Project management agreements are legal documents that outline the budget, resources, liabilities and termination clauses for a project.
Once the agreement is signed by the company working on the project and their client, it acts as a helpful guide for both parties to understand the service agreement as it explains any liabilities, payment obligations, and project requirements.
A project management agreement is an important document for both parties involved to sign before any work starts.
Here's the reality—no company or client should be involved in managing a project that's decided over a handshake. A written project management contract does more than finalize timelines and lay out expectations for the work that will be done (although that's important, of course.) It protects both parties if there are damages, disputes or misunderstandings once the work starts.
If there are any disagreements about anything—whether it's how much the contractor should get paid or what expenses the client has agreed to pay—the project management contract will have the answers in black and white.
Let's take a look at the must-have elements that make up a legally binding project management contract.
A project management agreement should outline each party's roles, responsibilities, and expectations once the project begins.
The contract should include basic details identifying both parties, including names, business entities, registered addresses, and phone numbers. Then, write a detailed description of the project's purpose and what deliverables the customer can expect in the project's timeframe.
The more detailed your project description is, the less chance of any scope creep occurring once work starts.
The project management contract has to specify the start and completion date of the project.
It is advisable to break down the project into manageable deliverables and assign milestones to give your client an idea about how work will progress. A better schedule also gives you room for effective tracking and monitoring of delays.
It's important to include payment details and expectations in any project management contract.
This part of the agreement should outline project management fees and how the work will be priced. The contract also needs to detail whether the project is a fixed contract (known as lump sum contracts that are charged as a one-time service) or if it'll be a recurring project where the client pays either by the hour (using timesheets) or a retainer fee.
If any travel or booking expenses fall outside the payment schedule, the contract must stipulate which party is responsible for paying for them.
It should also be clear whether or not the project management company needs to have expenses pre-approved by the client.
This is the section of the project management contract template where the company completing the work should include clauses that limit their exposure to legal disputes or liability in cases of damages or loss during the project.
Project managers should also check that their insurance (for their employees and resources) is adequate to protect them for the project's duration.
Cancellation and termination clauses are essential elements of a project management agreement as it covers both parties financially if one pulls out of the contract.
The clause outlines how far ahead either party can back away from the agreement, how much notice they must give, and if they're obligated to pay a cancellation fee.
Don't forget to include other essential small print clauses in your project management contract, like confidentiality clauses, competitive engagements, and ownership and licenses.
These pieces of a project management contract aren't usually the pieces either party focuses on. Still, they are vital (legally) if something happens, such as misusing copyright licenses or sharing information without content.
Project management companies can spend a lot of time creating a contract from scratch (or paying lawyers an eye-watering amount of money to write one for them).
We've solved this problem for you by creating a (legally binding) project management contract template that includes essential clauses and details to protect both parties.
Here's a simple project manager contract template for you to use:
Bonsai's project management contract has been approved by legal experts and is fully customizable, making it easy to change important elements to suit the needs of your next project.
Busy project managers already look to software to help them get their work done, so Bonsai's ready-made templates should be no exception. They can take the stress out of creating a legally binding contract and make it easy to change details like project pricing, invoice dates, and expenses with a couple of clicks.
And the biggest benefit is that instead of spending hours creating a project management contract template yourself—it's all done for you.
Want to use a Bonsai contract for your next project? Sign-up now to create a free project management contract that ticks all the legal boxes!
If you are a project manager, there are two options to create a project management agreement with Bonsai.
You can either download a simple project management contract PDF, or use our contract generator to customize and send a legally binding contract straight to your client's inbox.
Bonsai's contract generator allows you to make changes to liabilities, confidentiality clauses, and invoice dates. Once you're happy with all the T&Cs, just click "create contract" and it'll be on its way to your client!
There are three main types of project management contracts: Fixed Price Contracts (FP), Cost Reimbursable Contracts (CR), and Time and Material Contracts (T&M).
The goal of project management is to manage, oversee, and achieve the project's stated goals. On the other hand, contract management is managing a contract between the two parties involved in a project (i.e., the contractor and the client.)
Sign up with Bonsai and customize one of our pre-made project management templates. They are legally reviewed so you'll know in your agreement, you'll be covered.
