Best Practice Guide Contract Management

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Copyright
© Copyright ECIA 2014. The information and ideas contained within this document are
the copyright of the ECIA.
Acknowledgements
References to and quotations from relevant sources are included in this document. All
quotations are shown in italics and within quotation marks.
Disclaimer
Please be aware that nothing contained with this Best Practice Guide should be
considered as superseding the National Agreement for the Engineering Construction
Industry (NAECI).
Published by
Engineering Construction Industry Association (ECIA)
5th Floor, Broadway House, Tothill Street, London SW1H 9NS
Email: [email protected]
Tel: 020 7799 2000 Fax: 020 7233 1930
Website: www.ecia.co.uk
CONTRACT MANAGEMENT BEST PRACTICE GUIDE
Foreword – Contract Management

The ECIA Productivity Improvement Committee (EPIC) commissioned this Best Practice
Guide on Contract Management to facilitate the sharing and utilisation of knowledge.
From the information contained within the Guide, improved work practices can be
developed to assist with improved productivity and performance.
Throughout this document the term ‘Contract Management’ refers to those activities
performed by both clients and contractors to: establish a project; develop a scope, terms
and conditions to manage a project; procure, negotiate and award a contract; administer
delivery of the project and close the contract after delivery of the project scope.
This document breaks ‘Contract Management’ down into four phases which are generic to
any form of contract and any type of project, including both new-build and Repair and
Maintenance contracts. The recommended best practices, some of which are applicable
to clients, some of which are applicable to contractors, and some of which are applicable
to both, set forth ways in which the formation and administration of a contract can
positively influence improved productivity and worker performance.
The ECIA wishes to thank the many stakeholder representatives who contributed both
directly and indirectly to the production of this document. Industry support for its
production is indicative of a commitment to a continuous improvement process to
increase the performance and competitiveness of the UK Engineering Construction
Industry.
For further information please do not hesitate to contact [email protected]
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Definitions
The following key terms are used in this document:
Client: Primarily the asset owner, developer or operator. Depending upon the nature of a
particular project, references to the term ‘Client’ could refer to the ultimate Client who is
developing and paying for a project or the term ‘Client’ could apply to contractors at all
levels within the supply chain who are subcontracting services as part of their scope of
delivery. As such, companies who could act as both ‘Client’ and ‘Contractor’, as part of a
project’s execution plan, should properly consider all the recommendations set forth in
this Best Practice Guide.
Contractor: The Contractor who has primary responsibility to the Client for delivery of the
project, Major Event or Repair and Maintenance (R&M) activities. Depending upon the
nature of the scope of services and contract, use of the term ‘Contractor’ could refer to:
A ‘Managing Contractor’ who manages multiple contractors with defined scope of
services (that is, does not perform the work themselves)
An ‘EPCC Contractor’ who performs most of the project’s scope of work with their
own resources
A ‘Construction Management Contractor’ who subcontracts most of the project’s
scope of work to other contractors who perform the work.
Project Management: The professional discipline of managing a project from conception
through to completion, using accepted industry standards and practices for execution of
the multi-discipline activities involved in project delivery. The term is used with reference
to both the processes and people involved in Project Management.
Project Team: Any member of the Client’s, Contractor’s or subcontractor’s workforce
charged with overseeing and execution of a contract.
Subcontractor: Any contractor in the Contractor’s supply chain carrying out Engineering
Construction tasks on a project.
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Table of Contents
1. Introduction 7
1.1 Background 7
Establishment of EPIC to Examine Best Practice 8
2. What Did the Group Look at? 9

2.1 Terms of Reference 9
Definition of Contract Management 9
Key Aspects Addressed 9
2.2 Premises and Assumptions 9
2.3 Approach to Contract Management 10
Importance of New Developments in Contract Management 10
Importance of Clear Service Delivery Arrangements 10
Workforce Productivity Critical to a Successful Project 10
2.4 Benefits 11
Benefits of Good Contract Management 11
3. Contract Management in Engineering Construction 13

3.1 Phases of Contract Management 13
General Overview of Project Phases 13
Model and Approach for Contract Management 13
Pre-Contract Award 14
Contract Award 15
Contract Implementation 15
Contract Close-Out 15
3.2 Contract Management Activities and Events 15
Process Flow 16
4. Pre-Contract Award 18
4.1 Introduction 18
Proper Understanding of the Contract 18
Potential Areas of Poor Performance 19
4.2 Managing Barriers to Productivity 19
Client has Unachievable Expectations 19
Inadequate PQQ Process 20
Enquiry Packages Incomplete at Time of Bid 20
Lack of Qualified Contractors 21
Contractor Proposal Doesn’t Address Requirements of RFP 21
4.3 Best Practice 22
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5. Contract Award 24
5.1 Introduction 24
Contract Awarded without Proper Estimate of Cost 24
Contract Awarded with Unrealistic Scope/Schedule 25
Poor Understanding of the Key Project Risks 26
Comprehensive Project Governance not Incorporated into Contract 27
6. Contract Implementation 31
6.1 Introduction 31
Safety Performance 32
Mobilisation 33
Operations Management 33
Commercial Management 34
Materials and Equipment Management 35
Change Management 36
Project Controls Management 37
Relationship Management 37
Supply Chain Management 38
Commissioning and Handover 38
7. Contract Close-Out 44
7.1 Introduction 44
Extended Commercial Close-Out 45
Close-Out Documentation 45
8. Repair and Maintenance 49

8.1 Repair and Maintenance Contracts 49
8.2 Major Events 49
9. Conclusions 52
9.1 Contract Management 52
9.2 Summary of Recommendations 53
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A. Checklists for Contract Management 56

A.1. Pre-Contract Award 56
A.2. Contract Award 57
A.3. Contract Implementation 58
Ensuring Processes are in Place 58
On-going Monitoring 59
Commissioning 59
A.4. Contract Close-Out 60
B. Case Study – Relationship Management 61

B.1. Background 61
Commercial Tension 61
Safety Performance 61
Organisational Issues 61
B.2. Approach 62
Building Trust with Leaders 62
Separate Workshops with Teams 62
Integrated Workshop 62
Maintaining On-going Momentum 63
B.3. Conclusions 63
B.4. Lesson Learned 63
C. Key Contract Elements – Initial Enquiry Package 64
D. Lessons Learned – Close-Out 65
E. Abbreviations and Acronyms 68
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1. Introduction
The ‘Changing to Section 1 gives the
Why promote Compete’ report background and defines the
best practice in highlighted the need to 3 main areas of investigation
Contract use best practice in the for the promotion of best
Management? management of projects practice
1.1 Background
The UK Government’s Review of Productivity and Skills in the UK Engineering Construction
Industry (‘Changing to Compete’ - published in December 2009) contained a total of 13
recommendations to drive the improvement in the Engineering Construction sector and
thereby enhance the success of future projects. A number of the recommendations refer
to or imply that Contract Management can influence productivity and form the basis of
the terms of reference for this document.
In response to the recommendations in the above report, the ECIA commissioned a study
between December 2011 and January 2012 to further identify the barriers to productivity
and areas for improvement. The resulting report identified Contract Management as one
of a number of areas of improvement. Specifically, the following contributing factors were
cited as influencing pre-construction, construction and Repair and Maintenance work:
Risk Management
Increase and changes in scope
Obtaining authorisation to work.
The days of a simple handshake between a Client and a Contractor are long gone. Projects
within the Engineering Construction Industry are now delivered within the culture of a
contract governed under a legal framework. Improving how such contracts are managed
will have a direct consequence for enhanced productivity and worker performance.
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Establishment of EPIC to Examine Best Practice

The ECIA hosted a conference in October 2011 to explore productivity performance.
Following this, the ECIA Productivity Improvement Committee (EPIC) was established to
look at best practice within the industry.
The committee was tasked with three main areas:
1. To identify barriers to delivering successful projects and Repair and Maintenance work
in the Engineering Construction Industry.
2. To establish and disseminate best practice to overcome and mitigate barriers found.
3. To benchmark performance and measure improvement.
In November 2011 EPIC commissioned an independent report to identify the key barriers
to productivity in the UK Engineering Construction Industry (ECI). This report ‘Barriers to
Productive Performance in the Engineering Construction Industry 14 March 2012’
identified, amongst others, three initial areas that EPIC would investigate further:
Industrial Relations, Workforce Engagement and Contract Management. The aim was to
produce guidelines for stakeholders by means of the establishment of working groups
comprised of experienced people drawn from all levels of the Engineering Construction
Industry. The Industrial Relations and Workforce Engagement Best Practice Guides were
published in 2013.
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2. What Did the Group Look at?

Current practices and Section 2 defines the terms of
opportunities for possible reference and scope for
What aspects improvements in Contract examination of Contract
were examined? Management strategy and Management as well as
implementation summarising the key benefits
2.1 Terms of Reference

Definition of Contract Management
The term ‘Contract Management’ describes those activities which take place between a
Client and Contractor, and then between a Contractor and subcontractors and other sub-
tier suppliers, for the purposes of formulating, tendering, administering and closing a
contract for services. These activities form a similar sequence, irrespective of the form of
contract that is being employed.
Key Aspects Addressed

The working group addressed key aspects of the Contract Management process, with
particular reference to their effect on productivity of the workforce on a day to day basis.
Main points covered were:
The identification, control and mitigation of risks in Contract Management
The best means for improvement of the Contract Management process to enhance
productivity of the workforce
Specific processes for the control and management of contract change and obtaining
authorisation to work
Factors that vary between new-build construction and Repair and Maintenance work
Variations in factors in management of contracts between:
Clients and Contractors and
Contractors and their supply chains.
The impact on productivity of particular aspects of Contract Management during the
various phases of project delivery (from Planning through to Construction and
Handover).
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2.2 Premises and Assumptions

The primary focus of this Best Practice Guide is to describe barriers to workforce
productivity which can be overcome through employment of best practices in Contract
Management. This document also contains certain best practices which are generic to
effectively managing any contract for new-build and Repair and Maintenance projects and
will influence the successful outcome of a project on a number of levels, including
workforce productivity.
This Best Practice Guide specifically does not consider best practices for any of the
following:
The advantages or disadvantages of employing any particular form of contract; this

will be the subject of a future Best Practice Guide on Contract and Procurement
Strategy
The commercial arrangements of a contract
The definition of Industrial Relations content within contract requirements and

management of Industrial Relations during contract execution; this was the subject of
Best Practice Guide No. 1 – Industrial Relations.
2.3 Approach to Contract Management

Importance of New Developments in Contract Management
Contract Management has developed in many ways over the past ten years as projects
strive to reduce costs and improve financial and operational performance.
A Changed Environment
New regulatory requirements, globalisation, increases in contract volumes and increases
in project complexity have highlighted the increasing importance of and potential benefits
derived from effective Contract Management.
Introduction of Formal Structures and Procedures

The growing recognition of the need to automate and improve contractual processes and
to satisfy increasing compliance objectives have led to adoption of more formal and
structured Contract Management procedures. In parallel with this development, there has
been increasing reliance on available software applications designed to address this more
formalised approach.
Importance of Clear Service Delivery Arrangements

