Detailed Report on Contract Management Concepts, Methods and Analysis

This report provides a comprehensive analysis of contract management concepts, project delivery methods, and financial contract types. It begins by defining project delivery methods, comparing options like fixed-price and cost-plus contracts, and recommending the Design-Build method due to its advantages in project delivery speed, cost control, and seamless communication. The report then examines financial contract types, focusing on the non-disclosure agreement for protecting confidential information. It also evaluates various financial contract types, favoring the Cost Plus Fixed Fee (CPFF) method for its project delivery speed and ability to offer quality work. Finally, the report delves into procurement methods, advocating for the best value method considering project delivery speed, selection flexibility, and cost control. The report provides detailed comparisons of each method, considering factors such as project delivery speed, cost control, product quality, and risk sharing, making recommendations based on the specific needs of a large, complex public project.

Running head: CONTRACT MANAGEMENT CONCEPTS 1
Contract Management Concepts
Students Name
Institution Affiliation

CONTRACT MANAGEMENT CONCEPTS 2
Project delivery methods
A project delivery method entails organizing and financing the design, operations, construction,
operations, and maintenance services of a particular structure by entering into legal agreements
with one or more parties. (Ballard, 2008). This system is commonly used by an agency or a
particular owner. There are various types of project delivery systems which are more preferable,
however the choice of a particular project delivery system will depend on some factors such as
the ease of the design, desire of the design flexibility during the process of construction
availability of suitable project managers with suitable balance sheets, political considerations,
and budget constraints should also be put into consideration. (Ballard, 2008).
The different types of project delivery systems include the fixed price contract, the cost-
plus contract, the design and construct contract, project management agreement, managing
contractor contract, warranted maximum price contract and build own operate transfer contract.
At the beginning of the project, the choice of a particular project delivery system is made.
Among the above examples of project delivery I prefer is the cost-plus system. It is one of the
best project delivery systems because in this system there is no risk of as to cost for the
contractor (Bingham, Asmar & Gibson, 2016).
The project delivery method includes the Design-Bid-Build (DBB) it is also known as the
Design- Award-Building (DAB), the Design-Build (DB) or the Design-Construct, the Design-
Build-Operate-Maintain (DBOM), Build-Operate-Transfer (BOT), the Integrated Project
Delivery and the Public-Private Partnerships.

CONTRACT MANAGEMENT CONCEPTS 3
In this project, I, therefore, recommend the Design-Build method as it has the highest
score and it seems to be a big project therefore seamless communication is very important for the
project success while working with a very complex and a complicated project team involving
multiple organizations. The design-build method allows phased-construction this method can
also shorten the given project duration (Cardenas, 2016).
The project characteristics:
The Design-Build method has the following characteristics
1. Project delivery speed(45%) the speed should be at this given speed since it has to be
delivered before the end of 2017
2. Cost control- (27%) been a public project cost control is very important in order to avoid
the media attention.
3. The builders are assigned with the responsibility to monitor and control all quantities of
work related to their approaches by the Building Company. Some of the contract types
provide the contractors with more incentives to approach quality work.
4. The pitch construction project is worth risk sharing as it involves a major undertaking and
different parties are involved therefore the contractor and the owner share risk.
Project Delivery Speed
In a traditional delivery method in this method, work tends to be very slow.If any
changes are made the work tends to delay also during the process of submissions the
process delays even more. There is no applause for overlapping of design and
construction.
Design-Build this method allows the contractor to design as the construction goes on thus
allowing faster construction.

CONTRACT MANAGEMENT CONCEPTS 4
The CM risk offers the ability to overlap some portions of work this only happens
through phased construction together with the ordering of long lead times.
The seamless communication
In traditional delivery method due to different entities coming together who
might have never worked together before led to being given a very low score of. There
are different ways in which each firm do their staff like running meetings, perform
reviews and communicate can be an obstacle to seamless communication. These issues
are mostly in this project delivery system but they can be overcome.
The design and build method put together a team which might have worked
before together. It brings together a group of architects, builders, and contractors leading
to smooth working.
When a construction manager is at any risk he will try to use the people whom he had
already established a relationship with before like the contractors. The construction
manager tries to provide leadership for the entire team.
Cost control
In the traditional method, scores are high because a tight cost control is set the
construction and design are set upfront but unseen site conditions may cause the change
of orders and prices escalating.
Design-construct method
This method does not show their costs upfront making the government become
worried about approving of money if there is no idea of how costs go up.
CM Risk

