Project Management

Running head: PROJECT MANAGEMENT
Project Management
Name of Student
Name of University
Author Note

1
PROJECT MANAGEMENT
Table of Contents
Answer 1..............................................................................................................................2
Answer 2..............................................................................................................................4
Introduction......................................................................................................................4
1. The project team..........................................................................................................4
2. Technology..................................................................................................................4
3. Vendor/Supplier Partnering.........................................................................................5
4. The Risk Management Function..................................................................................5
5. Project initiation + Planning........................................................................................6
6. Project Knowledge Management.................................................................................6
7. Investment in Training.................................................................................................7
8. Staff Turnover..............................................................................................................7
Conclusion...........................................................................................................................8
References............................................................................................................................9

2
PROJECT MANAGEMENT
Answer 1
A price escalation clause in a contract guarantees a change in the contract price, if in
case, a particular factor is a contract goes beyond the estimation. This in turn can increase or
decrease the entire cost of the project. The escalation clause is included in a contract mainly
because in the implementation phase of a long term project, the prices of the goods might
fluctuate. An increase in the price of goods can result in significant trouble within the execution
phase of a project. The price escalation clause in a contract can significantly help in dealing with
the sudden change in the price of raw materials in a project. Price escalation clause is important
of project, especially construction projects. Repeated price escalations have been affecting the
construction industry during the last few years causing serious problems in project
implementation. Since price escalation causes significant delays in the project, addressing the
issue or finding solution to this problem becomes a necessity.
A price escalation clause helps in management of the agreement price of a project if a
particular factor goes beyond control in the project (Trauner, Theodore et al.). Therefore, I think
price escalation clause is definitely a good idea in a project contract. Without the presence of a
price escalation clause in a project, the adjustment to the contract price is not possible even if
there is an unexpected rise in the market price of key construction materials (Moynihan, Gary
and Mohammad Ammar Al-Zarrad).. It there is no escalation clause indicated in a project, a
contractor will not have any respite from the increase of cost in the project.
The presence of escalation clause in a contract guarantees a change in the price
mentioned in an agreement, if a particular factor in an agreement goes beyond control. I consider
price escalation as a good idea particularly because the presence of escalation clause within a

3
PROJECT MANAGEMENT
contract helps in adjusting the price of the project with inflation (Chaphalkar, Iyer and Patil). In
case, the price of raw materials changes, the absence of an escalation clause in the contract can
severely affect the value that has been determined in a contract (Iyer, Chandrashekhar and
Ratnesh Kumar). The escalation clause is considered vital for construction projects and
construction contracts as sharp fluctuation in the price of raw materials, fuel and labor needs is
experienced in construction projects.
Thus the key advantages of escalation clause are as follows-
1. Escalation clause considerably reduces delays in the project
2. Presence of escalation clause in a contract makes all the parties liable to pay for the
increase in material cost.
For example, the projects, that are controlled and guided by Associated General
contractors of America (AGC), are benefitted by the presence of escalation clause. AGC
maintains a sample price escalation clause that can be customized for certain individual projects.
However, there are certain disadvantages of presence of escalation clause in a contract.
The main disadvantage of the presence of escalation clause in a contract is that, it can increase
the cost of the project by a huge margin (Moynihan, Gary and Mohammad Ammar Al-Zarrad).
The costs incurred may not always be legitimate and therefore, it indicates the major
disadvantage of the contract.