11. Procurement, Tendering and Contract Administration

Introduction and Context

Property development converts an investment intention into a physical and legally compliant asset. Between feasibility approval and operational occupation lies a chain of procurement decisions that determines who designs, constructs, supplies, supervises and accepts the development. Procurement is therefore not merely the act of obtaining quotations. It is the governance system through which the developer converts project objectives into market commitments, allocates risk, secures performance and manages commercial relationships.

For a real estate project, procurement decisions influence cost certainty, programme reliability, design quality, buildability, financing requirements, maintainability and the developer’s exposure to disputes. A procurement route that is suitable for a standard warehouse may be unsuitable for a complex mixed-use tower or a heritage redevelopment. Similarly, the cheapest tender may not represent the lowest whole-life cost or the lowest risk.

Tendering is the competitive or negotiated process through which potential suppliers are invited to offer prices, programmes, qualifications and technical proposals. Contract administration begins once an agreement is executed and continues through mobilisation, design development, construction, certification, payment, change management, completion, defects correction and final account settlement. These activities require commercial judgement, reliable records and disciplined communication.

This chapter develops an integrated approach to selecting procurement routes, designing tender processes, evaluating contractors and administering contracts. It also examines claims, variations, payment, dispute resolution, collaborative relationships, digital tools and ethical governance.

Learning Objectives

By the end of this chapter, the learner should be able to:

1. Explain the purpose and strategic significance of procurement in property development.

2. Distinguish among major procurement routes and contract pricing arrangements.

3. Select a procurement approach by relating project characteristics to risk allocation, time, cost and quality objectives.

4. Design a fair and effective tendering process.

5. Evaluate contractors using financial, technical, organisational and behavioural criteria.

6. Administer variations, claims, payment certification, completion and defects obligations.

7. Identify causes of disputes and apply appropriate prevention and resolution techniques.

8. Use digital systems and collaborative practices to improve procurement governance.

9. Apply ethical, regulatory and professional principles to procurement decisions.

Procurement as a Strategic Project Decision

Procurement should be understood as a project delivery strategy rather than a purchasing procedure. It establishes the relationship between the client, designers, contractors, specialist suppliers, cost consultants, project managers and lenders. It also determines when design information becomes sufficiently mature for pricing and construction.

Three questions lie at the centre of procurement strategy. First, how much responsibility should be retained by the client and design team, and how much should be transferred to the contractor? Second, how much price and programme certainty is required at the point of commitment? Third, how much flexibility is needed after construction begins?

These questions involve trade-offs. Early contractor involvement may improve buildability and cost planning but can reduce the benefits of a fully competitive price if the contractor becomes embedded before the scope is sufficiently defined. A fixed-price contract may support financing and investment approval, but the apparent certainty may be weakened by numerous exclusions, provisional sums, inflation risks or poorly defined change mechanisms. A fast-track strategy can bring revenue forward, but it increases coordination and information risks.

A sound procurement strategy begins with a project brief that identifies the development’s functional requirements, quality standards, planning constraints, target completion date, funding conditions, risk appetite and expected operating life. The strategy should also reflect market capacity. A technically ambitious procurement model is ineffective if the relevant specialist contractors are unavailable or unwilling to accept its risk allocation.

Principal Procurement Routes

Traditional design–bid–build

Under the traditional route, the client appoints designers to develop the design and prepare tender documentation. Contractors then compete to construct the defined works. The client retains substantial design responsibility, while the contractor is generally responsible for construction in accordance with the contract documents.

The route provides strong design control and allows competitive tendering on a relatively complete scope. It is appropriate where the design is mature, quality and appearance are important, and the client wishes to retain control over design decisions. Its weaknesses include a longer pre-construction period, limited contractor input during design and potential disputes where drawings, specifications and site conditions are inconsistent.

Design and build

Under design and build, one contractor accepts responsibility for both design and construction, either directly or through consultants and specialist designers. The client usually appoints a professional team to prepare employer’s requirements, performance specifications or an initial concept.

This route creates a single principal point of responsibility and may improve coordination. It can support earlier construction and greater price certainty. However, the client must define performance requirements carefully. If the employer’s requirements are vague, the contractor may satisfy the literal contract while delivering an outcome that does not meet the client’s operational expectations. Design quality can also be compromised when price pressure is dominant.

