Issues regarding the signing of commercial contracts managed by contractors
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There are a wide variety of corporate contractors, and many of them are essential. Now, the contract agreements signed between contractors and owners are also quite detailed; those we have come across include business contracts, technical agreements, safety agreements, and so on. Some large companies or those with well-structured management systems have clear divisions of responsibilities for handling such contracts and agreements. However, small and medium-sized enterprises do not have such a complete organizational structure, and there is overlap in responsibilities as well as mutual shirking of duties. On the corporate side, the Supply and Marketing Operations Department is responsible for business management, the Production Operations Department handles technical expertise and production management, while the Safety and Environmental Protection Department is in charge of safety oversight. Other production facilities and workshops are responsible for the day-to-day management of contractors involved in production operations; they generally do not participate in the signing of contractor contracts, providing at most requirement information or evaluations of contractors. Now, some argue that the business department, as the governing body, should be responsible for signing business contracts ； Another view holds that it is the functional departments in charge of production management that understand the requirements and are responsible for technical oversight, while the production operations department should handle the signing of business contracts. As for the safety agreements, it is generally believed that they should be signed by the Ministry of Safety and Environmental Protection. I would appreciate it if everyone could share the practices of their respective companies, discuss the advantages and disadvantages, and offer some suggestions for further discussion. Thank you very much!
Contracts are signed for business purposes; the technical details are handled by the technical department, so there’s no conflict
At first, I had the same idea. Later, the business department felt that not understanding certain details could cause delays, so they assigned those tasks to the functional departments to handle on their own. The functional departments handle these tasks on their own, such as labor recruitment, property management, and logistics services. This is organized according to business management principles, with detailed classifications; however, there is no overall management in place, and each area operates independently. When too many outsiders arrive, it becomes difficult to maintain control
All details can be delegated to the relevant functional departments, but processes, coordination between tasks, and contracts need to be handled by the business team. A leader who understands these processes can be appointed to oversee everything and make decisions when there are conflicts between departments.
The approach adopted by engineering companies is as follows: the project manager takes charge of the overall process, the procurement department handles the business contracts, while the technical department is responsible for drafting the technical agreements. If construction labor is to be outsourced, a bidding process is carried out, with participation from the company’s business, procurement, and technical teams to determine the winner, among other things.
Can the functional department responsible for oversight handle the signing of business contracts?
For business contracts, the technical department is responsible for reviewing the technical terms of the contract, while security agreements are reviewed by the security department
In many companies, the production safety management departments and the security departments are not part of the same functional unit. Would it be better if the safety agreement were signed by the contractor’s business management department? Only in this way can the principle that safety must be taken into account in production management and in business operations be upheld
It’s not good; actually, the key issue isn’t technology, but rather which department is responsible for funding things. In most companies, it’s the business department or the procurement department
For business transactions, contracts are signed; the technical department prepares technical agreements as attachments to those contracts. If those in charge of production technology devote all their effort to these aspects, they are focusing on the wrong things