CONTRACT MANAGEMENT CONCEPTS 5
The construction manager might experience shifts which give him more incentive to
control costs while he is trying to maintain the advantages of the traditional method.
FINANCIAL CONTRACT TYPE
A contract is a legal or a formal agreement which entails two or more parties. There are several
types of financial contract types which include a bill of sale non -disclosure agreement and a
promissory note. In this pitch construction project, I, therefore, choose the non-disclosure
agreement. (Lahdenperä, 2012).The non-disclosure agreement is also known as a confidentiality
agreement is very important because it helps the company protect their confidential information.
Under this agreement, the company agrees to protect their confidential information either
received from another organization or other individual. The non-disclosure agreement should
include details like who is the main owner of the information, why the information is being
disclosed and for how long will the obligations apply (Cui, Ceribelli & Zhang, 2017).
In this project a non-disclosure agreement can be used for the following reasons:
 In employment: mostly in the environment it is used in disclosing business, or
trade information, client to consultants or employees.
 Business Deals: Information’s such as profits and losses is disclosed to the clients
and other secrets are disclosed to a buyer or seller.
 Inventions: on disclosure agreements are used to protect informations such as
inventions of products or designs of products and recipes.
In a Non-disclosure agreement customer information, intellectual property,
marketing, product, and service information is considered a confidential information. It is

CONTRACT MANAGEMENT CONCEPTS 6
ones choice to decide whether to protect or not. The non-disclosure agreement includes
information which talks about:
 The number of parties involved
 Full details about what should be shared with the other parties
 Time restrictions about how long the confidential information must be
communicated
 The obligations of the agreement
 Ownership of the information and return of the information
 Signing of the information
In financial contract types, there are several examples such as the lump-sum, the
unit price, the GMP and the CPFF. In this types of financial contract types, the
CPFF seems to be the best appropriate contracting method.This is due to its
advantages in project delivery speed and its ability to offer quality work.
Project delivery speed
In lump sum usually, the budgets are not yet established and this leads to
it not being tracked faster. This method does not provide the contractor with the
incentive to finish the construction early because the contractor is trying to lower
the cost and maximize his or her profits. The only disadvantage of this method is
that it cannot be fast-tracked (Hale et al., 2009).
Unit price with this method the contractor does not have an incentive to
reduce the schedule but instead, the contractor can take his time to since he gets
paid to the quality of work he delivers.

CONTRACT MANAGEMENT CONCEPTS 7
GMP this method can easily be tracked but due to many parties involved, there may be a
coordination problem. GMP does not give the contractor the incentive to finish work early this is
because the contractor would prefer to continue to work until his or her GMP is met.
Cost plus fixed fee this method allows fast-tracking and it provides a high intensity for
the contractor to finish work early. This is because the contractor receives the same fee
regardless of when the project is finished.
Cost control
A lump sum in this method even with the slightest change in the project or an escalation
in the material prizes would lead to a change order being issued to the owner.Therefore the
owner takes his or her changes at such kind of a situation.
A unit price
This method delivers good cost control since the cost of each item is at the upfront of the
contract. In order to make this method work for this project is to ensure regular inspection of
finished work.This will help keep the contractor honest.
The GMP this contract gives the contractor the incentive to keep the cost under the
maximum price, providing a control of costs.
Cost plus fixed fee it does not provide a ceiling for the cost of the owner in this method
there is no financial insurance of ultimate cost and is not preferred to a public project.
Product quality

CONTRACT MANAGEMENT CONCEPTS 8
A lump sum in this method the contractor strives his best to provide good quality in his
or her work. If the project exceeds the lump sum the contractor bid a problem could arise. This
would lead the contractor cut back on his or her quality of the product.
A unit price in this method the contractor will strive so hard to give quality work since
the owner is the one supposed to pay him or her.
In GMP the contractor has to bear all the costs and therefore ensuring it is below the
fixed amount. Therefore the quality ends up being sacrificed.
With CPFF the different qualities of work are rewarded equally but in this method, there
is no penalty for high quality since the owner pays all cost.
Risk sharing
A lump sum in case of any unforeseen problems there is a very high risk for the
contractor. This contract does provide flexibility in order to incorporate performance incentive to
the fixed price established between the project and the contractor.
The unit price contract in this method payment is based on the actual quantities so the
contractor will make his or her profit. However, in this method, there is a risk of accurately
pricing the units and incorporating their overheads in their prices is the contractor.
In GMP contract there is the risk shared equally between the owner and the contractor.
This method has high incentive to contain costs under the cap while the contractor is at risk for
additional costs.
In CPFF contract there exists a level of sharing risk between the contractor and the owner. But
in this case, the risk is high to the owner that the cost may escalate (Mafakheri et al., 2007).

