Edward W. Merrow - Contract Strategies for Major Projects: Mastering the Most Difficult Element of Project Management

1. Chapter 2
2. Chapter 3
3. Chapter 11

1. Chapter 2
2. Chapter 3
3. Chapter 4
4. Chapter 5
5. Chapter 6
6. Chapter 8
7. Chapter 9

EDWARD W. MERROW

Copyright 2023 by Edward W. Merrow. All rights reserved.

Published by John Wiley & Sons, Inc., Hoboken, New Jersey.

Published simultaneously in Canada.

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Library of Congress CataloginginPublication Data is Available:

ISBN: 9781119902096 (Hardback)

ISBN: 9781119902119 (ePDF)

ISBN: 9781119902102 (ePub)

Cover Design: Wiley

Cover Images: Top: RistoArnaudov/Getty Images

Bottom: Avigator

Photographer/Getty Images

Author photo: Stephanie Dupuis Photography

I dedicate this book to the memory of Iain A.R. Smith.

The world was a better place with you in it.

The IPA staff of dedicated professionals around the world made this book possible. Without the data garnered from their careful evaluations of nearly 1,200 capital projects, there would have been nothing to write about. The thing that unites my IPA colleagues above all else is our love of projects and commitment to seeing them done better.

My reviewers for this work were extraordinary. In alphabetical order because their contributions were uniformly excellent:

Bill Cherne was formerly chief executive officer of Cherne Contracting Corporation. With Bill as its handson leader, Cherne was a leading industrial constructor in terms of overall quality in the United States. An allunion shop, Cherne professionals understood construction and construction management at a level that was the best. Bill brought that knowledge to his review.

Michael Loulakis is a construction lawyer of the first rank. Mike was trained as an engineer before turning to law. He combines deep knowledge of construction law with an engineer's feel for projects. He has been awarded all sorts of honors, is a member of the National Academy of Construction, and is a fellow of the American College of Construction Lawyers. Mike continues an active practice of bringing sound advice to owners and contractors.

Jason Walker is one of the finest researchers I have known in my careerand I have known a good many fine researchers at Rand and IPA. Jason was until very recently the principal deputy director of IPA's Research Division and was responsible for clientfunded research. Jason contributed to this effort in two ways: he executed some of the research on which I relied, and he provided excellent review and comment as I wrote.

Graham Winch is a professor at the University of Manchester Alliance Business School. Graham's work has moved the understanding of projects forward in both public and private sectors. He is respected by academics and practitioners alike. He is one of the few academics I have met who understands projects to be a serious field of study in addition to being about project management.

I am really lucky to have these four distinguished members of the community willing to carefully review and critique my work. I am even luckier to be able to call all four of them dear friends. If there are mistakes in my conclusions, they belong to me and me alone. These gentlemen may well have tried unsuccessfully to fix them.

My hearty thanks to Kelli Ratliff and Jeanine Clough for turning my scribbles into understandable graphics. This is a complex subject, and graphical representations are often essential to comprehension. If you find the graphics sometimes opaque, you have no idea how difficult they were before Kelli and Jeanine applied their magic.

Thanks to my Wiley editor, Richard Narramore, and the entire Wiley crew that worked to make the book a reality.

Finally, my thanks to everyone at home and work who put up with me writing this book while trying to keep up my day job.

When a manufacturer or resource development company wants to build a new facility or refurbish an old one, the owner personnel put together the business case for the new project, develop a scope for the project, and assemble the preliminary design. If the facilities require a good deal of exacting engineering, an engineering contractor usually performs the final stage of preparation on the engineering side, while owner personnel put together the execution plan. Few companies in the process industries maintain the people resources needed to engineer the final stage of preparation on their own. After owner authorization, a contractor will be required to execute the detailed engineering, and that contractor will also usually procure all of the major equipment and the engineered materials for the project. The owner will require a construction contractor to build the facility. Contractors may or may not be involved in the commissioning and startup of the facilities depending on the skills and preferences of the owner.