Contractual Risks in Fast-Track Projects

Abstract

Fast-tracking strategies are used to achieve a shorter project duration; however, these strategies may negatively impact project performance by imposing additional risks, uncertainties, and costs. Rework, change orders and site modifications are almost inevitable in fast-tracked projects. Although these problems are not specific to fast-tracking, their frequency is relatively higher in this approach. Contracts should deal with these extra risks and the responsibilities associated with them, and assign them reasonably among project stakeholders as well. Currently, no contractual framework specific to fast-track projects is available; therefore, risks may not be allocated equitably to stakeholders. The usual consequence of the inequitable risk allocation is additional contingencies and premiums added by designers and contractors to their bid price which will end with greater overall project cost. In this paper, particular legal risks and challenges in fast-track projects are identified through a literature review. In addition, contractual aspects of fast-tracking are briefly reviewed at three levels: contract language; contract type; and project delivery method. The study shows that inaccurate cost estimating and cost overrun risk liability, liability for design errors and omissions, delay damages, change orders, construction rework and modifications, as well as risk liability for overlooked work are among the most common reasons for disputes in fast-tracking. The main purpose of this paper is to provide a better understanding of the contractual risks in fast-track projects and help to develop contract strategies and minimize the associated legal problems.