorandums of understanding (MOUs), service level agreements (SLA), letters of agreement, letters of intent, verbal agreements, email, or other written agreements. Typically, a contract is used when a project is being performed for an external customer."
At first we have to understand that it is not general case. Agreement will be an input for only when the project is performed for an external customer. For example, One countries Government give a contract to an construction company for constructing a bridge through an EPC or any type of contract/agreement. Then the construction company at first develop a project charter for initiating the project, in this case the contract/agreement between government (Customer) and construction company will be the input for project charter . Otherwise if the project is internal then not need.