Quantitative evaluation of contract strategies for construction
A contract strategy is, in broad terms, the legal-managerial framework adopted by the client of a construction project for carrying out that project. There is a view that projects are often procured using inappropriate contract strategies and that the associated financial consequences are significant. Following a review of previous research, it was concluded that there was scope to develop a decision methodology that utilised quantitative techniques. A prototype model was developed to facilitate the application of the quantitative approach. The model computes probabilistic cost and time measures of a project's performance for each contract strategy that is evaluated. Several industrialists were invited to evaluate the principles of the quantitative approach. From the fourteen industrialists interviewed, six simulated an application of the quantitative approach. Despite initial scepticism, the potential value of the quantitative approach was recognised. The six industrialists who performed example applications of the quantitative approach indicated that, in their view, the approach was workable. In response to the findings of the empirical study, an upgraded version of the model was designed. This version also addressed several intellectual compromises which had been made in the development of the prototype model. The refined model is applied to two example projects in order to demonstrate the potential utility of the quantitative approach and also to provide guidance on how to apply the model. It is acknowledged that the quantitative approach does not single out the most appropriate contract strategy for any given project. However, it is believed that the quantitative approach is most suited to deal with the decision problem's inherent complexities and is most likely to minimise the risk of irrational contract strategy decisions. It is therefore concluded that an improved understanding of contract strategy selection may result, especially on a personal level, from continued application of the quantitative approach.