Management contracting

In management contracting, the client appoints a management contractor to coordinate and manage works contractors. The management contractor is generally paid a fee, while the construction packages are let separately. This approach allows packages to be procured progressively and can shorten the overall programme.

It is useful for complex or fast-track developments where the design will evolve and specialist package input is valuable. The client, however, retains more cost and design risk. The final cost is less certain until packages are let, and effective cost control requires an experienced client team.

Construction management

Construction management separates the client’s appointment of a construction manager from direct contracts with trade contractors. The construction manager provides professional management, while the client carries the contractual risk of the individual trade packages.

This route gives the client high flexibility and direct access to package contractors. It can be effective for sophisticated clients managing complex developments. Its disadvantages include substantial client management responsibility, exposure to package interfaces and weaker cost certainty at early stages.

Design, build, finance, operate and related models

Some developments use integrated models in which a private partner designs, constructs, finances and sometimes operates the asset. Such models may be relevant to institutional, infrastructure-linked or income-producing developments. They require careful evaluation of lifecycle performance, financing cost, service standards, concession terms and long-term risk. The apparent transfer of responsibility must not be confused with elimination of risk; risks may return to the client through pricing, guarantees, performance deductions or renegotiation.

Contract Types and Risk Allocation

The procurement route describes the organisation of project responsibilities, while the contract type describes the commercial basis on which payment is determined.

A lump-sum or fixed-price contract establishes a price for a defined scope. It is most effective where design information is complete and quantities, interfaces and site conditions are reasonably understood. It provides budget visibility but requires clear provisions for variations, price adjustment, statutory changes and unforeseen conditions.

A measurement or remeasurement contract pays for actual quantities multiplied by agreed rates. It is suitable where the nature of the work is known but quantities cannot be measured reliably before construction, such as some civil works or refurbishment projects. The final cost depends on measured work, so the client requires accurate measurement and cost reporting.

A cost-reimbursable contract pays defined actual costs plus a fee or agreed mark-up. It may be appropriate where urgency is high or the scope is uncertain, but it gives the contractor less incentive to control cost unless open-book accounting, target cost mechanisms and pain/gain arrangements are included.

A target-cost contract establishes a target and shares savings or overruns according to an agreed formula. It encourages collaboration while retaining cost discipline. Its success depends on transparent records, open-book accounting and a reliable process for agreeing allowable cost.

Unit-rate, schedule-of-rates and time-and-material contracts are useful for maintenance, minor works and uncertain quantities. Framework agreements and call-off contracts can reduce transaction costs for repeat programmes, although they must preserve competition and avoid unjustified supplier dependence.

The allocation of risk should follow the party best able to control, price or mitigate it. Design risk normally belongs with the party responsible for design; construction productivity risk generally belongs with the contractor; land title and planning risks may remain with the developer. A risk transferred to a contractor without adequate information is likely to be priced heavily, excluded or become a source of dispute.

Selecting a Procurement Strategy

A practical procurement appraisal can score each route against the project’s principal objectives. The criteria may include cost certainty, speed, design control, quality, flexibility, contractor innovation, client capability, lender requirements and dispute exposure. Weighting is preferable to relying on an unexamined preference for a familiar route.

For example, a speculative residential development with a standardised design and a fixed sales launch may favour design and build with strong employer’s requirements. A landmark cultural or mixed-use project requiring intensive design development may favour a route involving early contractor participation and specialist trade coordination. A refurbishment in an occupied building may require a flexible measurement-based arrangement because conditions cannot be fully identified before opening up the structure.

The procurement decision should be documented in a strategy paper. It should state assumptions, risk ownership, approval authorities, market engagement plans, tender timetable, contract form, insurance requirements, security requirements and proposed change-control procedures. This record provides an audit trail and prevents later confusion about why a route was selected.

Designing the Tender Process

Tendering begins with market intelligence. The developer should identify capable firms, package the works appropriately and consider whether the market is competitive. A prequalification process may examine relevant experience, financial capacity, health and safety performance, quality systems, resources, litigation history, integrity declarations and supply-chain capability.

Tender documents should normally include instructions to tenderers, form of contract, conditions, employer’s requirements or drawings and specifications, pricing documents, programme requirements, information schedules, site information, health and safety requirements, evaluation methodology and proposed amendments. Ambiguity at tender stage is often converted into qualifications, inflated contingencies or later claims.

