INFORMATION INDEPTH NEWSLETTER
Enterprise Project Portfolio Management Edition
Oracle Corp
April 2012 Stay Connected: TwitterFacebookLinkedInYoutube Blog
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Owner/Contractor Collaboration Is Key to Successful Projects

An overwhelming majority of project owners in asset-intensive industries now seek collaborative relationships with their contractors to help minimize the negative impacts of change on construction projects. These collaborative partnerships improve visibility into long-term project costs and help ensure a return on investment.

These findings highlight some important new trends identified in Building in Change: Project Construction in Asset-Intensive Industries, an Economist Intelligence Unit Report sponsored by Oracle.

The Economist Intelligence Unit based its findings on a survey of senior executives from oil and gas, utilities, infrastructure, chemicals, and mining and metals industries. The analysis notes that by replacing litigious relationships with genuine partnerships, stakeholders can reduce risks and make it easier for organizations to cope with unforeseen project changes that result in delays and cost overruns during construction.

The report notes that in the past the owner/contractor relationship in asset-intensive industries was combative and litigious. Those attitudes are changing: owners today view contractors as partners who can help them minimize the impact of change during project execution. In fact, 91 percent of owners see the relationship with their contractors as important or extremely important to the process of managing change.

In another departure from the past, partnerships now continue throughout a project's lifecycle, according to the Economist Intelligence Unit report.

Other key findings include
  • Owners often lack adequate skills to minimize the impact of change. For example, only 51 percent of respondents rated themselves as effective at delivering their projects to scope, budget, and schedule when confronted with change.
  • Only 43 percent of the survey participants rated themselves as effective at anticipating potential change.
  • A full 67 percent of the executives said collaborative relationships make costs more predictable.
  • Unambiguous contract expectations and clearly defined roles are essential for project owners to benefit from collaborative relationships.
Penalties Don’t Necessarily Pay
The report also looks at punitive measures as a way to keep projects on track. The researchers found that penalties are not the most effective line of defense against unplanned negative changes. Although owners will hold contractors accountable if they fail to meet agreed targets, 67 percent said that a collaborative, open relationship helps them more accurately predict costs. And 65 percent see these relationships as a way to avoid contract disputes; 57 percent use them to address change in a proactive way.

Download the full report.
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