Post on 04-Feb-2021
WHAT ARE YOUR CAPITAL PROJECT CHALLENGES?�
A ‘megaprojects’ study by EY found:
64%Untracked scope changes following new instructions from contract buyer
56%Lack of effective change control
38%Inadequate
governance in managing contracts
TOP THREE REASONS FOR OVERRUNS
FACED COST OVERRUNS
WERE BEHIND SCHEDULE
73%
63%
Completion costs were, on average, 59% higher than initial cost estimates – an increase in total cost of US$500bn, over the 205 projects where cost data was available.
Unfortunately, some costs and time delays are unavoidable. But what about the ones that are avoidable? These can be mitigated through better management of the contract.
OVERRUNS ARE THE MOST FREQUENTLY CITED PROJECT CHALLENGE
AVEVA surveyed members of the International Association for Contract & Commercial Management (IACCM) to get
better insight into this.
CHALLENGES FOR CAPITAL PROJECT CONTRACTS
53%Inadequately prepared contract documents leave too much room for misinterpretation and avoidable, costly disputes
54%Escalating contract issues that are not
addressed early on
HALLMARK OF EXCELLENT PROJECTS
83%Clearly
defined scope
56%Good working
relationships with contractors
47% Managed
contract change
FIVE TRAPS TO AVOID IN YOUR PROJECTS
Trap 1Scope and goals not clearly defined
Trap 2 Poor stakeholder communication
Trap 3 Underutilisation of technology solutions
Trap 4 Poor post-award contract
management and governance
Trap 5 Weakly drafted contracts
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About AVEVAAVEVA offers engineering, contract and information management solutions for the asset intensive industries. AVEVA software has powered some of the most complex projects, helping customers create and maintain a digital replica of the physical asset to ensure operational excellence. Listed on the London Stock Exchange (LSE: AVV), AVEVA has built a loyal base of over 4000 customers globally.
Notes and referencesEY, 2015 Oil and gas capital projects series: Spotlight on oil and gas megaprojects
Survey conducted by the International Association for Contract & Commercial Management (IACCM) commissioned by AVEVA, data compiled from 176 responses
IACCM Commercial Excellence: Ten Pitfalls to Avoid in Contracting
CONCLUSION
Capital projects are challenged with cost overruns and time delays. Many of the reasons can be attributed to people and processes, particularly in the management of the project contract. Weak contractor relationships and poor communication are often issues in the set-up and management of capex project contracts.
In the white paper: ‘We need to talk: Why contractor relationships hold the key to managing very large projects’, Geoff Lill discusses the importance of communication and relationships in contract management and sets out a supporting framework.
DOWNLOAD THE WHITE PAPER
http://discover.aveva.com/hub/aveva-beyond-engineering-excellence-procon/the-effective-contractor-relationships-whitepaper?hs_preview=DHjGcBoZ-5452978793http://www.aveva.comhttps://www.linkedin.com/company/avevahttps://twitter.com/avevagrouphttps://sw.aveva.com/campaigns/aveva-beyond-engineering-excellence-procon/the-effective-contractor-relationships-whitepaper