The tender procedure may be open, selective, competitive dialogue, negotiated or two-stage. An open tender gives broad access but may attract unsuitable bids. A selective tender reduces evaluation burden and can improve quality. Two-stage tendering is useful where early contractor involvement is required: the first stage selects a contractor for pre-construction services, while the second stage agrees the construction price after design and package development. Negotiated tendering can be efficient for specialist or urgent work, but it requires strong governance to demonstrate value and prevent favouritism.

Tender clarifications should be issued consistently to all tenderers where the information affects competition. Late changes should be controlled, and tender validity periods should be monitored. A tender return should be checked for completeness, arithmetic errors, exclusions, qualifications, abnormal rates, programme assumptions and departures from the requested solution.

Contractor Evaluation and Award

Tender evaluation should distinguish between compliance and preference. A compliant tender satisfies mandatory requirements. The preferred tender is the one that offers the best evaluated value against the published criteria, not necessarily the lowest initial price.

A balanced evaluation may include:

• price and whole-life cost;
• technical approach and understanding of the brief;
• programme and mobilisation plan;
• relevant experience and key personnel;
• financial strength and bonding capacity;
• health, safety, quality and environmental performance;
• supply-chain arrangements and proposed subcontractors;
• digital information capability; and
• collaborative behaviour and dispute history.

A weighted scoring model improves transparency, but numerical scores should not conceal professional judgement. Evaluators should record evidence for each score and manage conflicts of interest. Abnormally low tenders require investigation rather than automatic rejection. The bidder may have misunderstood the scope, omitted critical work, assumed unrealistic productivity or adopted a deliberate low-entry strategy.

Before award, the client should verify references, insurance, corporate authority, proposed resources, financial information and key subcontractor commitments. Letters of intent should be used cautiously. If work must begin before the main contract is signed, the letter should state the authorised scope, payment basis, expiry date, liability limits and route to execution of the full agreement.

Contract Administration in Practice

Contract administration is the disciplined application of the contract to events occurring during delivery. It is not merely clerical work. Administrators must understand entitlement, evidence, notice requirements, authority limits and the relationship between technical facts and contractual rights.

At mobilisation, the parties should confirm the baseline programme, design responsibility matrix, information release schedule, site access arrangements, insurance, bonds, reporting formats, communication protocols, health and safety plans and payment procedures. A responsibility matrix should make clear who prepares, reviews, approves and records each deliverable.

Variations and change control

A variation is a change to the contractual scope, sequence, quality, quantity or method. Changes arise from client decisions, design development, statutory requirements, unforeseen conditions, coordination failures or contractor proposals. Every change should be assessed for scope, cost, time, quality, statutory compliance and operational impact.

A robust change procedure requires an instruction or agreed change record, an explanation of the reason, a quotation or valuation, programme analysis, approval by the authorised person and incorporation into the cost and information baseline. Uncontrolled verbal instructions are a major source of dispute. Where an emergency requires immediate action, the instruction should be confirmed in writing as soon as practicable.

Claims and extensions of time

A claim is a contractual assertion seeking additional time, money or another remedy. Claims may arise from employer delay, late information, disruption, variations, suspension, adverse physical conditions, changes in law or specified force majeure events. The claimant normally must demonstrate contractual entitlement, causation, loss and compliance with notice provisions.

Delay analysis should distinguish between the event, its effect on critical activities and the resulting completion impact. A contractor’s entitlement to additional time does not automatically establish entitlement to loss and expense; each depends on the contract and evidence. Contemporary records, programmes, site diaries, instructions, photographs, delivery records and labour returns are essential.

Payment and final account

Interim payment systems convert measured progress into cash flow. The administrator should verify work executed, materials properly stored, approved variations, retention, deductions, tax requirements and previous payments. Payment certification should be based on evidence and issued within contractual time limits. Poor payment practice damages supply chains and encourages defensive contracting.

The final account reconciles the original contract sum with measured work, approved variations, claims, provisional sums, omissions, adjustments and agreed settlements. It should be prepared progressively rather than postponed until the end. Early agreement of undisputed items reduces pressure at practical completion.

Completion, defects and close-out

Completion is a contractual status, not merely the point at which the building looks finished. The contract may define tests, statutory approvals, commissioning records, as-built information, operation manuals, training, cleaning and removal of temporary works. Defects obligations require the contractor to return and correct nonconforming work within the agreed period. The developer should maintain a defects register, assign responsibility and verify closure.

