An explanation of what is expected for this APM Project Management exam question.
This is an easy question, but it should not be confused with payment types. Most contracts include fixed and firm price elements along with time and materials. This question is asking about general forms of contract approach including prime, parallel (framework), single supplier, sequential (traditional) and Turnkey (EPC) contracts. The names in brackets are my terms not the ones used by the APM.
Take a look at what I’ve written below for a better background understanding…
Understanding the Different Types of Project Contractual Relationships
In project delivery, the contract isn’t just a legal document – it’s a strategic framework. It defines who is responsible for what, how the work gets done, and how the different moving parts of a project connect. And while discussions around contracts often zero in on price – fixed, firm, or time and materials – the deeper question is about structure: what form of contractual relationship best suits the nature, complexity, and risk profile of the project?
The answer can influence everything from procurement timelines to stakeholder alignment, risk exposure to accountability. Below, we explore the key contractual models that shape the modern project landscape – not in terms of how payment flows, but how responsibility and delivery are structured.
Prime Contracting: Centralised Control, Coordinated Delivery
In a prime contract model, the client engages a single main contractor who holds responsibility for the overall delivery of the project. This “prime” contractor may then subcontract portions of the work, but remains the central point of accountability.
This model offers clients a streamlined interface. Rather than managing multiple suppliers directly, the client relies on the prime to coordinate, integrate, and deliver. It’s often used in construction and infrastructure projects where complexity is high but the client still wants a level of control.
However, the success of this model depends heavily on the capability of the prime contractor to manage their supply chain. If poorly managed, the risks are simply shifted, not reduced.
Parallel or Framework Agreements: Flexibility at Scale
In some sectors, particularly government, utilities, and large enterprises, parallel contracting models are common. Here, the client sets up a framework or panel of approved suppliers who can be engaged for different work packages under a common set of terms.
This approach offers flexibility and speed. Suppliers can be brought in as needed, and the client retains control over allocation. It’s ideal for programmes involving repeatable work across multiple locations, or where demand is hard to forecast.
However, this model requires strong internal coordination. The client must manage the performance, capacity, and commercial balance of multiple suppliers simultaneously, which can be resource-intensive.
Single Supplier: One Contract, One Relationship
In a single-supplier model, the entire scope of the project is awarded to one contractor or consortium. This supplier is responsible for delivery end-to-end, and the client relationship is concentrated in one place.
This approach is often used where integration is key, such as in IT systems, facilities management, or complex engineering, and where the client prefers to minimise fragmentation. The supplier assumes full responsibility and, in theory, this should simplify project governance.
But it comes with risk. If the supplier underperforms or fails, the client may have limited fallback options. Additionally, with all eggs in one basket, contract negotiation and performance monitoring must be particularly rigorous.
Sequential (Traditional) Contracts: Control with Clarity
This is one of the most established models, especially in the construction industry. The client appoints a designer or architect first, who completes the design, and then separately contracts a builder to execute it. The contractor is responsible for building what has been designed, not for the design itself.
This “sequential” approach gives the client greater control over the specification and design quality. It also allows for competitive tendering once the design is complete. But it can lead to friction between the design and build stages, especially if the contractor identifies impractical or costly design decisions late in the process.
This model suits clients who want a clear separation of duties and who are prepared to actively manage the project across distinct phases.
Turnkey Contracts (EPC): Delivery as a Package
The turnkey or EPC (Engineering, Procurement, Construction) model is the closest thing to “handing over the keys.” The contractor is responsible for delivering the entire facility or system fully complete and ready to operate. The client provides the specification and steps back; the contractor handles everything else.
This approach is often used in industrial plants, data centres, and other highly engineered environments. It offers simplicity for the client and clear accountability. But it also places significant risk and control in the hands of the contractor.
Turnkey models work best when requirements are crystal clear from the outset. If the client’s needs evolve mid-project, change can be difficult and expensive.
Strategy First, Contract Second
Each of these models carries its own blend of control, flexibility and risk. Choosing the right one is not a procurement exercise – it’s a strategic decision. It should be informed by the nature of the project, the capabilities of the market, the client’s appetite for risk, and the importance of flexibility versus certainty.
In many modern projects, hybrid models are emerging. A programme may begin with framework agreements, move into turnkey delivery, and retain elements of sequential design management. There is no one-size-fits-all, but there is a clear imperative to understand the differences.
For project managers, recognising that contracts are more than cost mechanisms is vital. They are delivery frameworks. They shape team dynamics, determine accountability, and ultimately influence whether a project becomes a case study in success or a lesson in complexity.
Insightful and well-structured! This blog clearly explains contractual relationships in projects, perfect for both beginners and experienced professionals. Great work!