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Innovative contracting for BwN

Realisation within project boundaries represents the most concrete perspective on BwN. The definition of the project boundaries is of crucial importance since this defines the domain in which procurement and contracts have to be organized. So (1) grip is needed on how project boundaries are changed by BwN and (2) procurement and contract need to be organised accordingly.'

 

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Inevitable the issue has to be faced how to deal with procurement and contracts in the case realization takes place within enlarged and reshuffled project boundaries.

 

This building solution outlines cooperation and procurement strategies and elaborates contracts and suitable organisational structures.

The key questions are:

  • How can organisational structures, procurement and contracts facilitate BwN within project boundaries?
  • Which specific arrangements with regard to organisation, procurement and contracts are conditional for realisation of BwN within project boundaries?

 

Advantages

  • Successful integration of BwN concepts in a development benefits from early involvement of all relevant players in the field, especially from the knowledge of constructing parties. This requires a sound package of agreements with commercial parties, that allows these to bring in their expertise, under a mechanism to reward them for their creativity, but without 'open ends'.

Disadvantages

  • Innovative contracting requires a large input, qualitatively and quantitatively, from developers in early stages of the project, often dealing within knowledge fields they are less familiar with.
  • Innovative contracting inevitably includes a certain level of uncertainty in early stages of decision making. Mechanisms to handle such uncertainties through 'adaptive management' are becoming general practice.

 

 

How to Use

'The job to be done' for which guidance is offered is about:

  • How to build organisational and contractual arrangements in order to enhance the realisation of BwN within project boundaries?

At first sight this subject might seem almost trivial compared to issues of how to get and keep BwN on the agenda (see Networks), how to deal with and make good use of regulations and procedures (see Regulatory context) and how to arrange a productive knowledge process (see Knowledge context). Still the proof of the pudding is finally in organizing the project environment in a pro-active manner in order to harvest the seedbed. Without the realization of BwN within project boundaries all the efforts in the end are spoiled. So right from the start, the appropriate 'realisation framework' should be focused upon.

Some guidance is given on how to use insights in procurement and contracts in order to falititate BwN realization within project boundaries.

 

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Practical Applications

 

Idealtypical project arrangements

This building solution innovative contracting reasons from the perspective of BwN and the preferred involvement of actors in the project phases. For practical application keep the following idealtypical project arrangements into consideration to asses your position and determine appropriate next steps. 

 

Conventional arrangement

The conventional arrangement is structured by state-led, top-down planning. A public actor initiates and finances the project. This actor sets the Terms of Reference based on local and national debates.

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Integrated Market Arrangement

In the integrated market arrangement, a national government in cooperation with a private company or a private/privatized (port) authority takes the initiative. The project owner works together with a constructor in formulating the design.

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External financier-initiated arrangement

In this arrangement an external (global) financier initiates the project, often together with a government. These actors can be international financing institutions, foreign governments or private companies.

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The private arrangement

The central actor in this arrangement is a private principal, who as in the conventional arrangement, takes the initiative, controls finances, and manages the project.

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Project examples and cases

 

Channel Deepening Project Melbourne

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References

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