Disputes and Collaborative Relationships

Disputes frequently originate before a formal claim: unclear scope, delayed information, inconsistent instructions, unrealistic programmes, poor payment practice or distrust. Prevention is therefore more effective than relying solely on adjudication, arbitration or litigation.

A dispute management ladder may include project-level discussion, senior management negotiation, independent determination, mediation, adjudication, arbitration or court proceedings, depending on the contract and applicable law. The objective is not always to prove that one party is wrong; it may be to preserve progress while reserving rights and agreeing a commercially rational settlement.

Collaborative contracting does not mean ignoring contractual rights. It means creating mechanisms that encourage early warning, transparent information, joint risk review, integrated planning and problem-solving. Partnering workshops, risk registers, shared dashboards, target-cost incentives and alliance-style governance can support this approach. Collaboration fails when it is used as a substitute for clear obligations or when one party demands cooperation while withholding information.

Governance, Ethics and Professional Responsibility

Procurement decisions affect public money, investor returns, community welfare and the livelihoods of supply-chain participants. Ethical governance requires impartial evaluation, confidentiality, avoidance of conflicts of interest, accurate reporting and zero tolerance for bribery or collusion. Gifts, undisclosed relationships, bid leakage and manipulation of evaluation criteria undermine both competition and legitimacy.

The developer should maintain approval thresholds, segregation of duties, tender audit trails, conflict declarations and whistle-blowing channels. Modern slavery, labour exploitation, unsafe working conditions, environmental harm and discriminatory employment practices should be addressed through supplier due diligence and contract requirements. Sustainability criteria must be measurable; vague commitments are difficult to enforce.

Regulatory compliance may involve planning conditions, building regulations, occupational safety, environmental permits, employment law, tax, competition law, data protection and licensing. Because legal requirements vary by jurisdiction, project teams must obtain local professional advice rather than treating a generic contract form as a complete legal solution.

Digital Procurement and Emerging Practice

Electronic tender portals improve document control, issue tracking, secure submission and auditability. Building information modelling can connect design information with quantities, specifications, procurement packages and change records. Common data environments provide a controlled source for current information, reducing reliance on informal email exchanges.

Digital payment platforms can link valuations to approved records, while dashboards can display cost-to-complete, committed cost, change exposure, programme status and unresolved claims. Artificial intelligence may assist in checking document inconsistencies, classifying change events, identifying unusual tender rates and extracting obligations from contracts. Its outputs require human verification because context, legal interpretation and commercial judgement cannot be delegated safely without oversight.

Emerging practice increasingly emphasises whole-life value, carbon measurement, modern methods of construction, off-site manufacturing, supplier resilience and early involvement of specialist contractors. These developments reward procurement teams that can evaluate not only construction price but also logistics, maintenance, adaptability, energy performance and end-of-life implications.

Illustrative Case Study: Riverside Exchange Redevelopment

Background

Riverside Exchange is an illustrative case concerning the conversion of a partially vacant commercial building into a mixed-use development containing offices, retail units and serviced apartments. The building was in an urban location with restricted deliveries, incomplete historic drawings and a fixed opening target linked to a major tenant.

Situation and problem

The developer initially proposed a traditional lump-sum tender based on concept drawings. During pre-tender review, intrusive surveys revealed uncertain structural conditions, while the tenant continued to revise its technology and space requirements. A fully fixed price at that stage would either attract substantial contingencies or generate extensive variations.

Analysis

The project team compared three options: proceeding with a traditional tender, adopting design and build immediately, or using a two-stage design-and-build route. The evaluation considered programme, design control, site uncertainty, tenant flexibility, market capacity and the developer’s financing requirements. The team concluded that early contractor input was valuable because logistics, temporary works and structural sequencing were significant risks. However, the developer required an open-book cost plan and a maximum price before committing to the construction phase.

Approach and solution

A selective first-stage tender assessed contractor capability, proposed project team, logistics plan, risk methodology, preliminaries and pre-construction fee. The selected contractor joined the design team during detailed surveys and package development. A risk register assigned structural uncertainty to a jointly managed allowance, while tenant-driven changes were subject to a formal change-control procedure.

The second-stage agreement established a target cost, agreed subcontractor procurement rules, pain/gain sharing and a ceiling price subject to defined client changes and exceptional events. A common data environment controlled drawings and instructions. Weekly design coordination meetings were linked to a live procurement schedule.

