ABSTRACT
The working relationship between an owner and a contractor is one of the most crucial determinants of project success. Although there are many contract types, they can be broadly split into two categories: cost reimbursable and lump sum. The two major types include conditions which can affect the owner/contractor relationship. Managing the relationship between owner and contractor becomes significantly more difficult when a third party is involved. The more liability the contractor accepts for engineering errors, poor workmanship, and consequential damages, the greater the potential for an adversarial relationship, particularly under reimbursable cost. If an owner installs one of his people into a contractor's organization, it is imperative that both parties fully understand how the responsibilities are being shifted. Obviously, shifting responsibilities based on relative capabilities is easier on a reimbursable cost project than under a fixed price contract. Senior management can have a significant impact on the project team relationship and on the overall owner/contractor relationship.
