The majority of any project budget is spent through contracts. The project scope needs to be packaged into optimal contract work scopes. From a single EPC contract, to a series of small contracts, no standard grouping is suitable for all projects; each project will have its own unique contract strategy.
The contract strategy will also indicate the likely value of each contract, leading to a view on how the contract might be placed into the market. Detailed assessment of the tender method and payment mechanism is part of Contract Tactics; refer to the Contract Tactics service.
The strategy is presented in a diagram commonly called the ‘Navajo Blanket’ from its appearance, showing the grouping of activities per contract.

Contract Strategy answers the questions ‘How should we package the work?’, ‘ Who can build this for us?’ and ‘How should we manage the contracts’, and is required as part of the feasibility assessment of a project. Therefore the contract strategy should be defined during the latter part of feasibility assessment.

• Create a Work Breakdown Structure for the project as a matrix of asset breakdown versus development activity.
• Set aside core activities to be retained in house.
• Group irreducible activities that would never be split.
• Identify where client has an existing contract that could be used.
• Use themes to create several alternative strategies for the remaining scope.
• Make SWOT assessment of the alternatives and select preferred strategy.
• Make list of contracts and estimate of value of each contract.

• A Work Breakdown Structure matrix
• Core, Irreducible and Existing contracts set aside.
• Alternative strategies and a SWOT analysis
• A list of proposed contracts with value.

A 2 day workshop with the client development team will deliver the result stated.

EEE-S-062