Outcome

The arrangement did not remove uncertainty, but it made uncertainty visible and assignable. Structural risks were investigated before major packages were committed. Tenant changes were priced and approved through a documented process. The developer obtained greater cost transparency than would have been available through an opaque lump-sum tender, while the contractor gained earlier knowledge of site constraints.

Learning points

The case demonstrates that procurement should respond to information maturity rather than to a desire for nominal price certainty. Two-stage procurement is not automatically collaborative or cost-effective; it requires open-book rules, approval controls and a clear route from pre-construction services to the construction contract. It also shows that early contractor involvement is most valuable when the contractor contributes specialist knowledge to identifiable risks.

Common Failure Modes and Best Practices

Common failures include selecting a route because it is familiar, issuing incomplete tender documents, accepting the lowest price without investigating exclusions, transferring uncontrollable risks, using vague performance specifications, allowing informal instructions, delaying payment certification and failing to preserve records.

Best practice is to:

1. align procurement with project objectives and information maturity;

2. allocate risks to parties able to manage them;

3. use clear, coordinated and legally reviewed tender documents;

4. publish evaluation criteria and document scoring evidence;

5. verify contractor capacity rather than relying on reputation;

6. establish baseline cost, programme and information controls;

7. record instructions and changes promptly;

8. maintain contemporary records for delay, disruption and payment;

9. resolve issues at the lowest appropriate level; and

10. evaluate suppliers on safety, integrity, sustainability and whole-life value as well as price.

Chapter Summary

Procurement is a strategic decision that structures responsibility, risk, competition and project delivery. Traditional, design-and-build, management and integrated routes offer different balances of design control, speed, flexibility and cost certainty. Contract types such as lump sum, measurement, cost reimbursement and target cost determine how payment and risk operate within those routes.

Effective tendering depends on clear scope, appropriate market engagement, fair evaluation and careful investigation of qualifications and abnormal prices. Contract administration then converts the agreement into controlled action through mobilisation, instruction, change management, claims assessment, payment certification, completion and defects close-out. Accurate records and timely notices are central to commercial protection.

Disputes are reduced through clear allocation of risk, collaborative planning, transparent information and prompt escalation. Ethical governance requires impartiality, confidentiality, anti-corruption controls, supply-chain responsibility and regulatory compliance. Digital procurement, common data environments, analytics and carefully governed AI can improve visibility, but professional judgement remains essential. The central managerial lesson is that value is created not by transferring the greatest amount of risk, but by allocating each risk intelligently and administering the resulting relationship competently.

Key Terms

Procurement route: The organisational method used to arrange design, construction, management and related project responsibilities.

Tender: A formal offer submitted in response to an invitation to provide specified works or services.

Employer’s requirements: The client’s statement of required outcomes, performance, scope and standards.

Lump-sum contract: A contract in which an agreed price is established for a defined scope of work.

Remeasurement contract: A contract paid according to actual quantities multiplied by agreed rates.

Cost-reimbursable contract: An arrangement under which defined costs are repaid with an agreed fee or mark-up.

Target-cost contract: A contract using a target amount with agreed mechanisms for sharing savings or overruns.

Prequalification: Assessment of a supplier’s suitability before invitation to tender.

Two-stage tendering: A process in which a contractor is selected initially for pre-construction services and the construction price is developed subsequently.

Variation: An authorised change to the scope, quality, quantity, sequence or method of contracted work.

Claim: A contractual assertion seeking time, money or another remedy.

Extension of time: An adjustment to the contractual completion date arising from an event recognised by the contract.

Interim payment: A payment made during performance based on assessed progress or entitlement.

Retention: A portion of certified payment withheld to secure completion or correction of defects.

Final account: The agreed financial reconciliation of the contract after completion and adjustments.

Practical completion: A contractually defined stage at which the works are sufficiently complete for the intended use, subject to stated conditions.

Common data environment: A controlled digital system for managing project information.

Open-book accounting: Transparent disclosure of relevant project costs to support valuation or target-cost management.

Risk allocation: The deliberate assignment of responsibility for uncertain events to particular project parties.

Dispute resolution: Processes used to settle contractual disagreements, including negotiation, mediation, adjudication, arbitration or litigation.

Review Questions

Short Answer Questions

1. Why is procurement considered a strategic project decision rather than merely a purchasing activity?

2. What is the principal distinction between a procurement route and a contract type?

3. Identify two circumstances in which a remeasurement contract may be appropriate.

4. What information should be examined when investigating an abnormally low tender?

5. Why are contemporary records important in the assessment of claims?

Long Answer Questions

1. Compare traditional design–bid–build and design-and-build procurement in relation to design control, risk, time and cost certainty.