Effective and efficient Contract Management can only be achieved if the arrangements for
service delivery continue to be satisfactory to both parties (Client and Contractor) involved
in the delivery programme. In particular, it is inevitable that disputes will arise within the
complexities of the contract’s life cycle. It is the responsibility of those drawing up a
contract to expect and account for such disputes and provide mechanisms which will
allow for expedient resolution of issues to the mutual benefit of all parties. To do this, it is
essential that the contract binds both parties to a clear and deliverable scope and
programme, with an effective Change Management process that allows impacts and
changes to be incorporated into the contract with the least impact upon workforce
productivity.
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Workforce Productivity Critical to a Successful Project

Successful project delivery is dependent, amongst other critical success factors, upon the
productivity of the workforce. The way in which contracts are prepared, tendered,
administered and closed can have an effect upon the productivity of the workforce and
this should be taken into consideration when drawing up and implementing a contract.
The ‘Summary Report on Barriers to Productive Performance in the Engineering
Construction Industry’ confirmed that the management of risks, control of scope growth,
management of change and obtaining authorisations to work were factors that affect
workforce productivity on a day to day basis. It follows that all of these factors should be
considered in the Contract Planning stage.
2.4 Benefits
Benefits of Good Contract Management
The benefits of good Contract Management can be chiefly typified by:
Clear definition of the Client’s requirements

Clear understanding of the Client’s expectations
Clear allocation of risk between the Client and Contractor
Provision of sufficient time within each stage of the project life cycle to properly
implement those actions needed to allow successful implementation of the contract
Early and continued engagement of all key stakeholders
Provision of clear and early communication channels and mechanisms
Open and honest communication between the parties
Use of Key Performance Indicators (KPIs) to drive the right behaviours on both sides
of the contract
Effective change control
Effective and timely Contract Close-Out.
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3. Contract Management in Engineering

Construction
What are the Contract Management Section 3 summarises the
key project phases applies to all phases of a key phases in a project life
where Contract project through from Pre- cycle where Contract
Management Contract Award to Management has an impact
plays a role? Contract Close-Out
This section gives an overview of the key phases in Contract Management for an
Engineering Construction project and includes a summary description of those tasks that
pertain, in particular, to Contract Management.
3.1 Phases of Contract Management

General Overview of Project Phases
All projects can be subdivided into phases, where certain activities and events take place
in a defined sequence.
The number and nature of project phases will vary based upon a variety of factors,
including the scope, delivery model (for example, Client furnished design versus
Engineering Procurement Construction & Commissioning (EPCC)), third party involvement
and other external influences.
Phases are often structured around the key activities which comprise a typical project’s
life cycle, such as Planning, Design, Procurement, Construction, Commissioning and
Handover. Many clients and contractors have procedures in place that define project
phases with a gated approval process, governing the decision to consider one phase
complete before entering into the next phase.
Different perspectives can also drive the description of project phases, as can be seen in
Section 3.2 of Best Practice Guide No. 1 – Industrial Relations, which depicts phases of the
project life cycle from the perspective of Industrial Relations.
Model and Approach for Contract Management

From the perspective of Contract Management, a project can be seen to have four
discrete phases which encompass the activities carried out during which a contract is
formed, awarded, administered and closed. This model holds true for any contract or
contract form, including new-build and Repair and Maintenance work. These four phases
of Contract Management are:
Pre-Contract Award
Contract Award
Contract Implementation
Contract Close-Out.
The above phases apply to all contracts within a project’s supply chain and the principles
discussed in this Best Practice Guide would apply to all such contracts.
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Influence of Activities in Each Phase

This Best Practice Guide has considered each project phase both in isolation and as a
sequence of activities which comprise the life of the project. Each phase influences
subsequent phases; hence it is not possible to discuss barriers to productivity or best
practices in isolation.
This approach can be summarised as follows:
The activities which are accomplished during the Pre-Contract Award and Contract
Award phases significantly influence the success of Contract Implementation and
Contract Close-Out.
The activities which are accomplished during Contract Implementation significantly
influence the success of Contract Close-Out.
The activities which are accomplished during Contract Close-Out will influence
decisions made during the Pre-Contract Award and Contract Award phases of
subsequent projects.
As such, some of the best practices which are described herein for one phase of Contract
Management are reflective guidance for activities actually accomplished in other phases
of the project.
Often, insufficient time is allowed in the Pre-Contract Award and

NOTE: Contract Award phases to allow effective planning and decision
making for the best outcome of the Contract Implementation and
Contract Close-Out phases. Clients and contractors must both
understand the importance of ensuring that sufficient time is allowed
for in the early phases of a project to achieve a successful project
outcome.
Pre-Contract Award
The Pre-Contract Award phase commences when a Client decides to implement a project
and includes all the activities conducted by both the Client and the potential Contractor
up to and including the submission of proposals in response to a Request for Proposal
(RFP).
Clients
This phase includes those activities that clients must accomplish to confirm the scope of a
project:
Obtaining funding for the project

Preparing specifications, works information and contract requirements
Identifying potential bidders
Prequalifying potential bidders into a list of companies or joint ventures from whom
to request proposals
Preparing and issuing tender documents to procure the project
Responding to requests for information from the bidders during bid evaluation.
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Contractors
This phase includes those activities that contractors must accomplish to:
Make bid/no-bid decisions on prospective proposals

Gain internal approvals to submit a proposal for a project
Develop a ‘win’ strategy
Develop cost estimates
Engage the supply chain
Prepare proposals in response to a Client’s tender documents and gain final internal
approvals to submit a bid.
Contract Award
The Contract Award phase includes:
The Client’s evaluation of tender submissions

The exchange of information between clients and bidders to clarify and normalise
bids
The obtaining of internal Client approvals necessary to award a contract
The obtaining of internal Contractor approvals necessary to enter into a contract
And finally, the signing of a contract between the two parties.
Contract Implementation
The Contract Implementation phase commences after Contract Award and includes
everything that the Client and Contractor must do to administer the contract until the
Contractor has achieved completion of the works in accordance with the contract
requirements.
Contract Close-Out
The Contract Close-Out phase includes all activities needed, once the Contractor has
achieved completion of the works, to formally close the contract and implement the
warranty period.
3.2 Contract Management Activities and Events

General Overview of Project Phases
The flow sequence contained in this section shows typical key activities and events within
each of the four phases of Contract Management. It is designed to provide a context for
investigating the barriers to productivity within the Contract Management process as a
whole.
Please note the following key to the process flow in this section:
LEGEND:
• activity event / milestone
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Process flow
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Process flow
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4. Pre-Contract Award
What are the key Identifying the project and Section 4 describes
activities in the form of contract, selecting important factors for the
Pre-Contract bidders and issuing a Pre-Contract Award phase
Award phase? Request for Proposal and summarises potential
barriers to productivity
This section provides an introduction to the Pre-Contract Award phase and describes the
key barriers to productivity and steps that can be taken in their mitigation, in order to
create the basis for good productivity in the subsequent Contract Implementation phase.
It also includes a number of best practice recommendations for successful management
of this phase in a project.
The barriers to productivity covered in this section can apply at any point during the course
of the key activities and events which take place within this phase of Contract Management.
4.1 Introduction
The Pre-Contract Award phase is a crucial period during which, if the appropriate
procedures are conducted successfully, the contract will be positioned for a successful
outcome, maximising high levels of productivity. The main key to overall success in this
phase depends on communication and a willingness to work together.
Proper Understanding of the Contract

It is crucial that clear and precise understanding of the contract exists between all parties, in
order to avoid creating barriers to achieving maximum productivity. (See Appendix C for a
guide to the key contract elements that should form the basis of the Initial Enquiry Package.)
A properly prepared and compliant tender submission will have considered the many
barriers to successful contract completion. Given that sufficient time has been allowed to
compile the submission, issues will have been dealt with through intensive
communication and in the course of development of a culture of working together. By
mitigating many of the potential areas for conflict, the Project Team will be able to
concentrate upon execution of the contract and achieving the highest levels of
productivity throughout, rather than being split between dealing with contractual issues
and execution.
During this phase, the Client should give key consideration to how the contract will:
Impose appropriate incentivisation for timely delivery of design and specification

details
Demand detailed programmes for all aspects of the project’s scope in sufficient detail
to allow effective management of the work by the Contractor and evaluation of
progress of the work by the Client
Sufficiently consider and accommodate multiple locations involved in project
execution and compel the Contractor to clearly identify which key activities, such as
subcontract administration and management of off-site manufacturing, are to be
conducted in which location
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Ensure that the requirement for the subcontractors to operate a site Industrial
Relations policy fully reflects the best practice requirements laid down in the ECIA
Productivity Improvement Committee (EPIC) Best Practice Guide Number 1 for
Industrial Relations
Ensure that the requirement to deliver a Project Quality Plan, aligned with the
project’s delivery programme, is a prerequisite, as lack of a clear project execution
strategy clearly impacts delivery.
Potential Areas of Poor Performance

Of the numerous barriers that can create conflict within a contract, each should be
considered for its potential impact before mitigating factors are put in place.
There are six key areas where poor performance can lead to serious barriers to productive
working:
Client has unachievable expectations

Inadequate Pre-Qualification Questionnaire (PQQ) process
Enquiry packages incomplete at time of bid
Lack of qualified contractors
Contractor proposal doesn’t address requirements of the Request for Proposal
Insufficient time has been allowed for building the Project Team and ensuring the
correct levels of skill required.
4.2 Managing Barriers to Productivity

Some key potential barriers to productivity are described here with their causes, and
suggestions are given for an approach which will lead to identifying factors for success.
Client has Unachievable Expectations

The problem of unachievable expectations can arise from a number of contributory
factors. Generally such expectations stem from a lack of current understanding of the
supply and manufacturing market at the time, coupled with time and/or budget
constraints.
To achieve successful understanding of the current market, meetings need to be

implemented before the contract starts between all parties, including Client/Contractor
Project Teams, and then held on a regular basis. These meetings should have the objective
of discussing, defining and agreeing parameters during this phase of the project.
In particular, it is essential that:
Work levels are defined, including safety and quality requirements

The understanding from both Client and Contractor of what has to be delivered, and
to what programme, is set down clearly, in order to make the most efficient and cost
effective use of resources
Enough time is allowed for completion of the work in all phases of the contract.
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Inadequate PQQ Process

Poorly managed PQQ requirements are often seen as a barrier to the pre-qualification
process.
An effective PQQ process will facilitate:
Dialogue between Client and Contractor, giving due consideration to both the Client’s
and Contractor’s requirements, in particular as to how packages are placed. These
requirements should give the ability to bundle packages together, which can achieve
an enhanced performance from a Contractor and deliver flexibility and high levels of
productivity.
Developing a culture of trust between all parties to achieve a set of requirements
specifically relevant to the contract scope; consideration should in particular be given
to detailed reporting and productivity incentivisation.
Ensuring, whilst developing these requirements, that full consideration is given to
both safety and quality, each of which will complement good productivity throughout
the contract.
Enquiry Packages Incomplete at Time of Bid

Enquiry packages can be incomplete as a result of a number of factors:
Design information is incomplete

