Page 7 - Megaprojects Playbook

6 PROPER SUB SELECTION

Sub failures become more important and also more common due to longer durations of projects. Using small
subs (even those that are known) on a larger project can overwhelm a good sub and cause failure. Sub pool needs
to include Mega Project-type subs. Seek out those larger subs and build the relationships early in the pursuit.

7 SUB BONDING BECOMES MUCH MORE IMPORTANT

Using larger, more capable subs should help with making sure they have proper
bonding capacity. This can become the norm for large projects.

8 CHANGE MANAGEMENT IS AN ADMINISTRATIVE ISSUE

Bigger jobs = more potential changes. DOCUMENTATION is paramount. We must ensure we have all of the
written back-up to support our entitlement to changes, both in scope and money. Everything in writing!

"

From an overarching view, there are a few things that always make mega contracts more risky. Duration risk
is a really big one given those jobs generally last several years. All the usual suspects are present on mega jobs
that exist on smaller jobs – owner financing issues, sub failures, material price escalation, labor escalation –
but all are just magnified on larger jobs given the larger dollars and longer completion time. Having escalation
clauses in any of those areas is certainly very helpful (while difficult to get at times, we have seen more success
with including these in contracts recently). We’ve seen some very “creative” financing issues on some of these
mega jobs, so anything that can be done in negotiation and protecting themselves on that front is vital as well.
"
The only other point I might make is that we can see some larger contracts and contractors have
less flexibility in general as it relates to contract terms, conditions and insurance requirements.
So it's more important to keep that discipline and don’t acquiesce too much to get the big contract…
- Liberty Legal Team

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