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.