Design Specification quality is not up to standard
There is poor or late definition of scope
Interfaces have been insufficiently considered or defined
Local conditions are unknown
The programme of work is incomplete or wrong
The scope of the deliverables is not clearly defined.
This list is not exhaustive and other factors can contribute to this
NOTE: problem.
In order to achieve a successful Contract Award and continue through to successful

implementation of the works, it is essential that meetings and other channels for dialogue
are initiated during the Pre-Contract Award phase and continue on a regular basis. This
process should begin before the contract starts, and should include all Client and
Contractor Project Teams involved in the project.
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The objectives are to ensure that:

The Client is made fully aware of and understands why the required information is
incomplete, where this is the case, and how it could result in the need for qualifications
within the bid submission. The potentially negative effect upon efficient productive
working, for example through the need for re-work, should also be considered.
By developing a ‘Culture of Trust’ and working closely together, Client and Contractor
can avoid any future dispute which could adversely affect the productivity of the
project. All parties must commit to working together!
Lack of Qualified Contractors

A lack of general market intelligence and poor understanding of the skills market by the
Client can have an adverse effect on planning and productivity. In particular, supply chain
requirements and availability should be identified in relation to the contracting
community sufficiently ahead of the demand, otherwise the subsequent potential delays
and skill shortages can have a significant negative impact on the economic model on
which the proposed project has been established.
To prevent these problems, forward planning with early announcement of proposed

contracts is essential. Both Client and Contractor should fully evaluate the market so that all
parties understand the forthcoming requirements in relation to the available skills market.
This will allow potential tenderers sufficient time to establish clear plans and appropriate
teams for engagement with the proposed new project, and provide a solid base from
which the Pre-Contract Award process can be conducted.
Contractor Proposal Doesn’t Address Requirements of RFP

A number of issues can arise when the Contractor’s proposal doesn’t address the stated
requirements of the RFP. These can include:
Inadequate timescale provided for bidders to respond to the RFP

Lack of resource
Lack of engagement with the supply chain during bid development.
Detailed and complex enquiries should not be put out to the market place without
adequate time being allowed to understand the Client’s and Contractor’s requirements. It
is essential to allow such time to enable a fully compliant bid to be submitted.
Once again, it is suggested that close working relationships, which involve the building of
trust and mutual understanding, are essential for creating a full appreciation from all
parties of the proposal requirements. This understanding can then be transferred onto the
Project Team for implementation and will assist in achieving high levels of safety and
productivity during project execution.
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4.3 Best Practice
PRE-CONTRACT AWARD
Managing Client The Client should:

expectations
Engage at an early point with the supply chain to
avoid unrealistic expectations
Ensure high levels of communication between all
parties – this is considered essential
Use pre-contract meetings and general site
meetings to build a culture of trust and open
communication when working together.
The Contractor should:
Never be afraid to say “I Don’t Understand!”
Ensuring correct The Client and Contractor should:

understanding and
conditions of the Ensure the contract conditions are understood
contract and that they are applicable to the contract works
being issued.
The Client (including all clients along the supply chain)
should:
Ensure the strict application of good IR practices
as embodied in NAECI. This requirement should be
included in contracts and ‘enforced’ by clients.
Use contracts that incentivise the efficient use of
workforce man-hours and materials.
Provide individuals who have experience of the
form of contract supplied by the Client.
Employing competent The Client should:

contractors and
subcontractors Ensure that they appoint contractors and
subcontractors who are competent to do the job.
This means not only selecting those able to
organise the work efficiently but also those able to
manage the workforce effectively through good
leadership.
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PRE-CONTRACT AWARD
Ensuring appropriate The Contractor should:

knowledge and
understanding on the Have sufficient knowledge about and have
part of the Contractor performed due diligence with regard to a Client
Understand the level of investment required to
prepare and submit a competent proposal
Have shown that they are experienced in dealing
and working with UK Trades Unions, such as
outlined in NAECI.
Involvement of the The Client and Contractor should:

Trades Unions in the
communications process Ensure that Trades Unions that are recognised
signatories to NAECI are involved at an early stage
in preliminary planning, so that they fully
understand what is happening.
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5. Contract Award
What are the key Evaluating the proposals, Section 5 describes

activities in the handling tender queries, important factors for the
Contract Award conducting tender Contract Award phase and
phase? interviews, Contractor summarises potential
selection & signing barriers to productivity
This section provides an introduction to the Contract Award phase and describes the key
barriers to productivity and steps that can be taken in their mitigation. It also includes a
number of best practice recommendations for successful management of this phase in a
project.
The barriers to productivity covered in this section can apply at any point during the course
of the key activities and events which take place within this phase of Contract Management.
5.1 Introduction
The period spanning the time from when the Client receives proposals in response to an
Invitation to Tender up to Contract Award is critical for two key reasons:
Ensuring that the intent of the contract has been satisfied by the preferred bidder’s
proposal
Ensuring that the contract can be administered during the Contract Implementation
phase in a manner that achieves the desired outcomes for both parties.
Implicit in these aims is the objective of ensuring that any potential barriers to
productivity can be efficiently identified, mitigated and managed in order to minimise any
impact upon the productivity of the workforce.
In this context, there are four key areas where poor performance can lead to serious
barriers to productive working:
Contract awarded without proper estimate of cost
Contract awarded with unrealistic scope/schedule
Poor understanding of the key project risks
Comprehensive project governance not incorporated into the contract.

Contract Awarded without Proper Estimate of Cost
A number of causes usually contribute to a contract being awarded without a proper
estimate of the cost as a basis for the awarded contract value:
Unrealistic bid timescales are provided for contractors to prepare competent technical
proposals and cost estimates
The Client’s scope is not sufficiently defined or is subject to on-going research and
development which could lead to change in scope
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Contractors don’t sufficiently engage with their supply chain in preparing cost estimates
The risk profile and allocation of responsibility for mitigation of risks is not clearly
understood by either the Client and/or bidders.
Client Responsibilities
Clients need to ensure that they have provided sufficient information in their Request for
Proposal to clearly specify the project’s scope, programme and risk so as to allow
contractors to prepare competent technical proposals and cost estimates/price in
response; this is because the contractor’s proposals for time and cost form the basis for
the planned productivity of a project. The Client’s Request for Proposal should provide
bidders with a detailed Work Breakdown Structure (WBS) that clearly represents the
project scope and breaks down the cost in sufficient detail to allow a robust evaluation.
Sufficient time must be allocated during this phase for contractors to prepare a competent
proposal and clients to fully interrogate and understand the bidders’ cost estimates/price.
If the Client does not have the competence or resources internally to conduct a thorough
bid evaluation then securing external support may be necessary.
A structured tender query should be established which allows all questions to bidders to
be identified and tracked to resolution as part of the evaluation process.
Finally, clients need to be aware of contractors over-committing or simply trying to ‘buy

the job’ when they are trying to meet internal objectives and financial models.
Contractor Responsibilities
Contractors need to provide the necessary resources, supply chain involvement and
internal reviews to ensure proper estimates of cost to deliver the project scope within the
specified programme and risk profile.
Contract Awarded with Unrealistic Scope/Schedule

As with cost, clients must take measures during tender evaluation to ensure that contracts
are not awarded on the basis of an unrealistic scope or schedule.
A number of causes can contribute to this:
Clients don’t provide a sufficiently detailed programme within the Invitation to Tender
in order to communicate programme expectations to the bidders
Contractors don’t sufficiently study and understand the conditions and circumstances
that will affect the productivity and schedule of the project
Contractors don’t sufficiently study the project’s scope and risk profile to determine
whether the programme expectations of the Client are achievable
Contractors don’t sufficiently understand Local, National or International demands for
services, with the result that they offer schedules that cannot respond to pressures
caused by manual staffing, ‘white collar’ staffing shortages and subcontractor or
supply chain capacity
Client and/or Contractor programmes don’t provide for the required level of pre-
mobilisation and mobilisation activities before the start of construction
Risk Management reviews focus on the implications of cost rather the implications of
both cost and time.
25
The Client’s Request for Proposal needs to provide a Tender Programme which bidders
must achieve, based upon the same Work Breakdown Structure used to develop the
project’s cost estimate/price. During tender evaluation, clients need to be conscious of
whether timescales for the project have been changed or influenced by events which have
transpired since the Tender Programme was developed.
Contractors must take similar diligence in preparation of the Project Programme as they
do for preparation of cost estimates as outlined above.
Poor Understanding of the Key Project Risks

With risks comes the potential for unplanned change, which can have an adverse impact
upon productivity during Contract Implementation.
Causes which contribute to a poor understanding of the key project risks include:
Insufficient consideration of project risks by the Client prior to tendering for a project
Insufficient consideration of project risks by the Contractor prior to submitting a
technical proposal and cost estimate/price
Risk reviews that focus on cost, without proper consideration of time and effect of risk
upon productivity
Risk reviews that do not consider all measures which could minimise risks and prevent
impact upon cost and time
Risk ownership that is not agreed prior to Contract Award.
A Client needs to comprehensively evaluate the project’s risks prior to going out to tender.
The Client’s allocation of risk between themselves and the Contractor must be realistic
and specified in the tender documents, so as to allow contractors to sufficiently consider
and understand costs and risks within their technical proposal and estimate.
Contractors need to conduct robust risk reduction workshops during proposal preparation
to understand the implications of the project’s risks to their cost estimates and
programme. These risk reduction workshops need to review the project risks from the
individual Contractor’s perspective and not simply take the Client’s specification of risk for
granted.
Contractors need to allocate appropriate resources to the consideration of risks during bid
preparation and build the infrastructure of their Risk Management Programme into their
proposal. The flow down of risks must be also considered by contractors in the
preparation of their subcontracting strategy.
26
Comprehensive Project Governance not Incorporated into Contract

