Contract Strategies for Major Projects: Mastering the Most Difficult Element of Project Management

Major  Projects are Delayed by Months or  Years, and Cost Millions More Than  Budgeted, Because of Common  Mistakes Made at the Contracting Stage

Organizations  that invest  huge amounts of capital in major building/industrial  projects almost  never do the engineering and building themselves. They  hire engineering  and construction contractors to do it for them.  Unfortunately,  selecting contractors and negotiating the terms of a  major project is  one of the most difficult aspects of project  management...and  organizations waste billions of dollars and "bake in"  months or years  of delay by doing it wrong. Contracting is also the area  of project  management that is most prone to firmly held opinions  unencumbered by  any facts. We intend to remedy that situation with this  book. Drawing  on a properietary detailed database of over 1100 major  projects, the  world's leading industrial engineering project consultant,  Ed Merrow  explains:

Key Principles of Contracting for Major Projects:

1. Owners are from Mars; contractors are from Venus
2. All the biggest risks in contracting belong to the owner
3. Contracting “games” will normally be won by contractors, not owners
4. Most risk transfer from owners to contractors is an illusion
5. Contractors do good projects well and bad projects poorly
6. Contractors may have shareholders, but they are not your shareholders!
7. Mixing different contract types with different contractors on the same project is unwise
8. Economize on the need for trust; trust only when being trustworthy has value

Merrow also explains:

• Which contract incentives work and which don’t and WHY
• Which of over a dozen contracting strategies work best and which ones hardly ever work and WHY

The   strategic advice in this book is designed for owners and contractor   project managers, team members and supply chain, executives, and other   business leaders involved in major projects. It's also an indispensable   resource for engineers, leaders of industrial firms, bankers, and   academics studying the messy realities of the construction and   engineering industries.