A CONTRACT STRATEGY

A Contract Strategy for Westwater

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A Contract Strategy for Westwater

Available Contract Strategies

It is essential to understand the difference between procurement strategy and consultancy contract, before moving towards selecting a contract strategy. Procurement strategy is the process of planning a project that embraces the principles of best value, optimise savings through comprehensive purchasing power, and minimise disclosure through effective risk management and contract terms and contacts in building a project. The consultancy contract refers to the written agreement between a consultant and building contractor, regarding the delivery of services such as, cost planning, documentation, design, scheduling a project, and other services associated to a project.

Contract Strategies Westwater Can Use

General Contract Delivery Approaches

According to Ashworth (2012, pp. 10-285), the general contract delivery approach involves following key activities:

Define the outcomes of a project and success measure

Assign resources to the project team to complete the project successfully

Make effective communication channels, so that involving parties know what may happen and what are they are expected to do.

Cost management

Identification of risk and its management

Welcome new ideas and encourage innovation that can add value to the project

There are a lot of contract strategies available such as the contract arrangement, the scope and duration of the works, and the relationships that will exist between the various parties.

Contract Arrangement Strategy

The first strategy of contract arrangement involves traditional contract scheduled rate, build design, management of construction and alliance. The contract agreement has some advantages as well as disadvantages. This type of contract classified advantages and disadvantages into four categories of risk assessment that are exchange of the risk of owner, contractor, incentives of the contractor, and owner's flexibility. During the activity of design building there is a high risk involved for contractor. On the other hand, the activity of construction management requires maximum owner flexibility and involves high owner's risk (Powell, 2012, pp.25-522).

Traditional Scheduled Rate Contract Strategy

In this type of contract, the consultant will be hired to design and schedule of quantities organized. The contractor is responsible to complete defined amount of work in a given time. The advantages of traditional schedule rate contract are tenderers price are straight, and after the contract award the changes in the capacity or scope can be valued easily. This strategy also has some disadvantages that the client in order to determine quantities must undertake a lot of work upfront and there might be a huge difference between actual and assumed quality of work when the schedule of the tender was prepared (Ashworth, 2012, pp. 50-249).

Design-Build Project Strategy

The primary principle in a Design-Build project is that the owner contracts a contractor, for designing and constructing the entire project. This allows to integrate the requirements of design and construction in order to optimise the delivery cost of a project. This is also known as a fixed price contract. The advantages of this strategy include faster completion of a project, facilitates healthy competition among bidders, the process is designed to sequence and can be ...