Failure to put appropriate governance in place within the contract can lead to situations
where work cannot proceed, which directly affects workforce productivity. There are a
number of causes which contribute to failures in the Contract Award phase which need to
be considered to ensure that effective project governance is incorporated into the contract:
Performance measures are not defined or agreed prior to Contract Award
Robust communication and stakeholder engagement protocols are not agreed prior to
Contract Award
Lines of accountability and authority have not been specified in the Client’s tender
documents
Contractors have failed to establish clear authorities and responsibilities for approval
of changes to the contract
Contractors have failed to put mechanisms in place for payment of subcontractors and
sub-tier suppliers in a timely manner
Change control procedures are not clearly defined and/or adhered to
The contract is not administered in an appropriate or timely way.
Clients need to give proper thought to a project’s governance and be very clear in the
tender documents as to how that governance will be adhered to. This requires clarity in
specifying what the Contractor must submit with the proposal so that the Client can
properly understand the Contractor’s interpretation of the project’s governance.
Clients must ensure that:
The preferred Contractor’s proposal has understood the governance requirements

contained in the contract and has outlined the organisation and management systems
that will be used to meet those requirements during Contract Implementation
They understand what organisation and management systems they, as the Client,
need to have in place to administer the governance requirements during Contract
Implementation
They have clearly defined responsibilities for control of and approval of contract
changes
Their expectations and requirements are clearly established in the tender documents
so that the bidders can understand and propose how they will operate under the
contract’s governance.
Joint Responsibilities
Both parties (Client and Contractor) need to recognise the investment in project resources
that will be required to adhere to the project’s governance, and this needs to be reflected
in the Contractor’s proposed organisation and staffing plan.
27
5.3 Best Practice
CONTRACT AWARD
Ensuring projects are The Client should:

delivered to budget
Develop a comprehensive pre-tender estimate of
costs and require a price breakdown in sufficient
detail from contractors to facilitate evaluation
Incorporate a formula for disqualifying bids where
prices are expected and determined to be
abnormally low in their evaluation criteria.
Sufficiently engage with the supply chain in
development of bid prices
Develop prices to Client specifications and not to
standard estimating templates.
Ensuring projects are The Client should:

delivered on time
Develop a comprehensive pre-tender schedule for
the works and require Tender Programmes from
contractors that are in sufficient detail to facilitate
evaluation
Specify that programmes are tied to the same
Work Breakdown Structure as prices
Incorporate a formula for disqualifying bids where
programmes are expected and determined to be
unachievable in terms of evaluation criteria
Require a pre-award programme review with the
nominated Contractor.
Involve the Project Team who will deliver the
project in establishing the Tender Programme
Ensure the Tender Programme provides sufficient
details in all parts of the project scope, including
Planning and consents, Engineering, Procurement,
Construction, Commissioning and Handover.
28
CONTRACT AWARD
Ensuring projects The Client should:

understand and manage
risks Specify a Risk Management tool to be used for the
project and require contractors to submit a Project
Risk Register with their bid
Request contractors to provide specific proposals
for the mitigation of risks that could affect
workforce productivity
Require a pre-award risk review with the
nominated Contractor.
Implementing The Client should:

appropriate project
governance Outline a detailed change approval process in
tender documents including clear time limitations
for approval, which are to be strictly adhered to
during Contract Implementation
Provide a tender question which poses a
hypothetical change and requires the Contractor
to describe in their bid how they would manage
and mitigate the impacts of that change
Request bidders to propose Key Performance
Indicators that they would suggest using during
Contract Implementation to evaluate performance
Conduct pre-award interviews and values
screening with the Contractor’s key staff as part of
kick-off activities
Establish project bank accounts to provide
transparency of Contractor payments to sub-tier
suppliers.
29
30
6. Contract Implementation
What are the key Design, engineering, Section 6 describes important
activities in the procurement, factors for the Contract
Contract construction, Implementation phase and
Implementation commissioning and summarises potential barriers
phase? handover to productivity
This section provides an introduction to the Contract Implementation phase and describes
the key barriers to productivity and steps that can be taken in their mitigation. It also
includes a number of best practice recommendations for successful management of this
phase in a project.
The barriers to productivity covered in this section can apply at any point during the
course of the key activities and events which take place within this phase of Contract
Management.
6.1 Introduction
Contract Implementation commences upon the Contractor’s receipt of a signed contract
and runs through to acceptance of the completed asset by the Client. This phase includes
all aspects of Design, Engineering, Procurement, Construction and Commissioning.
Effective implementation and administration of the awarded contract can have a

significant effect upon achieving the budgeted cost and scheduled delivery of any project,
not only as it relates to the productivity of the workforce but also to many other aspects
of successful project delivery. Decisions made during the Pre-Contract Award and Contract
Award phases will have laid the foundation for effective Contract Implementation.
It is imperative, therefore, that:
The Contractor’s initial activities during the Contract Implementation phase effectively
translate those decisions and requirements embedded in the Client’s contract
requirements and the Contractor’s proposal into a robust Project Execution Plan.
Both the Client’s and Contractor’s procedures drive the right practices and behaviours
to effectively manage and administer the contract in a manner that affords decisions
and actions which prevent barriers to productivity.
The barriers to successful Contract Implementation are considerable and cross all the
project deliverables. In particular, there are ten key areas where poor performance can
lead to serious barriers to productive working:
Safety performance
Mobilisation
Operations Management
Commercial Management
Materials and Equipment Management
Change Management
31
Project Control Management

Relationship Management
Supply Chain Management
Commissioning and Handover.

The overarching requirement for any project should be to ensure that the maximum
continuity is maintained post Contract Award. This can only be achieved if the Client’s and
Contractor’s Project Teams have been actively involved in the contract negotiations and
award process. This group should be fully aware of the rights, obligations and deliverables
enshrined in the contract.
In conjunction with the above requirement, there are detailed below some of the key
barriers to successful and productive projects and their causes. These barriers can exist
throughout the project life cycle and suggested best practices have been recommended,
which should go some way to help minimise their impact and drive the key factors for
success.
Safety Performance
Studies have proven that there is a direct relationship between poor site safety
performance and poor project productivity. Poor safety performance can have many
contributing causes, which can be brought about by one or more of the following
conditions (this list below is not exhaustive):
Lack of visible senior management commitment (Client and Contractor)

An inadequate or poorly defined command and control programme which dictates the
key roles, responsibilities and accountabilities
Inadequate levels of experienced and qualified supervision on the project
A lack of safety ownership on the part of the Client’s organisation
A safety culture that is not well established or implemented
Accident/Incident/Near Miss recording and reporting that is either inadequate or does
not lead to observations being effectively followed up.
Approach to Mitigation of Risk

There is no single way to mitigate the above conditions, but it is clear that the provision of
a Project Safety Programme as part of the initial project enquiry package will go a long
way to setting the expectations of both the Client and the Contractor. It will also allow the
potential subcontractors to clearly articulate how they intend to deliver safety excellence
throughout the site Construction and Commissioning processes.
The agreed contract should allow for several Performance-Based Incentives (PBIs) to be
established against the site safety performance. These PBIs should be linked to a
contract’s commercial incentive mechanism aimed at the subcontractor and rolled down
to the on-site and off-site workforce.
32
Mobilisation
Late or slow contract start-up/mobilisation is the first area where productivity can start to
be affected. This impact is usually caused by several contributing factors:
The lack of key engineering and trade resources, usually caused by the lack of front
end planning and/or the selection of an overstretched Contractor
Insufficient schedule time allowed for effective site mobilisation
The lack of an accurate and contractually agreed project schedule at Contract Award
Failure to effectively engage with key stakeholders (Trades Unions, Regulators, Client
Production Management, etc.)
The Contractor’s ineffective transitioning from sales to project delivery.

The lack of a clear and detailed front end Contract Schedule (where sufficient time is
allowed for key activities) and Resourcing Plan can be the main contributing factors to a
slow starting project. The contract needs to ensure that a detailed Contract Schedule is
agreed and in place before a contract is awarded.
Failure of the subcontractor organisation to fully understand the key resource

requirements at the bid stage, coupled with contracting parties’ failure to conduct
sufficient due diligence of the Contractor’s proposals for the early project requirements
are both significant contributors to this issue. As stated earlier, the bid process should
carry out a robust review of a potential Contractor’s/subcontractor’s offer.
The pre-contract negotiations need to have ensured that a clear governance programme is
agreed for the project delivery phase, including a robust site mobilisation plan. The
mobilisation plan will detail the requirement for a detailed site kick-off meeting; the scope
and agenda for this will have formed part of the original enquiry documentation package,
the contents of which will be the subject of a detailed response from the potential
subcontractor organisations.
The agreed contract should contain several PBIs which cover mobilisation and resource
provision. These PBIs should carry significant weighting within the contract’s commercial
incentive mechanism.
Operations Management
Extension of time during construction is driven by several key issues which can seriously
derail the project’s productivity and timeline. Most of the issues below should appear on a
well thought out and detailed Risk Register and the solutions for these risks should be
evident in the mitigation strategies.
These generic risk elements include:
Detailed information regarding the local area and ground conditions (see Construction
Design and Management (CDM) Regulations)
The project’s interfaces with the existing operational facilities and their potential
impact on the project
Design quality issues, leading to a potential need for re-work or delays waiting to
proceed, which can impact efficiency
33
Stakeholder engagement issues

The effects of inefficient working practices, for example the failure to adequately plan
work areas and access
Failures in the delivery of key equipment and materials
Poor Industrial Relations management.

The original Invitation to Tender should not be released if it does not contain significant
detail regarding critical project inputs such as the existing site ground conditions, which
should include information on:
Potential contamination
Drains, services and utilities
Ground load-bearing capabilities
Access and egress
Emergency arrangements.
It should also be ensured that:
There is an effective and timely design review process
Key stakeholders who can impact on progress, for example regulatory authorities and
local resident groups, are kept informed and ‘on board’
There is effective project planning and scheduling
Good workforce relationships are maintained by following the recommendations of
EPIC Best Practice Guides 1 & 2.
Commercial Management
Although not an obvious barrier to productivity, cost escalation as an element of
Commercial Management can be a key indicator of issues in the wider project.
Behaviours in and around Project Cost Management can have a significant effect on
delivery. A Contractor who is commercially challenged is less likely to provide the
oversight and support needed to fulfil the Client’s objectives. Stresses which come with
significant commercial issues will potentially result in distractions to both the Contractor’s
and Client’s Project Team and senior management, which will likely result in conflict. This
can lead to a breakdown in communication and trust between the parties, which can also
cascade down through the supply chain.
Risk elements include:
Alignment between Client and subcontractor business objectives not effectively

managed
Inadequate or poor risk mitigation activity
Poor or inadequate Design Specification quality
Inadequate subcontractor management
Inadequate logging of site activities throughout the project life cycle.
34

Cost escalation is mainly driven by three key elements:
1. Inadequate preliminary engineering preparation (for example, FEED) which leads to

inadequate scope definition and, subsequently, a large amount of change.
2. Poor estimating practices by the subcontracting entity.
3. Poor understanding of the project risks and subsequent lack of sufficient contingency
budget.
All of the above elements are preliminary engineering input from activities in the Pre-
Contract Award and Contract Award phases of the project. The provision of adequate
preliminary engineering documents and a robust ‘first pass’ Risk Register are essential
weapons in the fight against cost escalation.
Materials and Equipment Management

The ability to manage the delivery of on schedule, right first time equipment and materials
to site is a fundamental requirement of a Construction Contract and can be one of the
biggest causes of poor productivity.
There are several risks associated with this activity:
The provision of inadequate equipment and materials
Inadequate delivery management processes and procedures
Poor execution of the Delivery Schedule, which will significantly impact productivity.

Contractors need to demonstrate that they have the requisite skills to manage this
delivery process by:
Establishing a robust off-site Equipment and Delivery Schedule, supported by

appropriate expediting systems
Establishing processes that ensure the Design Specification quality is of the highest
standard
Ensuring that schedule logic and milestones allow sufficient time for manufacture and
delivery requirements
Ensuring that off-site workmanship quality is underpinned by robust quality

programmes and systems.
The following factors should also be addressed:
Milestones: The contract should clearly detail the key equipment delivery milestones;
these milestones should form a part of the project’s Performance-Based Incentives
within the contract’s commercial incentive mechanism.
Bulk materials: Elements such as bulk material requirements (pipe, fittings, cables
etc.), especially exotic materials, should be identified and managed as schedule
deliverables.
35
Project Quality Plan: The project should develop a robust Project Quality Plan that is
integrated into a Master Contract Schedule, with sufficient time allowed to complete all
of the design quality reviews and any off-site pre-inspection activities. The quality of this
document should be a high scoring element of the Pre-Contract Award assessments.
Change Management
Clients and contractors consistently underestimate the disruptive impact of change on a
project; even the smallest of changes can result in significant delays. When change is
poorly managed on either or both sides of the contract, this will drive bad behaviour
within the contracting and delivering entities.
Poor Change Management is usually categorised by:
Unclear or ambiguous Change Management processes

The late identification of change
Poor and/or slow change communication
Slow change approval
Local agreements made outside the governance process
Work instigated without requisite approvals
Slow response to technical queries or concession requests.

