Über die Autorin bzw. den Autor

James Roy was born in Trundle, western NSW. When he was ten months old his parents accepted a missionary appointment to the highlands of Papua New Guinea. A placement in Fiji followed some years later and, by the age of sixteen, James had spent more than half of his life living in the islands of the South Pacific. He attributes much of his early interest in books to the absence of TV, a wonderful library full of adventure books, and the opportunity to play as those characters in wild, adventuresome places. James lives in the Blue Mountains with his family and writes both fiction and non - fiction for children and young adults. His books have won many awards and he travels throughout Australia talking about books and writing. He is an advocate for boys' literacy.

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IS YOUR GLASS HALF EMPTY?

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Contents

ACKNOWLEDGMENTS.........................................................................VPREFACE.................................................................................IXCHAPTER 1. OVERVIEW OF PROJECT DEFINITIONS AND VARYING COMPLEXITIES.....................1CHAPTER 2. TRAITS OF A STRONG PROJECT MANAGER...........................................7CHAPTER 3. CRITICAL ELEMENTS IN THE PROJECT MANAGER'S APPROACH..........................13CHAPTER 4. CONTRACT ADMINISTRATION AND PRIME CONTRACT MANAGEMENT........................37CHAPTER 5. SUBCONTRACT ADMINISTRATION AND SUBCONTRACT MANAGEMENT........................49CHAPTER 6. OTHER KEY TOPICS AND LESSONS FOR PROJECT MANAGERS............................55CHAPTER 7. THE EXCITING INTERNATIONAL PROJECTS..........................................83CHAPTER 8. EXTENDED SCOPE PROJECTS......................................................99CHAPTER 9. FOR THE MANAGER OF PROJECTS..................................................103CHAPTER 10. WRAP IT UP..................................................................125

Chapter One

Before I dive into my observations, lessons, and advice, the fun stuff, I believe that it is necessary to define several types of projects and project structures. Because these definitions vary from industry to industry, they may appear different from the ones you are used to. Nonetheless, the definitions match my experience. I will also comment, for the benefit of the project managers, on the variations in complexity and difficulty in projects, depending on many factors.

Projects vary basically in the way their contracts are written; they also vary dramatically in complexity based on scope, the number of disciplines needed to supply the scope, schedule requirements, relationships between the participants, capabilities of the participants, as well as the geographical and political conditions to be encountered. Because of their difficulty and unique challenges, I will devote chapters of this book to turnkey and fast track projects (chapter 8) and so-called international projects (chapter 7).

There are three common methods for establishing the final price of a contract or subcontract: cost type, lump sum (or fixed price) type, and unit priced type. Although most contracts use a single method, large contracts are often made up of scope elements contracted in a combination of these methods. Each method has its own set of dangers and lessons to be learned.

Cost type contracts and subcontracts: In this type of contract, you (or your subcontractor) are paid what you spend. I would use this type only when the scope of work cannot be defined at the outset. This situation can occur when there is no time to develop and estimate a detailed scope of supply. Payments are made as the expenditures are incurred. The prime issue for the contracting party is to ensure that the money is properly spent and that value is achieved for the payments made. For the contractor, an important issue is the amount of the overhead and margin the contractor is paid, depending on the cost of the final scope of work.

I have seen contractors abused under this arrangement when agreeing to fixed fees on a poorly defined cost type contract, in which the owner expected to and did direct significant scope/cost growth.

A second problem for the contractor is when the owner (or contracting party) is, in the name of cost control, allowed to become involved in day-to-day decisions as well as in operational and personnel matters. Be careful, most contractors have better capabilities than the interfering and often biased contracting parties.

Lump sum or fixed price contracts or subcontracts: In this type of contract, you (or your subcontractor) are paid an amount agreed at the outset for the scope contracted for. The price of agreed-to changes is then added. Payments are typically made as progress is demonstrated or in accordance with an agreed-upon set of milestones achieved. The contracting party must ensure the scope is accomplished without contract changes developed only because the contractor is in cost trouble, avoid scope changes and scope disputes, and ensure that excessive payments are not made earlier than necessary. The contractor must manage cost (schedule is cost) and ensure that there is a written agreement with the owner to pay for any scope changes before the work is done and to pay for changes in conditions that affect the contractor's ability to perform.

Unit priced contracts or subcontracts: In this type of contract or subcontract, there is an agreed-upon value for each unit of quantities manufactured, installed, built, or erected (cubic yards of material or concrete, tons of steel, feet of pipe or cable). Payments are made as the quantities are installed. The issue here is for both parties to ensure that there is carefully checked agreement on the as-designed quantities and that only these amounts are installed and paid for. The contracting party must ensure that payment is for what is on the drawings, not what the contractor installs.

Projects can then be categorized based on their complexities. The simplest projects deliver a product from a single discipline, such as designs, software packages, or manufactured products (without supporting supply by others).

The next step up includes one or more supporting work elements supplied by internal supporting groups, contractors, or vendors. These elements are sometimes in sequence, supporting the primary activity. Engineering, procurement, or supporting fabrications fall into this category. These elements of the work should ideally be completed to the maximum extent possible before the next activity starts. I will refer to this project type as "extended scope," particularly when one division/ department or company sells its product along with engineering, design, procured material, construction, or the like, supplied by others or a different part of the company.

Turnkey projects, the next step in complexity, include the multiple discipline scopes combined with whatever is necessary (testing, commissioning, and training) for the owner to immediately make productive and beneficial use of the product or system at project completion.

Managing these sequences and supporting work is made much more difficult when supporting activities overlap, for schedule acceleration. This brings greater opportunity for claims from or between the parties. This is typically called "fast tracking." I will address these two types of contracts in a later chapter.

Another variable in complexity is how detailed the definition of the project scope is. A conceptual scope or scope definition written around functional requirements has its own special risks. This approach is often used to accelerate the start of a contract when time cannot be taken to define the scope. While the functions to be satisfied can be agreed upon and accomplished, the detail in many design, engineering, or quality conditions will usually be the source of dispute, rework, and cost overrun. Neither party will have a strong contractual basis for its positions (unless the dispute involves one of the few detailed contract requirements).

This conceptual scope contract is particularly risky when used in a lump sum...