Project managers may be involved in the contract development process. Project managers are more focused on the day-to-day tasks and progress of the entire project.
The four types of project contracts are lump sum, unit price, cost plus, and time and material contracts.
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This Contract is between Sample Client (the "Client") and Acme LLC (the "Project Manager").
The Contract is dated [DATE BOTH PARTIES SIGN].
1.1 Project. The Client is hiring the Project Manager to do the following: Assist the Client with managing company projects
1.2 Schedule. The Project Manager will begin work on [START DATE] and will continue until the work is completed. This Contract can be ended by either Client or Project Manager at any time, pursuant to the terms of Section 6, Term and Termination.
1.3 Payment. The Client will pay the Project Manager a rate of [PROJECT RATE] (USD) per hour. Of this, the Client will pay the Project Manager [DEPOSIT AMOUNT] (USD) before work begins.
1.4 Expenses. The Client will reimburse the Project Manager's expenses. Expenses do not need to be pre-approved by the Client.
1.5 Invoices. The Project Manager will invoice the Client at the end of the project. The Client agrees to pay the amount owed within [X DAYS TO PAY] days of receiving the invoice. Payment after that date will incur a [LATE FEE PERCENTAGE]% per month on the outstanding amount.
1.6 Support. The Project Manager will not provide support for any deliverable once the Client accepts it, unless otherwise agreed in writing.
2.1 Client Owns All Work Product. As part of this job, the Project Manager is creating “work product” for the Client. To avoid confusion, work product is the finished product, as well as drafts, notes, materials, mockups, hardware, designs, inventions, patents, code, and anything else that the Project Manager works on—that is, conceives, creates, designs, develops, invents, works on, or reduces to practice—as part of this project, whether before the date of this Contract or after. The Project Manager hereby gives the Client this work product once the Client pays for it in full. This means the Project Manager is giving the Client all of its rights, titles, and interests in and to the work product (including intellectual property rights), and the Client will be the sole owner of it. The Client can use the work product however it wants or it can decide not to use the work product at all. The Client, for example, can modify, destroy, or sell it, as it sees fit.
2.2 Project Manager's Use Of Work Product. Once the Project Manager gives the work product to the Client, the Project Manager does not have any rights to it, except those that the Client explicitly gives the Project Manager here. The Client gives permission to use the work product as part of portfolios and websites, in galleries, and in other media, so long as it is to showcase the work and not for any other purpose. The Client does not give permission to sell or otherwise use the work product to make money or for any other commercial use. The Client is not allowed to take back this license, even after the Contract ends.
2.3 Project Manager's Help Securing Ownership. In the future, the Client may need the Project Manager's help to show that the Client owns the work product or to complete the transfer. The Project Manager agrees to help with that. For example, the Project Manager may have to sign a patent application. The Client will pay any required expenses for this. If the Client can’t find the Project Manager, the Project Manager agrees that the Client can act on the Project Manager's behalf to accomplish the same thing. The following language gives the Client that right: if the Client can’t find the Project Manager after spending reasonable effort trying to do so, the Project Manager hereby irrevocably designates and appoints the Client as the Project Manager's agent and attorney-in-fact, which appointment is coupled with an interest, to act for the Project Manager and on the Project Manager's behalf to execute, verify, and file the required documents and to take any other legal action to accomplish the purposes of paragraph 2.1 (Client Owns All Work Product).
2.4 Project Manager's IP That Is Not Work Product. During the course of this project, the Project Manager might use intellectual property that the Project Manager owns or has licensed from a third party, but that does not qualify as “work product.” This is called “background IP.” Possible examples of background IP are pre-existing code, type fonts, properly-licensed stock photos, and web application tools. The Project Manager is not giving the Client this background IP. But, as part of the Contract, the Project Manager is giving the Client a right to use and license (with the right to sublicense) the background IP to develop, market, sell, and support the Client’s products and services. The Client may use this background IP worldwide and free of charge, but it cannot transfer its rights to the background IP (except as allowed in Section 11.1 (Assignment)). The Client cannot sell or license the background IP separately from its products or services. The Project Manager cannot take back this grant, and this grant does not end when the Contract is over.