The contract document needs to clearly detail the required Change Management process
and the appropriate subsection of the contract should:
Detail the Client’s and Contractor’s personnel with change instruction/approval

responsibilities and accountability
Ensure that Client and Contractor are aligned and staffed to execute the chosen form
of contract. (Fixed Price Contracts will be executed significantly differently to target
cost.)
Include the implementation of a Change Management Register, which is proactively
managed by the project as part of the agreed governance change review process
Include provision to allow for the escalation of unresolved change issues to an
overarching Client-led arbitrator/ombudsman, with powers to instruct or reject
change
Provide a clear timeline for the identification and issue of a change request and a clear
contractual time for review and approval. The utilisation of the site’s document
control system is a key element in this process.
If the project is of a significant value, consideration should be given to

NOTE: the introduction of a Change Control Board (CCB) to manage the
Change Register, in the same way as risk is managed. This Board should
consist of the key Commercial and Project Management resources from
both the Client and Contractor. The duties of this Board will be to
sanction all contractual change encountered on the project.
36
Project Controls Management

Those who are managing projects need to know how the cost and schedule performance
is progressing against the baseline and so accurately predict completion. Failure to control
these two key project health indicators can significantly impact delivery performance.
Some elements that can impact project controls are:
Contractor’s data is inaccurate or of poor quality

A Project Control process has not been established or is inadequately deployed
There is a lack of experienced project control resources
PBIs are not established to drive the necessary behaviours
There are too many or overly complex reporting demands from within different parts
of the Client’s organisation.

In order to deliver accurate schedule and cost data, the contract between the Client and
Contractor, and subsequent subcontracts, should clearly define the Project Control
process requirements detailing the:
Schedule and cost control software requirements

Working level Work Breakdown Structure
Data reporting requirements and reporting frequency.
Where subcontracted entities are not large enough to carry the software and/or Project
Controls Management (PCM) resources, the contract should clearly identify the type,
format and frequency of the base data that will be required for progress monitoring.
The contract should also contain Performance-Based Incentives which are structured to
reward/penalise the provision and delivery of accurate data.
Relationship Management
Conflicts on a project can seriously harm productive delivery, the obvious area for conflict
being Industrial Relations. The EPIC Best Practice Guide Number 1 covers this important
topic in detail, therefore this element is not considered here. However, several other areas
can also be responsible for poor Relationship Management, and include elements such as:
A lack of clear and concise leadership

The Client does not retain an intelligent customer capability, therefore the project is
starved of clear Client guidance at critical times
Poor Client/Contractor relationships as well as poor inter-team dynamics
Poor relationships within key elements of the supply chain
Failure to take action/address issues when conflict arises.
37

Leadership at all levels of a project is of key importance and is driven from the top down.
Every level of the project organisation from front line field supervision through to
members of the Project Team needs to have a clear understanding of the roles and
responsibilities within the Project Team for delivering the project objectives and
milestones. These roles and responsibilities need to be clear, concise and fully understood.
The contract should make the delivery of these goals a contractual requirement in the
Prime Contract document.
The introduction of a Project Team Building programme between the Client, Contractor
and subcontractor organisations will drive the types of behaviour that are needed to
engender collaborative working throughout the duration of the project. This process is
often more effective and timely when a third party facilitator, who is impartial to the
differences being experienced, is engaged to lead the alignment process. A case study is
presented in Appendix B, which illustrates the principles involved.
It is essential that the Project Manager act swiftly to defuse tensions and conflicts within
the Project Team; failure to respond quickly and decisively will result in deterioration of
working relationships.
Supply Chain Management

Effective Supply Chain Management depends on a collaborative approach between the
Client, Contractor and subcontractors. The importance of strong links within all elements
of the supply chain cannot be overplayed and any failures in Supply Chain Management
will significantly impact equipment and material deliveries. Trust between the three
parties is an absolute requirement, and failure to establish a relationship of trust will lead
to conflict and ultimately have a significant impact on productivity and project delivery.
Supply Chain Management has a common link with Equipment and Materials
Management, which is detailed above. However, there are several additional elements
which do not directly impact equipment and materials delivery and can be potential
barriers to successful delivery:
The Prime Contract requirements are not passed down to the subcontracts, therefore
key terms and conditions of the Contract are not represented throughout the supply
chain, causing discontinuities in contract deliverables
There is a lack of suitably qualified and experienced subcontract administration
resources; this can lead to a lack of visibility of key subcontracts
Payments to suppliers, if not made on time, can significantly impact trust
Failure of the contracting authorities to fully understand the Local, National or
International supply chain capacity can have a negative impact.

In order to maintain strong supply chain relationships, the Prime Contract should require
that key terms and conditions be integrated into any subcontracts.
The Prime Contract should demand that any subsequent subcontracts ensure that
payment mechanisms and timelines are maintained (where performance meets
expectations and PBIs).
38
6.3 Best Practice
CONTRACT IMPLEMENTATION
Safety Management The Client should:

Plan
Ensure that the Contractor’s Safety Management
Plan is aligned with the tender requirements and
the Contractor’s bid submission
Develop and implement a monthly safety
performance evaluation of Contractor performance,
which impels the Contractor to develop and
implement monthly safety improvement plans to
drive improved safety performance.
Ensure that appropriate measures to safeguard
workforce health are implemented to reduce
health-related risks to worker productivity
Ensure that worker safety and near miss
observations are addressed in a timely manner
Develop and implement a periodic (e.g. monthly)
director-level safety steering group with the Client
in order to drive the correct behaviours and
practices on-site.
Risk Management Plan The Client should:

Ensure that a Risk Register is assembled and that
risk ownership is properly assigned and forms a
key part of the initial Enquiry Documentation
Ensure that the tender/contract negotiations
deliver an all-party agreed Contract Risk Register.
Ensure, in conjunction with the Client, that they
proactively manage the Contract Risk Register
throughout the project life cycle, taking account that:
Regular (monthly) reviews and updates are
conducted
New risks are identified and mitigation
strategies established
Realised risks are documented as planned and
mitigation strategies remain robust.
40
PBI Schedule The Client should:

Ensure that the contract contains Performance-
Based Incentive measures that cover all the main
parts of the Delivery Programme including:
Safety Management Plan
Equipment and Materials Delivery Schedules
Site Arrangement and Conditions Plan
compiled and agreed during the bid
negotiation period of the Contract Award
Construction.
In order for these measures to be effective, they
should be linked to the contract’s commercial
incentive mechanism.
Document requirements The Client should:

Establish a detailed schedule of all the
prerequisite documentation and deliverables
required throughout the project life cycle.
Include all prerequisite deliverables as part of the
Contract Schedule in order to monitor delivery of
these deliverables, which should include elements
such as:
Lifetime quality documentation
Custody transfer documentation
Testing and conformance certification
Operation and maintenance documentation.
Contract Change The Client should:

Management
Governance Specify, implement and enforce a clear and
(continued overleaf)
concise Change Control process that precludes
delays in agreeing contract change through use of
commercial disincentives to the Contractor. This
process should include:
Identification of personnel empowered to
instruct change
41
Contract Change Introduction and proactive management of a

Management Change Control Register
Governance
(continued from The requirement, when necessary, to establish a
previous page) Change Control Board consisting of the key
Commercial and Project Management resources.
The duties of this Board will be to sanction all
contractual change encountered on the project.
Ensure that the appropriate level of authority for
approval of change is delegated to the Client’s site
representatives and require the same from the
Contractor.
Ensure that no change is implemented without the
correct and agreed level of approvals
Ensure that cost and schedule impacts are
accurately assessed and that the Project Schedule
is amended accordingly.
Manufacturing Plan The Contractor should:

Ensure that the contract requires detailed off-site
Manufacturing Plans, which should be managed
by subcontract administrators
Ensure that systems and processes are in place to
ensure that Design Specification quality is of the
highest standard.
Industrial Relations Plan The Contractor should:

Ensure that the contract dictates the requirement
for the subcontractors to operate a site Industrial
Relations policy fully reflecting the best practice
requirements laid down in the ECIA Productivity
Improvement Committee (EPIC) Best Practice
Guide Number 1 for Industrial Relations.
Quality Assurance Plan The Client should:

(continued overleaf) Specify and support a Quality Innovation Programme
which incentivises the Contractor to demonstrate the
use of innovation to make improvements in the
project’s quality, budget or schedule.
42
Quality Assurance Plan The Contractor should:

(continued from
previous page) Ensure that the contract includes a detailed
Project Quality Plan that highlights all the quality
control requirements and links these
requirements to a robust PBI programme.
Change Management The Client and Contractor should:

Avoid changes, where at all possible. They lead to
re-work, confusion and poor morale (including a
view that management does not know what they
are doing). Good discipline in the Client
organisation can often determine best practice in
this area.
Ensure that the Contract Schedule clearly details
the required Change Management process, where
this is required.
Relationship The Client and Contractor should:

Management
Ensure that all organisations involved are working
in the best interests of the project. Bad
relationships at management level can permeate
through the site and affect the morale of all
participants, including craft.
Ensure team building development and good
communication at all levels of senior management
Ensure appropriate training at all levels.
The Client should:
Work to avoid relationships tipping over into a
‘lose-lose’ mentality. Whilst a Client has a right to
ensure that a Contractor delivers the work he is
contracted to do, and at the agreed price, this
needs to be tempered with a recognition that a
Contractor who is losing money rarely tries to get
out of a hole by increasing the efficiency of his
working practices. Ensuring the right contractors
and realistic prices in the first place will help
eliminate this problem.
43
7. Contract Close-Out
What are the key Submission of final Section 7 describes

activities in the deliverables, commercial important factors for the
Contract Close- close-out and production Contract Close-Out phase
Out phase? of close-out and summarises potential
documentation barriers to productivity
This section provides an introduction to the Contract Close-Out phase and describes the
key barriers to productivity and steps that can be taken in their mitigation. It also includes
a number of best practice recommendations for successful management of this phase in a
project.
The barriers to productivity covered in this section can apply at any point in the course of
the key activities and events which take place within this phase of Contract Management.
7.1 Introduction
The Contract Close-Out phase can normally be considered the ‘critical path’ for the Client
in moving towards plant ownership and an operational mode.
This phase requires:
Attention to detail in final completions
Team working between contractors to ensure a safe and timely handover to the
Client’s operational staff
The signing of the relevant completion certification and
Crucially, incorporating lessons learned and producing a comprehensive Project Close-

Out Report.
The close-out period for most contracts generally occurs when the installations are in the
main completed and final handover certification documentation has been completed or is
nearing completion.
It is recognised that in this phase of the contract there is, by and large, minimal impact on
the hands-on productivity of labour and supervision due to the completion status. Indeed,
at this point in time significant demobilisation of the workforce will have occurred, leaving
only suitably skilled and qualified snagging teams to complete any minor outstanding
works required for final completion, and a general support team dedicated to the Client’s
operational transition phases.

