Lump Sum Contracting in Alberta Oil and Gas Industry

摘要

Alberta’s conventional oil and gas industry represents a large investment in Alberta, over$115 billion from 2004-2009 and in the next 25 years, $218 billion is expected to be invested in newoilsands capacity [1]. This is a significant portion of the Alberta construction sector and economy. It isnot uncommon for these projects to experience cost overruns up to 100 percent of the original costestimates [9]. If this trend continues, it may impact the viability of the Western Canadian oil industrywhich employs thousands of construction workers, engineer, suppliers, contractors and support staff.These overruns have created a demand by oil and gas operating companies for a return to lump sumcontracting. Through a survey of industry professionals, this research paper determines why lump sumcontracting has not been favored, determines the willingness of operating and contracting companiesto employ LS strategies, identifies the barriers to implementing it and suggests methods for mitigatingthese barriers.