web-based training session summary
CURT web-based training is designed to provide an understanding of critical work processes. Visit the web-based training page to view a list of the training sessions currently scheduled.
selecting contracting strategies
CURT owners recognize that project success is built on a foundation of early project planning. Establishing an optimum contracting strategy is a critical component of this front-end plan. Many owners have a corporate contracting strategy that they routinely use for most of their projects. It is based on successful results they have achieved on similar projects and provides a consistent approach for the project teams. Most owners' corporate policy requires that the optimum contracting strategy be determined and deployed for each individual capital project. Owners often have alternate contracting strategies for small, medium, and large projects. Small projects, for example, frequently have more direct management and execution by the owner.
Frequently, within their corporate contracting strategy, owners specify different strategies for each type of project. This approach customizes the contracting strategies to the typical scope, size, or location of the project. For example, all warehouse projects might be contractor-managed, design-construct, with a firm price, while other projects may use reimbursable contracts.
While the corporate contracting strategy is routinely used for most projects, many owners do consider alternate contracting strategies for large or critical projects. With more at stake, these projects are given more latitude to select the best strategy for their unique scope and objectives. Some owners' corporate contracting strategies include long-term contracts with selected contractors. These can take the form of alliances, partnering, or preferred suppliers. These strategies may be the required approach for all projects, but frequently the owner may also study alternate contracting strategies for individual (large or critical) projects.
CURT does not endorse any specific contracting strategy. A recent survey of CURT members shows that there is no consistently preferred contracting strategy. Each owner selects their contracting strategy based on their own unique project scope and objectives. All of the alternate strategies were used. This user practice merely describes the current options and a process for selecting a strategy.
The project contracting strategy includes three critical elements:
- Project execution approach, which determines how the project tasks and contracts will be structured. Examples include design-bid-build and turnkey.
- Construction management approach, which identifies who will manage the work, whether owner-managed or contractor-managed.
- Contracting option, which establishes how contractors will be paid. Reimbursable and firm price are two typical techniques.
Owners who proactively establish a clear contracting strategy early in the project planning phase experience better project results. Development of a contracting strategy requires significant owner investment in both effort and project calendar time. This investment, however, pays dividends by improving project cost and reducing schedule, safety, and quality risk.
