Contracting Formulas for Large Engineering Projects. The Case of Desalination Plants

Abstract

Population growth has increased over the past two centuries. In the driest countries, water supply alternatives are scarce, with desalination being an alternative to ensure water supply to the population. Desalination plants have increased in size and efficiency, and require large investments, large infrastructures, and complex technology, besides they also need sophisticated contractual formulas to successfully build them. Various contract models are tools that should be used by taking into consideration the characteristics of the project, the parties involved, and who is responsible for each of the risks involved. To help choose the most suitable type of contract for a particular project, so-called decision support systems have been developed over the past thirty years. In this paper, a new decision support system is presented and applied to a case study of two desalination plants built under the design and build and turnkey modes of contract. The objective was to determine the most suitable contract model for these types of projects which had very ambitious objectives and decisive social, economic, and environmental implications.