2. Explain the stages of a properly governed tendering process from market engagement to contract award.

3. Discuss the principles that should guide risk allocation in a property development contract.

4. Explain how variations, extensions of time and payment certification should be administered.

5. Examine the role of collaboration, digital information management and ethical governance in reducing disputes.

Analytical / Application Questions

1. A developer has a complex refurbishment project with incomplete drawings, occupied premises and a fixed opening date. Recommend a procurement route and contract type, and justify the principal risk allocations.

2. A contractor submits the lowest tender but excludes temporary works, assumes unrestricted deliveries and proposes a programme that conflicts with planning conditions. Analyse how the client should evaluate and respond to the tender.

3. During construction, the client issues an informal verbal instruction that changes the façade material. The contractor later submits a cost and delay claim. Explain the steps the contract administrator should take to establish entitlement, value the change and prevent recurrence.

22. Multiple Choice Questions with Answers

Question 1

A developer has incomplete design information but needs specialist contractor input before fixing the construction price. Which procurement approach is most appropriate?

A. Single-stage traditional lump-sum tender

B. Two-stage tendering with pre-construction involvement

C. Open tender with no clarification process

D. Cost reimbursement without cost controls

Correct Answer: B. Two-stage tendering with pre-construction involvement

Question 2

Which contract type is generally most suitable when the nature of the work is known but quantities cannot be measured reliably before construction?

A. Remeasurement contract

B. Pure fixed-price contract

C. Unconditional target-cost contract

D. Design competition agreement

Correct Answer: A. Remeasurement contract

Question 3

A tender is substantially cheaper than all competing bids. What should the client do first?

A. Accept it immediately because lowest price is best value

B. Reject it automatically as financially unrealistic

C. Investigate scope assumptions, exclusions, arithmetic and programme

D. Ask other tenderers to match the price

Correct Answer: C. Investigate scope assumptions, exclusions, arithmetic and programme

Question 4

Which principle provides the strongest basis for allocating project risk?

A. Allocate every risk to the contractor

B. Allocate risk to the party best able to control or mitigate it

C. Allocate all uncertain risks to the client

D. Allocate risks equally regardless of project circumstances

Correct Answer: B. Allocate risk to the party best able to control or mitigate it

Question 5

What is the main purpose of a formal change-control procedure?

A. To prevent all design development after contract award

B. To record, evaluate, approve and incorporate changes into cost and programme controls

C. To transfer every client decision to the contractor

D. To avoid issuing written instructions

Correct Answer: B. To record, evaluate, approve and incorporate changes into cost and programme controls

Question 6

A contractor demonstrates that a late client instruction affected a critical path activity. What additional issue must normally be established for a monetary claim?

A. The contractor’s preferred procurement route

B. Causation, contractual entitlement and substantiated loss

C. That the project has already achieved completion

D. That no records were maintained

Correct Answer: B. Causation, contractual entitlement and substantiated loss

Question 7

Which practice best supports fair tender governance?

A. Changing evaluation criteria after bids are opened

B. Issuing material clarifications consistently to all tenderers

C. Disclosing one bidder’s price to another

D. Scoring without recording evidence

Correct Answer: B. Issuing material clarifications consistently to all tenderers

Question 8

What is the principal function of a common data environment?

A. To replace all professional judgement

B. To provide controlled management of current project information

C. To guarantee that construction costs cannot increase

D. To eliminate the need for contract documents

Correct Answer: B. To provide controlled management of current project information

Question 9

Which statement best describes a target-cost contract?

A. The contractor is paid only a fixed amount regardless of scope

B. Actual cost is ignored and quantities are never measured

C. Savings and overruns are shared according to an agreed mechanism around a target

D. The client has no access to cost information

Correct Answer: C. Savings and overruns are shared according to an agreed mechanism around a target

Question 10

A project team wants to reduce disputes during construction. Which action is most effective?

A. Rely exclusively on litigation after completion

B. Permit verbal instructions without records

C. Use early warnings, clear responsibilities, accurate records and prompt issue escalation

D. Transfer all risks without changing the contract price

Correct Answer: C. Use early warnings, clear responsibilities, accurate records and prompt issue escalation