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Review of the book \’Contract Strategies for Major Projects\’ by E. Merrow

Another book by Edward W. Merrow the founder of Independent Project Analysis IPA, has just come out early 2023: \”Contract Strategies for Major Projects – mastering the most difficult element of project management\”. This book like previous books by the author relies on statistical analysis of the vast database of IPA to analyse the success factors of various contracting strategies and other influential parameters.

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This book is probably bound to become one of the important reference books for large industrial projects, because it provides important insights on the advantages and drawbacks of various contracting schemes. In particular, it clearly shows that \”EPC lump sum\” approaches to contracting have severe disadvantages contrary to common belief by decision-makers not fully aware of large industrial projects.

The worst contracting strategy appears to be alliancing, while the best appears to be separating Engineering & Procurement on one side, with Construction on the other. This separation appears to provide significant benefits, provided the owner project team is sufficiently capable to handle the interface.

Other considerations will be of interest to the project practitioners: the importance of contractor prequalification, to understand what are really their proven capability and limits; the limited interest of using incentives in addition to those fundamentally included in the contracting model (they never seem to work!). The book also presents some results that depend on the actual scale of the project, as certain contracting approaches may appear to work well for relatively modest projects but much less for very large projects.

Of interest is the provision of observable performance of various contracting strategies not only in terms of cost and schedule slippage, but also on cost and schedule performance compared to the benchmark for the facility to be built: certain approaches may provide less slippage, but with an initial planned performance in terms of cost and schedule which may be above the average. This then questions the overall profitability of the infrastructure.

This book will find its place as a major reference book in your project management library and we can only engage the project practitioner to read it.

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