In convertible contracts, different contract price arrangements such as costs reimbursable, unit rate, and lump sum are used at different levels of project definition and through the project life cycle to allocate cost and performance risks more appropriately between contracting parties. Deciding conversion points through the conversion process is a challenging exercise in managing convertible contracts in oil and gas projects. This paper, through a grounded theory study, introduces a theoretical framework to enhance the conversion process in convertible contracts. The main focus of the study has been on engineering, procurement, and construction (EPC) fast-track projects in the oil and gas industry. The theoretical framework introduces important factors that influence deciding the conversion points, provides practical recommendations to enhance the conversion process, and presents some of conversion strategies in applying convertible contracts.
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