The barriers to productivity noted below are essentially the forerunners to what can delay
and disrupt smooth and timely completions and subsequent handovers. The list is not
exhaustive but identifies the major Contract Management issues that can prevail on large
complex projects.
44
Extended Commercial Close-Out

There are a number of barriers that can affect the commercial close-out and in some cases
extend the contract duration, causing financial loss to both contractors and clients. These
barriers can occur at different phases of the contract life cycle, and for the purposes of this
guide we have identified the key areas at risk as:
Design and Procurement
Construction and Commissioning
Clearance of defects and snagging during Contract Close-Out.

Barriers to satisfactory close-out in this area can include:
Late or incorrect design
Incorrectly specified procurement of components
Poor supply chain support.

Delayed handover of completed plant to Client Operational Staff
Site completions/snagging growth
Late commissioning/Client Operational Staff engagement.

The Project Team must be issued with a clear and correct design from the outset of
construction. Any changes to this design must be minimised and robustly managed to
reduce impact on the installation, testing and commissioning completions and final
handovers of completed systems.
Close-Out Documentation
Project Quality Assurance (QA) documentation ranges from off-site supply chain to site
test records and the Life Time Quality Records (LTQR) packages.

Late Supply Chain documentation
LTQR packages not generated accurately or in a timely manner.

Inadequate snagging and poor communication feedback
Construction Trade and Commissioning Team area and plant access conflict
Functional defensiveness appearing when teams are under pressure to deliver
milestone targets
45
Lack of attention to detail. Missing scope or the smallest of items missing can derail
the handover.
No clear or defined handover strategies/procedures in place at the outset of
construction activities
LTQR packages not generated accurately or in a timely manner
No handover sign-off agreements/processes/procedures in place.

Control of site QA records requires significant managing and monitoring expertise to avoid
any impact on a satisfactory close-out. It is essential that such expertise is in place at an
early stage in the project. Requirements for Supply Chain documentation must be
specified in the Purchase Order, so as to minimise the potential for delays in submission.
7.3 Best Practice
CONTRACT CLOSE-OUT
Managing Client The Client and Contractor should:

relationships
Ensure time is spent on mutual relationships
throughout the life cycle of the contract.
This should not be limited to the Project Teams, but
extended to functional leaders, senior managers and
the Client’s operational staff.
Providing a close-out The Client should:

schedule/programme
Ensure good co-ordination between themselves
and contractors to allow snagging to be done
efficiently. This can include building relationships
with the plant operators.
Consider a specific and detailed close-out
schedule/programme that all parties contribute
and agree to, as it is likely that the main schedule
will not have sufficient detail to cover all the minor
elements of close-out.
46
CONTRACT CLOSE-OUT
Appointing a The Contractor should:

Completions Manager
Appoint a specific resource to manage the
completion Handover phase (dependent on
contract value and plant complexity).
This individual must be appointed early in the
Construction phase with the responsibility of
establishing and developing the Handover process
with full Client support.
Managing the The Client should:

documentation (LTQRs)
Ensure that the LTQR structure has been defined
at the start of the contract.
Ensure that documentation is collated
contemporaneously
Implement frequent monitoring of the
documentation collation process.
Agreeing a handover The Client and Contractor should:

strategy
Agree a handover strategy and process at the
beginning of the contract
Identify the structure and documentation
requirements at a very early stage in the contract,
so that Procurement can specify to the supply
chain the contract requirements and the collation
of the document packs; this needs to be in place
at the commencement of the Engineering and
Manufacturing stages.
Capturing lessons The Client and Contractor should:

learned Ensure that lessons learned from the full project
delivery life cycle are captured within the Project
Close-Out Report.
This must include an analysis of the lessons learned in
closing out the contract, which should include the
positives as well as the negatives.
Refer to Appendix D for an example of the types of
attributes which should be considered by both Client
and Contractor organisations to ensure that effective
analyses of the lessons learned from one project can
influence improved productivity on future projects.
47
48
8. Repair and Maintenance

How does the Understanding the contract Section 8 gives a brief
approach differ requirements, creating a summary of some
for Repair and culture of working together arrangements particular to
Maintenance
and developing good lines of Repair and Maintenance and
projects and
Major Events? communication Major Events
The best practices identified during the four phases of Contract Management apply
equally to projects for:
Repair and Maintenance (R&M)

Major Events.
This section addresses the use of best practice for each of these categories and amplifies
aspects that are unique to both these types of project.
8.1 Repair and Maintenance Contracts

It is essential for the successful operation of long term R&M contracts to try and develop a
culture of trust and working together with the respective Client throughout the
organisation. This should involve higher management teams, procurement teams and
engineering teams, wherever the day to day work is carried out. This helps to create a
sense of involvement and ownership among the workforce, which assists in producing
high levels of safety and productivity on a regular day to day basis.
The recommendations in all the previous sections of this Best Practice Guide also apply to
R&M works in varying degrees. Problems often arise for this category of project from the
very limited timescale in the Pre-Contract Award phase and the very short nature of most
R&M contracts, with a high probability of emergent work, so particular attention must be
paid to working relationships. Clients, in particular, should put effort into working with
their appointed Contractor so that both parties own and understand the problematical
issues that can affect productivity. It is critical on these short duration contracts to work
together to achieve a constant high level of productivity and safety, achieving timely
completion of the contract works.
49
8.2 Major Events

The Major Event categorisation is used for shutdowns and turnarounds. The key
differences from new-build projects are:
Work scope normally must be completed within a tight timescale, often requiring shift
working and with complex operations being completed in close proximity to each
other
In most cases the nature of the work is well known; however volumes may not be
known and here the value of historical data comes into play
A significant amount of service and access preparation work is required to be
completed before workforce mobilisation
Even minor risk realisation can significantly impact access availability (overruns and
failure to complete activities on time will more likely block out follow-on trades than
on new-build projects)
A Major Event runs over a very short timescale in comparison with a new-build project
Health and Safety arrangements need to take cognisance of the close proximity of
complex operations and tight timescales
A Major Event may require a rapid mobilisation of labour resources and, at the end of
the shutdown, a rapid demobilisation. The workforce may include a significant
proportion of travelling labour.
Completing the Major Event on time is a critical success factor, as the asset is generally
required back in operation as soon as possible.
50
8.3 Best Practice
REPAIR AND MAINTENANCE AND MAJOR EVENTS
Repair and Maintenance The Client and Contractor should:

Read and understand the contract requirements in
full
Create a culture of working together, with the
emphasis on safety, quality and productivity as
priorities
Share and understand each other’s problems
Develop good lines of communication between
each other, ensuring that this permeates down to
the workforce where necessary
Establish a good Planning Team with highly
integrated collaboration and planning between
Client and Contractor to achieve maximum
productivity.
Major Events The Client and Contractor should:

Ensure that high level access is well understood
and in place well before the event commences
Develop clear and concise Risk Mitigation and
Schedule Management processes
Understand the contract conditions and their
requirements
Ensure the supply chain can provide all required
materials
Develop good lines of communication between
each other as well as between the Contractor and
all subcontractors.
51
9. Conclusions
Summary of Section 9 describes the
What are our recommendations for conclusions for a good strategy
conclusions? implementation of a good in approaching Contract
Contract Management Management and includes a
strategy summary of recommendations
9.1 Contract Management

Decisions made during each of the four phases of Contract Management can have a direct
effect on productivity and worker performance. As the best practice recommendations in
this guide suggest, it is those decisions made early in the project life cycle, before a
contract is signed, which have the most effect upon how risk is managed, how change is
controlled and how work is authorised during implementation of the contract.
The recommendations provided in this Best Practice Guide are intended to ensure that
productivity is managed through:
Management of risks
Control and management of change
Ensuring proper governance is in place to allow decisions and approvals to be made in
a manner that does not stop work.
The earlier these considerations are weighed in the project life cycle, the more benefit
there will be in improvement of productivity.
Early engagement and dialogue between the parties is essential to instil an appropriate
culture of collaboration and co-operation which can survive the life of the project.
52
9.2 Summary of Recommendations
CONCLUSIONS FOR EACH PHASE
Pre-Contract Award An appropriate period of time must be allocated,

so as to allow for all bidders to assess and compile
a fully compliant bid. The use of experienced
Project Management and Commercial personnel is
essential.
Technical specifications need to be clear and fully
complete, and all parties should respond rapidly
to queries and questions to allow the tender
period time to be used efficiently.
A high level of communication with bidders is
essential throughout the pre-qualification and
tender periods. Building a culture of collaboration
and being realistic about the time needed to
tender will contribute to achieving a compliant
bid.
Contract Award Appropriate resources must be provided by both

clients and contractors during bid evaluation,
Contractor selection and contract negotiation.
Sufficient due diligence must be accomplished
during bid evaluation to ensure that clients
understand whether or not the preferred
Contractor’s proposal will deliver what is being
procured.
A Client’s expectations for performance and a
Contractor’s plans for delivering that performance
must be understood and agreed before a contract
is signed.
Contract The agreed contract should allow for several

Implementation Performance-Based Incentives to be established
(continued overleaf) covering site safety performance, mobilisation and
resource provision.
A plain English version of the Contract should be
made available to all those personnel in a
supervisory role. Where the project delivery
involves non-English speaking supervisors,
appropriate translations should be provided.
53
CONCLUSIONS FOR EACH PHASE
Contract Requirements to deliver a Project Quality Plan

Implementation should be a prerequisite.
(continued from
previous page) Contractors need to demonstrate that they have
the requisite skills to manage the delivery process.
The contract between the Client and Contractor
and subsequent subcontracts should clearly define
the Change Management and Project Control
process requirements.
Team building programmes should be introduced
to engender relationships that will avoid conflict.
Key terms and conditions of the contract should
be integrated into any subcontracts.
The contract documentation should identify the
requirements for the Commissioning and
Handover portion of the Project Schedule.
Contract Close-Out The Project Team must be issued with a clear and
correct design from the outset of construction to
avoid the risk of extended commercial close-out.
The LTQR structure should be defined at the start
of the contract and the documentation collated
contemporaneously and frequently monitored.
The Project Close-Out Report should be initiated
and completed in conjunction with Contract Close-
Out.
Both clients and contractors should conduct
lessons learned workshops to inform and
influence future project delivery.
Repair and Maintenance A culture of working together must be created,

Operations with the emphasis on safety, quality and
productivity as priorities.
It should be ensured that the supply chain can
provide all required materials.
Good lines of communication must be developed
between Client and Contractor and between these
parties and their subcontractors.
54
55
A. Checklists for Contract Management

