The Internet is growing to the point of needing more serious, scalable management infrastructure. Telecommunications companies and Internet Service Providers alike face the pressures of upgrading and provisioning their networks while constraining their infrastructure costs to maintain profitability and to stay competitive in an industry that is financially stressed with tight profit margins. In order to be financially successful in this environment, service providers will have to support a variety of services and applications on a combined packet infrastructure, carrying increased varieties of traffic with different performance characteristics and predictable levels of managed Quality of Service (QoS). Multi-Protocol Label Switching (MPLS) traffic engineering enables service providers to engineer their networks to provide such QoS; however, this task brings along with it a plethora of management challenges. This paper discusses these management challenges and our experience with the design and implementation of a policy-based management system, PECAN, for managing MPLS networks. PECAN provides the ability for a network operator to define high-level policies that control the operation of the management system. These high-level policies control admission of traffic into the network based on the QoS guarantees required; placement of traffic flows on MPLS traffic engineered paths; and the feedback loop between network fault/performance monitoring and reconfiguration of the network to alleviate the effects of any observed problems.