Development of a “Project Objective System” (POS) to align the interests of all the stakeholders and find the right delivery model

Abstract

Major projects often exceed estimated costs and schedule. Therefore, they do not achieve the desired quality. The difference in objective interests of the project participants is a major problem. Based on the difficult contractual relationship. Also, the late involvement of subcontractors brings a lack of information for all involved with it. This lack can be described by the principal agency theory from the economic field. The current project execution models do not have a smart objective system that records the interests of the client from the start to the end of the project. They are neither documented at the start of the project nor adapted iteratively. With the help of the recently created project objective system (POS), the objectives of all project stakeholders can be selected, checked, and compared. Later on in the project procedure, the objectives will be transferred into risks. To know these risks and set the priority further on with the objectives. And the best fitting project delivery model can be chosen. The probability of successful project completion is much higher. Later, with the risk mitigation the objectives can be complied more efficiently. However the risk profile of the project and the risk aversion of the owner, decide on the delivery model. As a result of the POS with risk profile, for a very complex construction project the Integrated Project Delivery (IPD) with a cost-plus incentive fee contract would be the fitting model. IPD with the contractual relationship, the early involvement of all the participants creates understanding of the project early on. This can reduce information losses and risks. With the POS the incentive contract can be created and thus an incentive mechanism developed. In addition, the project delivery on time and within the budget is strongly supported. The POS is a software app for better usability.