A.1. Pre-Contract Award
Has the Client properly researched and understood the work to ensure that
it would fit into a portfolio in which they should be involved?
Is there clear and precise understanding of the contract among all parties
(Client, Contractor and relevant Trades Unions)?
Have meetings been implemented before the contract starts among all
parties to establish the project’s credibility and that the Client’s
requirements are realistic?
Does the Client have a realistic understanding of the state of maturity of

the project, its scope, requirements and remaining areas of uncertainty?
Has the Client properly researched local market conditions, capabilities and
subcontracting and employment practices?
Have Client and Contractor established that they can build Project Teams of
the required size and competence to manage the project, with full
evaluation of the available skills market, to pre-empt lack of qualified
contractors?
Has a structure been developed in which high levels of communication can

exist and which promotes a culture of working together?
Has due consideration been given to both the Client’s and Contractor’s
requirements in the Pre-Qualification Questionnaire?
Are enquiry packages complete and, if not, does the Client fully understand
why the required information is incomplete?
Is there a detailed front end Project Schedule and Resourcing Plan to

minimise the risk of slow contract start-up/mobilisation?
Does the Contractor’s proposal address all the requirements of the RFP,
such as timescale, resources, engagement with the supply chain and
existing site ground conditions (e.g. potential contamination, drains, access
and egress and emergency arrangements)?
56
A.2. Contract Award
Has the intent of the contract been satisfied by the preferred bidder’s
proposal?
Has the contract been awarded with a rigorous estimate of costs, which has
been reviewed and agreed?
Has the contract been awarded on the basis of a realistic scope and schedule?
Have uncertainties in scope been explored in the contract award process in

an open and collaborative manner?
Have bidders established that there is an adequate supply of personnel in all

trades and professions to execute the work?
Is dialogue at all levels (including with sub-suppliers) being maintained during

bidding and contract negotiations to ensure that the Client’s requirements
are understood and that Contractor commitment is being maintained? This
includes commitment to an agreed bidding process and timescales.
Has a risk assessment been carried out, with key project risks understood and
evaluated, and effective mitigation measures established?
Have clients satisfied themselves as far as possible that commitments made

by the chosen tenderer are realistic and that they understand local market
conditions and employment practices?
Have effective governance arrangements been established in both Client and

Contractor organisations? Are levels of authority and escalation
arrangements established and understood and incorporated into the
contract?
Has the Change Management process been agreed?
57
A.3. Contract Implementation

Ensuring Processes are in Place
Is there a robust Project Execution Plan, which incorporates the Client’s

contract requirements and the Contractor’s proposal?
Are there effective Client and Contractor procedures in place to drive the right
practices and behaviours to effectively manage and administer the contract?
Is there an appropriate Project Safety Programme in place, with a set of

Performance-Based Incentives established against the site safety performance?
Is there provision of adequate preliminary engineering documents (e.g. FEED)

and a robust ‘first pass’ Risk Register to mitigate cost escalation?
Is there a robust off-site Equipment and Delivery Schedule, supported by

appropriate expediting systems and with key equipment delivery milestones?
Is there a robust Project Quality Plan that is integrated into a Master Contract
Schedule, allowing for completion of all design quality reviews and any off-site
pre-inspection activities?
Is there a detailed Change Management process, where appropriate

responsibilities and accountability for personnel are designated?
Has a Project Control process been clearly defined so that cost and schedule
performance progress against the baseline can be accurately measured?
Is there a clear understanding of the roles within the Project Team and the
responsibilities for delivering the project objectives and milestones?
Has a Project Team Building Programme been introduced between the Client,
Contractor and subcontractor organisations to engender collaborative working
throughout the duration of the project?
Does the Prime Contract require that key terms and conditions be integrated
into any subcontracts to mitigate potential problems in the supply chain?
Does the Prime Contract demand that any subsequent subcontracts ensure
that payment mechanisms and timelines are maintained?
58
On-going Monitoring
Is the Client ensuring that the Contractor is following agreed Industrial

Relations processes?
Is the Client showing sufficient commitment at all levels, including senior

management, to high standards of health and safety?
Is effective engagement between all key participants being maintained (Client,

contractors, subcontractors and Trades Unions)?
Are project requirements being fully and accurately implemented along the
supply chain as subcontracts are being awarded?
Are effective Change Management arrangements being maintained? Are

changes being minimised and controlled?
Are projects risks and mitigation arrangements being regularly reviewed?
Are regular checks being made at all points in the supply chain to ensure
quality, and thereby minimise the need for re-work?
Are all key aspects of project performance being reported regularly and
accurately, with timely interventions as necessary?
Are conflict management arrangements working effectively? Is sufficient senior

management and Trades Union Officer dialogue being maintained?
Is the Client mobilising the operational team in good time for them to become
familiar with the plant and participate effectively in Commissioning and
Handover?
Are deficiencies in the plant being identified at the earliest possible stage to
avoid delays in Commissioning and Handover?
Commissioning
Has planning for commissioning and handover been started early in the project
and are commissioning personnel being appointed in good time?
Are detailed commissioning Operations and Maintenance (O&M) plans

available?
Are commissioning spares available for the activities to be undertaken during

this phase?
Have clear roles and responsibilities been established for the key members of
the Commissioning Team?
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A.4. Contract Close-Out
Has a specific and detailed close-out schedule/programme been agreed for

clearance of snagging items and exceptions agreed at handover?
Have arrangements been put in place that will both minimise commercial
downtime of plant for remedial work and ensure efficient use of Contractor
resources to do this work?
Has a plan been agreed for completion of outstanding deliverables and

settlement of final account?
Has a Completions Manager been appointed?
Has the relevant completion certification been signed?
Has a comprehensive Project Close-Out Report been produced,

incorporating lessons learned?
Are there in place suitably skilled and qualified snagging teams to complete
any minor outstanding works required for final completion?
Is there in place a general support team dedicated to the Client’s

operational transition phases?
Has appropriate close-out documentation been supplied (e.g. Project

Quality Assurance documentation, site test records and the Life Time
Quality Records packages)?
60
B. Case Study – Relationship Management

B.1. Background
In late 2012, a major project was experiencing a ‘misalignment’ in operation focused on
three major areas:
Commercial tension
Safety performance
Organisational issues.
A third party facilitator was approached to lead an alignment process between the Client
and the Contractor in order to repair the damaged relationship which had developed.
Commercial Tension
Significant commercial tension had arisen between the two parties due to disagreement
around changes to scope. The Client was concerned that the cost of change did not
represent value for money and had become a barrier to ‘getting the job done’. A previous
attempt to address the issues in a commercial workshop facilitated by the Contractor
failed to achieve wider buy-in. The legacy of this experience was a level of cynicism
amongst some key stakeholders about the likelihood of success for a facilitated outcome.
Safety Performance
Following a high profile near miss and a recent serious incident on one of the sites, the
Client was concerned that the Contractor was not sufficiently focused on safety
leadership. The Client felt that there was an urgent need for improvement in safety
performance.
Organisational Issues
The Contractor was a joint venture company which had formed specifically to bid for the
project and was still in the early stages of organisational maturity. The JV partners had
limited experience of working together, which meant that the Client often received
contradictory messages.
The facilitator proposed an alignment process designed to get the parties to understand
the issues together and agree a set of outcomes in a way that built openness and trust,
enabling them to work towards a collaborative solution.
61
B.2. Approach
A simple four stage process was designed involving:
Building trust with leaders

Separate workshops with teams
Integrated workshop
Maintaining on-going momentum.
Building Trust with Leaders

The alignment process began with a series of confidential one-to-one interviews to
establish trust and rapport with the leaders of each team. A senior Client representative
volunteered to serve as an ‘internal champion’. This stage took several weeks and required
considerable tenacity. Getting the various stakeholders on board with a collaborative
alignment process is often an important part of the work, as key leaders are not always
positive about an alignment intervention. Meetings were frequently rescheduled due to
project pressures (as is typical on intense projects).
A key breakthrough in this process came when a senior member of the Contractor’s
organisation admitted that a past experience on another project, where a conflict over
commercials had ended up in court, was affecting his ability to trust. Although this was
separate to this project it had a very real and corrosive dynamic; it was an ‘elephant’ that
needed to be named.
Separate Workshops with Teams

The facilitators designed separate ‘mirror up’ workshops for the Client and Contractor
teams. These took place simultaneously in the same venue, in the morning before the
main integrated workshop. The participants explored three simple questions:
What are we doing as a team that impedes our effectiveness?

What are we doing as a team that impedes their effectiveness?
What are they doing as a team that impedes our effectiveness?
Integrated Workshop
In the afternoon integrated workshop, both teams reviewed the outputs from the
morning session from ‘different ends of the same telescope’. This resulted in a series of
breakthroughs as the participants understood the impact of their behaviours on each
other.
In a further exercise designed to access submerged feelings, the participants selected

photos from magazines to help express how they felt now and how they wanted to feel in
the future.
By the end of the workshop, the participants agreed to a shortlist of nine programme-
critical tasks to help them work together more effectively. Because the tasks were jointly
created by the Client and Contractor teams, there was a far greater sense of shared
ownership. At the workshop, the group also decided to establish an integrated leadership
steering committee to make sure things happened and to remove roadblocks.
62
Maintaining On-going Momentum

In the early days of the steering committee, the facilitator helped the team agree some
ground rules and continued to support the teams in working collaboratively. This involved
working alongside the two most senior leaders from the Client and Contractor teams, to
maintain momentum and keep a focus on collaborative activities, when the inevitable
pressures of day to day work distracted people from their jointly made commitments.
Soon thereafter, a strategic planning exercise was facilitated with the joint leadership
team. This involved looking back to the successes of each team during the previous
period, which built increased confidence in the potential for further alignment.
B.3. Conclusions
Since the alignment process began, some significant issues have been resolved while
others are ‘work in progress’. What is beyond doubt is that there has been a major
improvement in the effectiveness of the relationship between the Client and Contractor,
based on new ways of working and continued open and constructive dialogue. There has
also been a significant improvement in the Contractor’s performance in terms of safety,
cost and schedule and it has successfully delivered some major project milestones. Both
parties agree the level of realignment which has been achieved would not have been
possible had a third party facilitator not been engaged.
B.4. Lesson Learned

There have also been a number of lessons learned:
There are no easy solutions to resolving tensions within a project; it needs time and a
patient approach to establish trust. Even after months of careful work, there is a
constant sense that it can all go wrong at any stage. But the reasons why it is difficult
are the same reasons that make it worth doing.
A major risk of this kind of work is that unless you are serious about following through
on the actions, it can raise people’s hopes only to dash them. Everyone has to be
prepared to commit to a new way of working.
Having an internal champion on board who is not connected with the project is
critical to help clear blockages.
Having an impartial facilitator is a key factor in building trust between all parties. In
the Project Management world, based on facts and cognition, it is rare for players to
admit to feelings that can obscure objectivity. Getting people to open up in this way
does not happen by chance; it occurs only when the participants feel that they are in
safe hands with a credible and trustworthy professional.
Hurrying the process does not result in the most effective outcome. Both parties
should be willing to invest the time and resources necessary to foster a collaborative
project environment.
63
C. Key Contract Elements – Initial Enquiry

