Quantitative Methods in Project Management
This book combines theoretical and practical applications and takes project managers through the most important quantitative methods, integrates them, and illustrates interrelationships.
TABLE OF CONTENTS Quantitative Methods in Project Management
Chapter 9: Quantitative Methods in Project Contracts
Now this is not the end. It is not even the beginning of the end. It is perhaps the end of the beginning.
Sir Winston Churchill
London, 1942
Project Contracts
Contracts between suppliers and the project team are commonly employed to accomplish two objectives:
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Change the risk profile of the project by transferring risk from the project team to the supplier. Presumably, a due diligence examination of the supplier's ability to perform confirms that the supplier has a higher probability of accomplishing the scope of work in acceptable time at reasonable cost than does the project team. The decision-making processes discussed in this book provide a method and tool for making contracting decisions.
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Implement policy regarding sharing the project opportunity with participants in the supply chain. If the contract is related to a public sector project, public policy regarding small business and minority business participation may be operative on the project team. In the private sector, there may be policy to involve selected suppliers and customers in projects, or there may be policy to not involve selected participants in the project.
In this chapter, we will address project contracting as an instrument of risk management.
The Elements of a Contract
A contract is a mutual agreement, either oral or written, that obligates two or more parties to perform to a specific scope for a specified consideration, usually in a specified time frame. The operative idea here is mutual agreement. A contract cannot be imposed unilaterally on an...
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