Procurement Strategy and Main Option Selection

The procurement decisions made before contract signature set the commercial framework that the Parties live with for the rest of the project. This chapter examines the six Main Options. They divide into priced contracts with activity schedule or bill of quantities, target contracts that share cost risk through a pain/gain share, cost reimbursable contracts, and management contracts. Each Option is set out in terms of how it prices the work, where the cost risk sits, and the project conditions under which it performs well or poorly. A decision framework anchored on Scope definition, Client risk appetite, Client commercial capability, and market conditions follows, distilled into a single-page decision tree. The secondary options (X1 to X29 and Y(UK)1 to Y(UK)3) are tabulated with the purpose of each, when to use it, and its advantages and disadvantages. The chapter closes on the recurring procurement failures that cause commercial damage at the outset, choices that no amount of later administration can reverse.