Effective Project Management

Section B Contracting Strategy Considerations

It's unwise to pay too much, but it's worse to pay too little. When you pay too much, you lose a little money – that's all. When you pay too little, you sometimes lose everything because the thing you bought was incapable of doing the thing it was bought to do. The common law of business balance prohibits paying a little and getting a lot; it can't be done. If you deal with the lowest bidder, it is well to add something for the risk you run, and if you do that, you will have enough to pay for something better.

John Ruskin, 1819–1900

In developing the contracting strategy² for a project the following questions and issues need to be understood or addressed:

1 Business Strategy and Stakeholder Alignment

1.1

What is dictated by the ultimate client and is, therefore, a given? (The operator is not always the client. In many countries, the client may be a state‐owned entity).

1.2

What are the objectives, motives, needs, and opinions of each of the stakeholders?

1.3

What are the client's minimum conditions of satisfaction?

1.4

The client's key drivers are cost, schedule, new market or new country entry, and so on.

1.5

What is anticipated by all other stakeholders, such as the non‐governmental organizations, company shareholders, local communities, and so on?

2 Regional and Local Factors

2.1

What are the key features, and what is the general environment of the area in which the work will be carried out? ...