Control and Flexibility in Contracts
Contracts form the backbone of project management today. Project management techniques have developed in response to severe pressures such as unfavourable economic factors, inflation, uncertainties in the magnitude and duration of construction projects, and often unpredictable regulatory and environmental requirements. Executive control of a project can therefore be achieved only by controlling the progress of contracts entered into for the project.
Major projects involving substantial construction are exceptional, one-time or at least infrequent. The popular mode is that you invest in capital works and execute the project through a single entity created for the implementation of the specific project.
The single entity is the project team, which in turn is led by a designated project manager dedicated to the project. This team should be established early in the development of the project concept and be given responsibility for the complete project life cycle from feasibility; through schematics, design, and procurement. In this way, managerial unity is established early in the project.
The single entity model can be achieved in three different ways, each way being a contracting mode for an entire project:
1. Award of a single contract (either Lump sum Fixed price or Engineering Procurement Construction (EPC), for the implementation of the project after the basic design of the project is finalised.
2. D-B (Design and Build) mode of contracting
3. D-B-B (Design, Bid and Build) mode of contracting