In the final analysis everything is executed through a contractual framework – contract documentation. No matter how good all the other practices are, the process can go off-track if the wrong strategy is applied and the contract document itself is not adequate to manage the project. Poor project definition is probably the major cause of poor contract documentation which in turn leads to unexpected cost and time overruns, poor productivity, disputes and frustration.
The full range of contract strategies are rarely discussed with Clients by their advisors because of the narrow focus inherent in the discipline of the particular advisor. Similarly, when alternative strategies are applied, such as design and construct within the building industry, the Client must be fully aware of the “pros and cons” and the necessary planning and control measures he needs to have in place before they are applied.
The client needs to recognise and understand how risks are allocated by the various commercial options open to him, (lump sum, bill of quantities target cost, cost reimbursable and management contract pricing strategies; bonding, insurances, parent company guarantees etc.)
- that the largest single cause of disputes in the construction industry is poor quality of contract documentation mainly as a result of errors, ambiguity, and late supply of documents,
- the distinction between contracting on an outcomes performance basis and a prescriptive detailed specification basis,
- the benefits of contracting on a procurement system, as distinct from a discipline, basis and
- that once the Client has agreed to the terms of a contract, it has to operate in accordance with contract documentation.