Contractual Risk Management In Capital Projects – A New Frontier

The Oil and Gas Industry is investing heavily in capital projects with a view to finding more recoverable reserves. Upstream global investment reached almost $700bn in 2013, much of this investment was in risky frontier locations. The risk profiles of the high-value contracts that underpin this investment differ significantly from contracts that support on-going operations.

To date, contract management software solution providers have focused on designing solutions to support contract management activities in operating environments. Whilst these solutions have proven return on investment in operations, they are inadequate as support tools for managers of capital project contracts.

This paper outlines the factors that drive the "unique" set of contract management challenges in major capital projects in the Oil and Gas Industry and highlights the business requirements that providers of contract management software must address in creating solutions to meet challenges.