CONTRACT MANAGEMENT CONCEPTS 9
Procurement Methods
Project considerations
 Project delivery speed (47%)since it is essentially the work should be completed by the
end of 2017
 Since is a large and a complex project, the work should be divided into various
geographical areas, seamless communication is required by the project team even though
every participant has their own method of doing their work.
 Cost control (30%) due to media attention it is very important because it is a public
project.
 Working with local sub-contractors (6%) because this is an essential public project.
There are several procurement methods which are commonly recognized.These methods are a
competitive method, negotiated method, and the best value method. Of the three examples, the
best value method is preferred because it has the highest value (Oberlender, 1993).
Methods considerations
Project delivery speed
Competitive bidding it involves abiding period as well as bid evaluation .it is also a
time-consuming process it also consists of review time prior receiving a notice to proceed with
the process.
Negotiated contracts in order for the process to move on faster, the contractor is selected
on basis of overall qualifications of the job and reputation

CONTRACT MANAGEMENT CONCEPTS 10
Best value procurement this method involves reviewing the proposals received through
this it takes more time than the negotiated product but less time compared to competitive.
Selection flexibility
This project can use competitive bidding to attract different owned firms and even other
more contractors from the locality to bid on the contract. A joint venture is built as the pitching
company cannot handle the whole project alone. This form receives a mid-level score as it
reduces the pull of bids that the project could evaluate.
In a negotiated procurement, the contractor is definitely pre-selected because they may
have worked with the owner successfully at past. Negotiated procurement may face problem in
this case because the pitch project is a public entity which may need to allow a large level of
competition.
Best value procurement this involves the process of reviewing a firm based on its
technical merit as well as its price. It is important that the company gets the best contractors and
most qualified and therefore the construction goes on smoothly.
Product quality
Competitive bidding in this method the work awarded to the lowest bidder and the
project is therefore constructed the required quality at lowest price. However, in this method,
there is also a problem as a result of the quality specifications are not yet completely defined and
subjected to change. In addition, the lowest bidder does not provide a top-notch quality.
For the negotiated contract the contractor is actually preselected, this is because he once
worked successfully with the owner of the job and the owner has proven his quality. However,

CONTRACT MANAGEMENT CONCEPTS 11
unlike the best value procurement, the contractor might not be able to identify any technicalities
involved with the project and how they will be able to approach this technology in order to
achieve the quality desired by the owner (Shrestha, Batista & Maharjan, 2016).
Best value procurement
It entails reviewing a firm or a contractor based on the technical merit as well as the
price. It is very important that the project gets the best contractors who are well equipped with
skills and the most qualified so that the construction runs smoothly.
In conclusion, in order to comprehend the different contract management concepts I have come
up with the best of the project delivery system elaborated its characteristics and also the best
financial contract type and procurement method (Thomas et al., 2009).

CONTRACT MANAGEMENT CONCEPTS 12
REFERENCES
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Bingham, E., Asmar, M. E., & Gibson Jr, G. E. (2016). Project Delivery Method Selection:
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Cardenas, D. P. (2016). Evaluation of Construction Project Delivery Methods: A study of
Axiomatic Design Principles Measuring the Efficiency of the Design Process (Doctoral
dissertation, Worcester Polytechnic Institute).
Cui, Q., Ceribelli, J., & Zhang, K. (2017). Efficient and Effective Implementation of Alternative
Project Delivery Methods (No. MD‐17‐SHA/UM/3‐35).
Hale, D. R., Shrestha, P. P., Gibson Jr, G. E., & Migliaccio, G. C. (2009). Empirical comparison
Of Design build and design/bid/build project delivery methods. Journal of Construction
Engineering and Management, 135(7), 579-587.
Lahdenperä, P. (2012). Making sense of the multi-party contractual arrangements of project
Mafakheri, F., Dai, L., Slezak, D., & Nasiri, F. (2007). Project delivery system selection under
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and Economics, 30(1), 57-79
Oberlender, G. D., & Oberlender, G. D. (1993). Project management for engineering and
Construction (Vol. 2). New York: McGraw-Hill.

CONTRACT MANAGEMENT CONCEPTS 13
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