2.5 Project Manager's Right To Use Client IP. The Project Manager may need to use the Client’s intellectual property to do its job. For example, if the Client is hiring the Project Manager to build a website, the Project Manager may have to use the Client’s logo. The Client agrees to let the Project Manager use the Client’s intellectual property and other intellectual property that the Client controls to the extent reasonably necessary to do the Project Manager's job. Beyond that, the Client is not giving the Project Manager any intellectual property rights, unless specifically stated otherwise in this Contract.
The Project Manager won’t work for a competitor of the Client until this Contract ends. To avoid confusion, a competitor is any third party that develops, manufactures, promotes, sells, licenses, distributes, or provides products or services that are substantially similar to the Client’s products or services. A competitor is also a third party that plans to do any of those things. The one exception to this restriction is if the Project Manager asks for permission beforehand and the Client agrees to it in writing. If the Project Manager uses employees or subcontractors, the Project Manager must make sure they follow the obligations in this paragraph, as well.
Until this Contract ends, the Project Manager won’t: (a) encourage Client employees or service providers to stop working for the Client; (b) encourage Client customers or clients to stop doing business with the Client; or (c) hire anyone who worked for the Client over the 12-month period before the Contract ended. The one exception is if the Project Manager puts out a general ad and someone who happened to work for the Client responds. In that case, the Project Manager may hire that candidate. The Project Manager promises that it won’t do anything in this paragraph on behalf of itself or a third party.
5.1 Overview. This section contains important promises between the parties.
5.2 Authority To Sign. Each party promises to the other party that it has the authority to enter into this Contract and to perform all of its obligations under this Contract.
5.3 Project Manager Has Right To Give Client Work Product. The Project Manager promises that it owns the work product, that the Project Manager is able to give the work product to the Client, and that no other party will claim that it owns the work product. If the Project Manager uses employees or subcontractors, the Project Manager also promises that these employees and subcontractors have signed contracts with the Project Manager giving the Project Manager any rights that the employees or subcontractors have related to the Project Manager's background IP and work product.
5.4 Project Manager Will Comply With Laws. The Project Manager promises that the manner it does this job, its work product, and any background IP it uses comply with applicable U.S. and foreign laws and regulations.
5.5 Work Product Does Not Infringe. The Project Manager promises that its work product does not and will not infringe on someone else’s intellectual property rights, that the Project Manager has the right to let the Client use the background IP, and that this Contract does not and will not violate any contract that the Project Manager has entered into or will enter into with someone else.
5.6 Client Will Review Work. The Client promises to review the work product, to be reasonably available to the Project Manager if the Project Manager has questions regarding this project, and to provide timely feedback and decisions.
5.7 Client-Supplied Material Does Not Infringe. If the Client provides the Project Manager with material to incorporate into the work product, the Client promises that this material does not infringe on someone else’s intellectual property rights.
This Contract is ongoing until the work is completed. Either party may end this Contract for any reason by sending an email or letter to the other party, informing the recipient that the sender is ending the Contract and that the Contract will end in 7 days. The Contract officially ends once that time has passed. The party that is ending the Contract must provide notice by taking the steps explained in Section 11.4. The Project Manager must immediately stop working as soon as it receives this notice, unless the notice says otherwise. The Client will pay the Project Manager for the work done up until when the Contract ends and will reimburse the Project Manager for any agreed-upon, non-cancellable expenses. The following sections don’t end even after the Contract ends: 2 (Ownership and Licenses); 3 (Competitive Engagements); 4 (Non-Solicitation); 5 (Representations); 8 (Confidential Information); 9 (Limitation of Liability); 10 (Indemnity); and 11 (General).
The Client is hiring the Project Manager as an independent contractor. The following statements accurately reflect their relationship:
8.1 Overview. This Contract imposes special restrictions on how the Client and the Project Manager must handle confidential information. These obligations are explained in this section.
8.3 Third-Party Confidential Information. It’s possible the Client and the Project Manager each have access to confidential information that belongs to third parties. The Client and the Project Manager each promise that it will not share with the other party confidential information that belongs to third parties, unless it is allowed to do so. If the Client or the Project Manager is allowed to share confidential information with the other party and does so, the sharing party promises to tell the other party in writing of any special restrictions regarding that information.
