Contract Management How Owners Can Be Responsible For Changing Orders In Oil And Gas Project Management

Many oil and gas projects endure cost overrun or delay due to change order. Contractors send many change order requests to owner but many owners do not respond on time, leading to project delay. Contractors have to spend extra time waiting for owner’s approval, and claim extra payment for the project extension. So how could Owner manage change order request on time, to reduce minimum extra money and project could finish on time?

Mr. Do Van Hanh made a study which main objectives were as follows:
- How owner could minimize change order in pre-contract phase.
- How owner could respond to manage change order during construction phase
- Analyze the practice of change order through a case study of offshore oil and gas construction project.

Conclusion

All construction projects, even the best planned projects have experienced change, cost overrun, impacts, and disruptions associated with implementing the change. The Author realized some keys to managing the change which are: 1) to be knowledgeable about pricing change orders, and understand the potential for changes, to have additional impacts beyond the direct cost of the change; 2) Owner should prepare a contract form with adequate clear clauses, term etc, that prescribe contractor to have response to engineering, procurement, construction and installation, and each parties have to respond with time limit when a change order happens; 3) owner and contractor should set up a good communication; 4) Both owner and contractor should assign contract management and administration to an experienced person; 5) Owner should hire a well-experienced and professional consultant company to manage the project.

1)By understanding and including these costs in early change order pricing, both the owner and contractor can have impacts associated with changes, and can limit conflict and claims later in the project. Furthermore, by understanding and implementing these change management steps, the changes of the parties resolving the outstanding change orders more effectively and efficiently during the construction process greatly increase.

2) If Owner prepares a good contract with adequate clear clauses, term, standard, norm and criterion… that prescribe clear responsibility, authority of each party, it will be easier to have agreements during negotiation.

3) Communication is very important to solve early problems; it helps the owner and contractor to understand each other. If Owner and contractor should set up a good communication mode, both parties will have a trouble-free agreement.

4) If the owner assigns contract management and administration to an experienced person, he or she is knowledgeable about terms, clauses, and how to solve each kind of situation.

5) A consultant will help the owner to gather and can give best advice in solving problems.

His thesis abstract is copied and posted.

Abstracts

Viet Nam is a developing country needs to develop projects to build infrastructure, investment production base is a huge. However, the new approach and experience should not have management contracts particularly weak resolving issues, related to treatment change order. Many owners do not have the experience or the responsible handling of problems arising inappropriately caused the projects’ capital increase, and project delay.

In this report, the author wants to highlight the theoretical overview to investors arising manage and resolve them effectively. Also make some recommendations to reduce the risks of change order due to the project caused.

Furthermore, the authors also offer a case study and analysis baked each issue during project implementation, thereby giving recommendations as well as the lessons and conclusions for management change orders of investors.