What is a construction “gigaproject,” beyond an amped-up marketing term for the comparatively modest “megaprojects”? Think initiatives with expenses of well over $1 billion and time periods of well over five years. Think engagements whose extraordinary size, duration and complexity might induce even the most seasoned of project professionals to rethink how they “do contracts.” The prospect of a gigaproject does not so much raise new questions as call for the careful reconsideration of otherwise established answers. What alternative forms of contracting might one use, how might they allocate economic and project risks, and what compensation might drive the parties’ behavior? Here I address transfers of risk and schemes of compensation both as a static matter—for an entire engagement—and as a dynamic matter— morphing over different times or among different scopes of work. I also consider how good or poor execution can affect the success of a project, no matter what contract form is used.
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