Contracting in the Changing World of Projects

Learn Key Contracting Practices and Processes to Drive Improved Capital Project Performance

Course Summary

Contracting strategy is an important element of any project execution plan. It is often a contentious area with strongly held beliefs about how contract plans can influence project outcomes. However, no one contracting strategy is right for all projects or project systems. As more work is outsourced by owners to contractors, contracting arrangements have become increasingly important elements of the capital project process.

This seminar, based on IPA’s extensive research and understanding of contracting as it relates to capital  effectiveness, provides a set of practices and tools that will enhance participants’ capabilities in evaluating, selecting, and developing appropriate and effective contracting strategies for capital projects.

Key Benefits

• Implement a structured process for developing a contracting plan
• Identifying owner characteristics that should be evaluated prior to selecting a contracting strategy
• Understand the relationship between the current market and available contracting strategies
• Explore the relationship between Terms and Conditions and contractor bidding behaviors
• Discover the concept of risk pricing and strategies to reduce contractor risk premiums
• Learn how risk analysis exercises affect contracting strategy
• Apply learnings from IPA’s research on actual projects to improve ongoing and future projects

Who Should Attend?

All who consider contracting an important element of success in capital effectiveness will benefit from this program. This program targets those involved in selecting and implementing contracting strategies and managers of individual projects who establish the contracting approach for their projects. It will also provide insight into contracting approaches for those who manage whole project systems and seek to establish system-wide approaches to contracting.

Topics Covered

Contracting Overview

• Contracts and contracting strategy in the context of capital projects
• A structured process for developing a contracting plan

Starting Point: Project Environment

• The relationship between clear project and business objectives and contracting strategies
• Project scope and how it influences contracting strategy selection
• The relationship between the current market and available contracting strategies

Starting Point: Owner Characteristics and Risk Analysis

• Owner characteristics that should be evaluated prior to selecting a contracting strategy
• The ways that risk analysis exercises affect contracting strategy

FEL, Scope, and Phase

• Industry practices for contracting FEL
• The relative roles of owners versus contractors in project definition phase
• Determining how the project scope and phases will be subdivided into different contracts

Contract Formats

• Research and explanations for relationships between contract formats and incentives and project results

Selection Process

• Research on selection criteria and why selection based only on cost leads to poor results

Contracting Project Management and Terms & Conditions (T&Cs)

• Risks associated with Project Management Contractors and strategies to help mitigate those risks
• Options for construction management
• The relationship between T&Cs and contractor bidding
• The concept of risk pricing and strategies owners can apply to reduce contractor risk premiums

Implementation

• Best practices related to effective project controls
• The concept of claimsmanship and practices to manage the risks of contractor claims
• Issues owners should monitor related to closeout of contracts

Course Background

The material in this seminar is typically covered in 2 days. Each module focuses on a specific topic, with material presented in a variety of ways. Important research findings are presented through lectures, with supporting presentation material and readings. A case study will be used to enable the participants to develop a contracting strategy for a sample project. Participants will learn to translate materials and findings into action items that they can implement to improve their capital project processes.