The whichway and wherewithal in an ownership phase context can be associated with contract details, including budgets, fees, and penalties—the operational details that make internal or external contracts work.
This is one reason for the development of a wide range of 'standard' forms of contract that serve as familiar 'models' for the contracting process. For example, the Institute of Civil Engineers' (ICE, 1995) New Engineering Contract (NEC) has been designed so that its implementation should contribute to rather than detract from the effectiveness of management of the project works. This is based on the proposition that foresighted, co-operative management of the interactions between the parties can shrink the risk (and risk inefficiency) inherent in construction work. The NEC main options offer six different basic allocations of issues between the 'employer' (client) and contractor, and whatever variations in strategy between different contracts within a project are adopted the majority of the procedures will be common to all contracts.
Internal contracting, and associated incentive and target-setting mechanisms, have not received the same attention, but the problems can be equally complex and equally important. Intelligent choices that reflect the circumstances can be crucial to effective and efficient allocation and subsequent management of issues. Chapman and Ward (2002, chap. 6) consider this question in some detail.
Was this article helpful?