Over time, owner organizations transitioned from performing their own construction, or acting as the General Contractor, to contracting out this function to a General Contractor or Construction Management contractor. In the self-performing construction situation, owners took on the responsibility of overseeing the execution contractors (civil, mechanical, electrical, etc.) and had the added responsibility of contactor interfaces, dealing with productivity issues, contractor performance, etc. Highly experienced owner construction managers supported this responsibility by running the field construction effort and directing the execution contractors on a day-to-day basis. These resources provided construction management input into Front-End Planning prior to full project funding. This allowed for more accurate project schedules and better-defined cost estimates at project authorization.
The environment has shifted as owners’ project portfolios have become more responsive to consumer demands and changing lifestyles. As a result, organizations started outsourcing project execution and front-end design/planning activities. In this situation, owners have outsourced the responsibility of construction management to a third party using different contracting approaches. There are varying contracting strategies along with varying compensation schemes that we have seen:
Contracting Strategies:
- Hire a totally independent construction management contractor
- Combine the Detailed Engineering and Construction Management role to one contractor
- Engineering, Procurement and Construction approach which puts overall execution responsibilities on one contractor
- etc.
Compensation Schemes:
- Lump Sum
- Reimbursable Cost
- Unit Price
- Incentives
- etc
Regardless of the contracting strategy chosen, the owner must still oversee the contracted services. This is where the challenges lie. In many of the above contracting approaches, the contractor takes on the day-to-day management of the field activities. The owner’s role is to provide:
- Assurance that the contractors are adhering to all safety protocols
- Clarification on design issues
- Assure quality to maintain design standards
- Ease the contractor interface with the Owner Site Organization
- Address potential changes
- Oversee project status and address productivity issues
- Support execution contractors on execution adjustments needed to maintain schedule and cost expectations
The owner construction manager is not responsible for:
- Direct management of day-to-day activities
- Interfaces between field discipline contractors
- Day-to-day field productivity
- Resourcing the field activity
- Interface between procurement and construction (unless procurement was carved out as an owner responsibility)
- Etc.
Today, supporting construction activities requires a unique set of resources in our resource-limited world. The owner construction manager needs to not interfere with the contractor’s activities. Instead, Their role should involve guidance and oversight rather than strict management. They need to support by providing information and possibly recommendation but not direct and mandate. They need to know when to intercede (example might be safety issues) and when to collaborate. These are often not skill sets that are available in today’s construction resources.
Many owners have recruited traditional contractor construction managers. These resources have been responsible for running field activities, handling discipline interfaces, and managing daily field tasks. Transitioning from a “doer” to an “oversight” role can be challenging for experienced construction resources. However, it is necessary to avoid any potential interference with the contractor responsible for construction management. Many people find this transition difficult, but we must understand and implement it to ensure efficient and effective construction activities.
Through interactive contract strategy workshops, Pathfinder has partnered with numerous owner organizations to identify the best contracting approach for any given project and to define the owner’s responsibilities in the chosen contract strategy.
ABOUT THE AUTHOR
Steve Cabano
Steve is President/Chief Operating Officer for Pathfinder, LLC and has over 30 years of direct Project Management experience for Owner, Contractor, and Government clients in various industries.
slcabano@pathfinderinc.com
856-424-7100 x122
