Maturity in preparation: Setting yourself up for success

Setting yourself up for success

Successful relationships depend on strong teamwork and owners should constantly review the effectiveness of their relationships with contractors.

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Maturity in Preparation

  • Most of the owners in the survey use formal screening, prioritizing and approval processes for projects, including financial and risk analysis
  • Almost half of the respondents are concerned about the lack of key skills in-house and augment their teams with external specialists

Despite some concerns about a lack of flexibility, the traditional design-bid-build approach remains one of the two most popular project delivery strategies, enabling the owner to work with various suppliers for different aspects of the project. Sharing the top spot is engineer, procure, construct (EPC), which leaves the contractor in control of design, procurement and construction, giving the owner a single point of contact from start to finish. Both these delivery strategies shift the project risk firmly into the hands of the contractor and suggest either a high level of trust in contractors – or a desire by construction owners to defer the risk and responsibility of project execution to contractors. 

Maturity in Preparation

There is significant evidence of a mature and structured approach to planning, prioritizing and approving projects. Construction activity is also carefully vetted in advance, with a large majority (84 percent) reporting the use of financial and risk analysis to screen projects. Most owners also appear to have a formal ranking process for prioritizing potential projects using pre-established criteria such as operational safety, environmental, legal and regulatory factors, and overall return on investment.

Although over half of those taking part in the 2015 survey plan projects at least 5 years ahead, executives from the larger companies are more likely to have a shorter timeframe. This could reflect the need to respond quickly to changes in demand, backed by a more sophisticated forecasting capability and an internal project development and management team that can mobilize at short notice. 

Maturity in Preparation

Keeping the talent conveyor belt running

In order to successfully manage the enormous responsibility of a multi-billion dollar project, owners are heavily dependent upon capable project management teams that understand engineering and construction, project management principles and practices and, not least, the increasingly sophisticated technology that controls every step.

The talent gap is a much-discussed phenomenon in the industry, and owners face the same challenges that contractors have been grappling with for years – to attract, train and retain the best people in the face of severe competition from other sectors

Not surprisingly, there is a strong correlation between organizational size and number of full-time employees specifically assigned to projects. Almost half of respondents from smaller organizations have 50 or fewer staff, while for the largest entities, three-quarters have teams of over 50 and 62 percent have more than one hundred. 

Maturity in Preparation

Those organizations with fewer full-time project staff tend to have a higher annual average capital expenditure per employee. Fears that this could stretch their resources are not borne out by the findings, which show that the smaller institutions in the survey also report a lower rate of underperforming projects suggesting that it is not the quantity of employees that makes the difference, but the quality of employees. 

A need for outside assistance

Despite investment in recruitment and training, owners routinely bolster their project teams with additional, temporary personnel, particularly in the aforementioned areas of craft labor and planners and project management specialists. Over two-thirds of the executives in the survey note the need to hire a significant number (more than 5 percent of the total workforce) of external project or program management experts to supplement existing staff. And, the larger the organization, the greater the need: 87 percent of the larger institutions report the necessity to bring in outside people. 

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