Package
The Initial Enquiry Package should contain a series of Supplementary Conditions, in the
form of documentation, which require addressing during the tender process; these issues
will become key elements in the tender evaluation process and will eventually be attached
to the final contract.
Supplementary Conditions Description

Document Elements
Safety Management Plan An outline of the Site Safety Plan as agreed

during the tender negotiations.
Roles and Responsibilities A description of the Roles and Responsibilities

of all the key delivery functions.
A Schedule of Performance- A list of all the agreed Performance-Based

Based Incentives (PBIs) Incentives (PBIs) with percentage shares within
the contract’s associated commercial incentive
mechanism.
Contract Schedule A detailed baseline Contract Schedule as

agreed during the tender negotiation process.
Risk Register A detailed baseline Risk Register which

identifies clear mitigation strategies, and cost
and time impacts if risks are realised, as agreed
during the tender negotiation process.
Risk Ownership The Risk Register should have the risk owners
identified and agreed during the tender
negotiations.
Local Conditions Schedule A schedule of all the key local conditions,

which should include: ground conditions,
access and egress, emergency arrangements,
welfare requirements and local agreements.
Stakeholder Engagement A list of the main stakeholders with an outline

Requirements of the engagement requirements.
Milestones Schedule A schedule of the project’s key delivery

milestones.
Equipment Delivery Schedule A standalone Equipment Delivery Schedule

agreed during tender negotiations.
64
Supplementary Conditions Description

Document Elements
Project Quality Plan A Project Quality Plan which covers all aspects
of the project’s right first time delivery process
agreed during tender negotiations.
High level Work Breakdown A detailed project scope and cost breakdown
Structure (WBS) for evaluation by the Contractor.
Project IT and software A comprehensive list of the IT and software

requirements requirements for the project.
Team building requirements The team building requirements through the

life of the project, with a simple target
completion date.
Project kick-off meeting As a minimum this should contain the agenda

requirements items for the project kick-off meeting.
Mobilisation Plan A detailed schedule of the key activities for

project mobilisation and transition between
the Design/Construction/Commissioning
phases.
The Commissioning Plan Outline General outline of commissioning

requirements and focus.
D. Lessons Learned – Close-Out

It has been widely acknowledged that learning lessons from one project can positively
influence the productivity of future projects. Often, however, the lessons learned process
will produce output which is not sufficiently considered or incorporated into future
execution plans. Lessons learned processes can also become overly complicated as a
result of trying to focus on too many things rather than considering a lesser number of
lessons which can make a difference. The following table provides a number of examples
of the types of subjects which should be considered during the lessons learned process to
influence improved productivity on future projects.
65
Contract Award Contract Close-Out
Design and Engineering Procurement & Manufacture Construction Testing & Commissioning Close-Out and Handover
Key Deliverables: Key Deliverables: Key Deliverables: Key Deliverables: Key Deliverables:
Process design Procurement and Building of the plant to Complete system testing Complete close-out
Detailed design engagement of schedule and in a cost Cold and hot documents and Project
subcontractors effective manner commissioning Close Out Report
Constructability in design
Manufacture of components programme Plant handover
Key lessons learned: Key lessons learned: Key lessons learned: Key lessons learned: Key lessons learned:
A design must be Procurement and The site works QA Commissioning should be All the phased lessons
produced that can be Manufacturing LTQR documentation must be engaged early in the learned should be
constructed in accordance package requirements must continually progressed and project to ensure captured, compiled and
with the CDM regulations, be clearly communicated monitored. commissioning strategies included in the Project
incorporating and understood. are identified and included Close-Out Report.
constructability in the Clear and defined in the programme.
design process. The work must be planned handover strategies must The continuous
and its alignment with the be established and agreed There should be Interface improvement plan should
The design must be construction programme from the onset of with design and be completed and
completed to schedule and deliverables ensured. construction. construction to establish included in the Project
be robust to minimise the system or part system Close-Out Report.
change during the later QC standards must During construction commissioning scope.
phases of delivery. replicate site QC standards completion and handover An analysis of the lessons
during procurement of phases to commissioning, For the commissioning learned should be
Construction/ parts and components and plant access priorities area there should be undertaken and
constructability milestones consistency must apply. must be clearly agreed and continuous participation in communicated to the
must be identified in line established. construction co-ordination Client and company
with overall programme Completed works must be reviews, access reviews management teams.
deliverables. supported with completed Lessons learned events and completion reviews on
and comprehensive should be completed on a a daily basis. It should be ensured that
Design deliverables must documentation packs planned basis and fed into the continuous
be aligned to the aligned to the LTQR a continuous improvement Lessons learned events improvement plan is live
construction programme. requirements. plan. should be completed on a and active to final close-
planned basis and fed into out and handover.
Outline construction Design close-out must be It should be ensured that a continuous improvement
methodologies should be confirmed to mitigate the continuous plan.
identified and generated. change impact to improvement plan is live
construction strategy and active and clearly It should be ensured that
Lessons learned events communicated. the continuous
should be completed on a Lessons learned events improvement plan is live
planned basis and fed into should be completed on a and active and clearly
a continuous improvement planned basis and fed into communicated.
plan. a continuous improvement
plan.
66 67
Contract Award Contract Close-Out
Design and Engineering Procurement & Manufacture Construction Testing & Commissioning Close-Out and Handover
Key Deliverables: Key Deliverables: Key Deliverables: Key Deliverables: Key Deliverables:
Process design Procurement and Building of the plant to Complete system testing Complete close-out
Detailed design engagement of schedule and in a cost Cold and hot documents and Project
subcontractors effective manner commissioning Close Out Report
Constructability in design
Manufacture of components programme Plant handover
Key lessons learned: Key lessons learned: Key lessons learned: Key lessons learned: Key lessons learned:
A design must be Procurement and The site works QA Commissioning should be All the phased lessons
produced that can be Manufacturing LTQR documentation must be engaged early in the learned should be
constructed in accordance package requirements must continually progressed and project to ensure captured, compiled and
with the CDM regulations, be clearly communicated monitored. commissioning strategies included in the Project
incorporating and understood. are identified and included Close-Out Report.
constructability in the Clear and defined in the programme.
design process. The work must be planned handover strategies must The continuous
and its alignment with the be established and agreed There should be Interface improvement plan should
The design must be construction programme from the onset of with design and be completed and
completed to schedule and deliverables ensured. construction. construction to establish included in the Project
be robust to minimise the system or part system Close-Out Report.
change during the later QC standards must During construction commissioning scope.
phases of delivery. replicate site QC standards completion and handover An analysis of the lessons
during procurement of phases to commissioning, For the commissioning learned should be
Construction/ parts and components and plant access priorities area there should be undertaken and
constructability milestones consistency must apply. must be clearly agreed and continuous participation in communicated to the
must be identified in line established. construction co-ordination Client and company
with overall programme Completed works must be reviews, access reviews management teams.
deliverables. supported with completed Lessons learned events and completion reviews on
and comprehensive should be completed on a a daily basis. It should be ensured that
Design deliverables must documentation packs planned basis and fed into the continuous
be aligned to the aligned to the LTQR a continuous improvement Lessons learned events improvement plan is live
construction programme. requirements. plan. should be completed on a and active to final close-
planned basis and fed into out and handover.
Outline construction Design close-out must be It should be ensured that a continuous improvement
methodologies should be confirmed to mitigate the continuous plan.
identified and generated. change impact to improvement plan is live
construction strategy and active and clearly It should be ensured that
Lessons learned events communicated. the continuous
should be completed on a Lessons learned events improvement plan is live
planned basis and fed into should be completed on a and active and clearly
a continuous improvement planned basis and fed into communicated.
plan. a continuous improvement
plan.
66 67
E. Abbreviations and Acronyms

Abbreviation Description
CCB Change Control Board
CDM The Construction Design and Management Regulations 2007
ECI Engineering Construction Industry
ECIA Engineering Construction Industry Association
EPCC Engineering Procurement Construction & Commissioning
EPIC ECIA Productivity Improvement Committee
FEED Front End Engineering Design
IR Industrial Relations
JV Joint Venture
KPI Key Performance Indicator
LTQR Life Time Quality Records
NAECI National Agreement for the Engineering Construction Industry
O&M Operations and Maintenance
PBI Performance-Based Incentive
PCM Project Controls Management
PQQ Pre-Qualification Questionnaire
QA Quality Assurance
QC Quality Control
R&M Repair and Maintenance
RFP Request for Proposal
WBS Work Breakdown Structure
68

Best Practice Guide Contract Management

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Best Practice Guide Contract Management

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3

Foreword – Contract Management

CONTRACT MANAGEMENT BEST PRACTICE GUIDE

2. What Did the Group Look at? 9

3. Contract Management in Engineering Construction 13

8. Repair and Maintenance 49

CONTRACT MANAGEMENT BEST PRACTICE GUIDE

A. Checklists for Contract Management 56

B. Case Study – Relationship Management 61

C. Key Contract Elements – Initial Enquiry Package 64

D. Lessons Learned – Close-Out 65

E. Abbreviations and Acronyms 68

Increase and changes in scope

Obtaining authorisation to work.

CONTRACT MANAGEMENT BEST PRACTICE GUIDE

Establishment of EPIC to Examine Best Practice

3. To benchmark performance and measure improvement.

2. What Did the Group Look at?

2.1 Terms of Reference

Key Aspects Addressed

CONTRACT MANAGEMENT BEST PRACTICE GUIDE

2.2 Premises and Assumptions

The advantages or disadvantages of employing any particular form of contract; this

The commercial arrangements of a contract

The deﬁnition of Industrial Relations content within contract requirements and

2.3 Approach to Contract Management

Introduction of Formal Structures and Procedures

Importance of Clear Service Delivery Arrangements

Workforce Productivity Critical to a Successful Project

Clear deﬁnition of the Client’s requirements

3. Contract Management in Engineering

3.1 Phases of Contract Management

Model and Approach for Contract Management

CONTRACT MANAGEMENT BEST PRACTICE GUIDE

Influence of Activities in Each Phase

Often, insuﬃcient time is allowed in the Pre-Contract Award and

Obtaining funding for the project

Make bid/no-bid decisions on prospective proposals

The Client’s evaluation of tender submissions

3.2 Contract Management Activities and Events

CONTRACT MANAGEMENT BEST PRACTICE GUIDE

Proper Understanding of the Contract

Impose appropriate incentivisation for timely delivery of design and speciﬁcation

Potential Areas of Poor Performance

Client has unachievable expectations

4.2 Managing Barriers to Productivity

Client has Unachievable Expectations

To achieve successful understanding of the current market, meetings need to be

In particular, it is essential that:

Work levels are deﬁned, including safety and quality requirements

CONTRACT MANAGEMENT BEST PRACTICE GUIDE

Inadequate PQQ Process

An eﬀective PQQ process will facilitate:

Enquiry Packages Incomplete at Time of Bid

Design information is incomplete

In order to achieve a successful Contract Award and continue through to successful

The objectives are to ensure that:

Lack of Qualified Contractors

To prevent these problems, forward planning with early announcement of proposed

Contractor Proposal Doesn’t Address Requirements of RFP