Taking the Long View - How Appropriate Foresight Supports the Development and Execution of Large-Cap Construction Projects -

Introduction -

The arduous, start-to-finish process of developing and constructing a large-scale project is akin to a marathon that begins at the earliest stages of development and ends after several years (or more) of technical and design development, complex commercial considerations, and lengthy engineering, procurement, construction, commissioning and start-up periods. Most owners and developers already fully appreciate the significant, upfront technical efforts necessary for such projects to be successful. This article highlights some of the other early challenges faced by commercial, technical and legal personnel, and how early engagement between these personnel can yield significant positive results for the ultimate “finish line” – i.e., the on-time and on-budget construction of a fully functional facility. As set forth below, these challenges include (i) the appropriate validation of early-stage commercial opportunities, (ii) staying focused on long-term goals during project development, (iii) evaluating sole-source versus competitive RFP bidding processes, (iv) negotiations with key technology providers, suppliers, and original equipment manufacturers (“OEMs”), and (v) developing all commercial, technical, and site information necessary to successfully design, construct, and operate the project.

Validating Commercial Opportunities -

Commercial opportunities often require rapid technical substantiation prior to the greenlighting of development. Understandably, every dollar spent is scrutinized in these early stages, which often leads owners to use existing agreements or standard, “off the shelf” contract forms in lieu of consulting with legal counsel. While using “shortcut” forms may result in lower upfront costs, they can also result in much larger and costlier impacts later in a project’s lifecycle. In particular, clauses regarding the ownership and use of intellectual property and confidential information (which are commonly disadvantageous to owners in standard form agreements) can impair an owner’s ability to use these preliminary designs in their intended manner, potentially impacting an owner’s ability to proceed with its preferred contractor and commercial structure. Even where pennies are being pinched, a quick, relatively inexpensive call to legal counsel will eliminate these potentially project-altering issues and ensure that commercial/technical teams keep all options on the table at this early juncture.

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