Strategic Frames for Implementation

Knut Samset

Chapter 21 in Early Project Appraisal, 2010, pp 209-214 from Palgrave Macmillan

Abstract: Abstract Two principal prerequisites for project success are that the front-end phase results in a sensible strategy and that the implementation phase affords the tactical flexibility needed to accommodate promising technical options in situations that may arise. This was discussed in Chapter 7. The distinction between strategic guidance and tactical flexibility is significant in project management. In cases when a project is both financed and implemented by a single organization, conflicts of interest at the borderline between the strategic and the tactical are avoided. The organization itself can determine the extent to which tactical choices that depart from the project strategic guidance may be made. However, in many cases, the commissioner is not the same as the contractor. So, considerable conflicts of interest may arise between them, not least in the sharing of risk. The implementation of a project is influenced by internal conditions and by the surroundings with which uncertainty is associated. A choice made may result in desirable or undesirable results and consequently imply risk. The commissioner may choose to bear the relevant risk or may transfer it to the implementing party. A commissioner who opts for making tactical choices also incurs the relevant risks and must sustain any losses that arise. Likewise, a contractor allowed to make tactical choices must also bear the relevant risks. In such instances, the contractor normally will require a risk premium or a price differential to compensate for possible losses.

Keywords: Risk Premium; Recipient Country; Relevant Risk; Donor Country; Incentive Contract (search for similar items in EconPapers)
Date: 2010
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DOI: 10.1057/9780230289925_21

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