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Contracting strategies for improving energy capital project performance

Contract strategies improve energy project performance

The right contracting strategy may improve energy project performance, manage risk among parties reasonably and ensures contractors remain profitable.

Augusto R. Patmore

Partner, Advisory Global Infrastructure Advisory & Mining

KPMG in Canada


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Aerial view of nuclear power plant

Historically, project performance in the power industry has been lacking with frequent drivers of lower than planned performance often related to:

  • Contracts that transfer little or no construction schedule risk
  • Risks transferred to the wrong party
  • A low bid procurement model
  • A lack of independent advisor scrutiny on the business case

A robust contracting strategy that allocates project risks among contract parties in a reasonable fashion is a key driver of good project performance.

KPMG’s six steps for developing a contract strategy

  • Bundling of contracts or contract packages
  • Identifying project risk to be divided between contracting parties
  • Selecting a delivery method for each bundle
  • Selecting the right form of contract
  • Establishing bid evaluation criteria
  • Independent advisory project checks

Download KPMG's article for a deeper dive on contracting strategies, contract types and lessons learned.

Turn strategy into success. Let’s do this.

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