Neither party is liable for breach-of-contract damages that the breaching party could not reasonably have foreseen when it entered this Contract.
10.1 Overview. This section transfers certain risks between the parties if a third party sues or goes after the Client or the Project Manager or both. For example, if the Client gets sued for something that the Project Manager did, then the Project Manager may promise to come to the Client’s defense or to reimburse the Client for any losses.
10.2 Client Indemnity. In this Contract, the Project Manager agrees to indemnify the Client (and its affiliates and their directors, officers, employees, and agents) from and against all liabilities, losses, damages, and expenses (including reasonable attorneys’ fees) related to a third-party claim or proceeding arising out of: (i) the work the Project Manager has done under this Contract; (ii) a breach by the Project Manager of its obligations under this Contract; or (iii) a breach by the Project Manager of the promises it is making in Section 5 (Representations).
10.3 Project Manager Indemnity. In this Contract, the Client agrees to indemnify the Project Manager (and its affiliates and their directors, officers, employees, and agents) from and against liabilities, losses, damages, and expenses (including reasonable attorneys’ fees) related to a third-party claim or proceeding arising out of a breach by the Client of its obligations under this Contract.
11.1 Assignment. This Contract applies only to the Client and the Project Manager. The Project Manager cannot assign its rights or delegate its obligations under this Contract to a third-party (other than by will or intestate), without first receiving the Client’s written permission. In contrast, the Client may assign its rights and delegate its obligations under this Contract without the Project Manager's permission. This is necessary in case, for example, another Client buys out the Client or if the Client decides to sell the work product that results from this Contract.
11.2 Arbitration. As the exclusive means of initiating adversarial proceedings to resolve any dispute arising under this Contract, a party may demand that the dispute be resolved by arbitration administered by the American Arbitration Association in accordance with its commercial arbitration rules.
11.3 Modification; Waiver. To change anything in this Contract, the Client and the Project Manager must agree to that change in writing and sign a document showing their contract. Neither party can waive its rights under this Contract or release the other party from its obligations under this Contract, unless the waiving party acknowledges it is doing so in writing and signs a document that says so.
11.4 Notices.
(a) Over the course of this Contract, one party may need to send a notice to the other party. For the notice to be valid, it must be in writing and delivered in one of the following ways: personal delivery, email, or certified or registered mail (postage prepaid, return receipt requested). The notice must be delivered to the party’s address listed at the end of this Contract or to another address that the party has provided in writing as an appropriate address to receive notice.
(b) The timing of when a notice is received can be very important. To avoid confusion, a valid notice is considered received as follows: (i) if delivered personally, it is considered received immediately; (ii) if delivered by email, it is considered received upon acknowledgement of receipt; (iii) if delivered by registered or certified mail (postage prepaid, return receipt requested), it is considered received upon receipt as indicated by the date on the signed receipt. If a party refuses to accept notice or if notice cannot be delivered because of a change in address for which no notice was given, then it is considered received when the notice is rejected or unable to be delivered. If the notice is received after 5:00pm on a business day at the location specified in the address for that party, or on a day that is not a business day, then the notice is considered received at 9:00am on the next business day.
11.5 Severability. This section deals with what happens if a portion of the Contract is found to be unenforceable. If that’s the case, the unenforceable portion will be changed to the minimum extent necessary to make it enforceable, unless that change is not permitted by law, in which case the portion will be disregarded. If any portion of the Contract is changed or disregarded because it is unenforceable, the rest of the Contract is still enforceable.
11.6 Signatures. The Client and the Project Manager must sign this document using Bonsai’s e-signing system. These electronic signatures count as originals for all purposes.
11.7 Governing Law. The laws of the state of [STATE] govern the rights and obligations of the Client and the Project Manager under this Contract, without regard to conflict of law principles of that state.
11.8 Entire Contract. This Contract represents the parties’ final and complete understanding of this job and the subject matter discussed in this Contract. This Contract supersedes all other contracts (both written and oral) between the parties.
THE PARTIES HERETO AGREE TO THE FOREGOING AS EVIDENCED BY THEIR SIGNATURES BELOW.
