We have all, at one time or another, witnessed the poor execution of an excellent idea.
The first film adaptation of the masterpiece Dune by Frank Herbert, directed by David Lynch in 1984, illustrates this concept well — construction projects are no exception.
How can we help ensure its success?
Here are a few elements that, without being exhaustive, can help limit the risks of failure.
The importance of the pre-construction phase
If there is any consensus within the community of stakeholders in the construction industry, it is about the importance of dedicating sufficient qualified resources, both human and material, to the pre-construction phase.
This stage, which in particular ensures better-quality documents (statement of conceptual requirements, plans and specifications, preliminary studies, provisional budgets and schedules, etc.), is all too often neglected for budgetary and scheduling reasons.
Yet the degree of attention paid to it will prove inversely proportional to the attention that will have to be paid to changes at the tendering stage or, worse, during construction.
In principle, changes during execution:
- will cost more, in that,
- they will escape the competitive bidding process;
- they will require modifying the scheduling and coordination already begun with the contractor, subcontractors and suppliers;
- they will be subject to the market conditions prevailing at that time, as opposed to those prevailing during the tender, including indexing of the market, labor rates, equipment and materials;
- they will require more time (including back-and-forths between the owner, the professionals, the contractor, subcontractors and suppliers) while site overheads will affect each critical day, extending the footprint of stakeholders on site;
- they will incidentally give rise to more disputes among stakeholders, thereby causing relational impacts, further delays and additional costs.
In a market where the best players have no difficulty obtaining contracts, it becomes increasingly difficult to attract them under such circumstances.
The importance of delivery and remuneration methods
Identifying the delivery method remains essential, but it is rarely given the full importance it requires.
General contracting, management-for-services, management-for-services-and-construction, design-build, integrated project delivery and hybrid modes (partial or progressive design-build, pre-procurement and phased construction with or without assignment, etc.) each have their advantages and disadvantages, with a butterfly effect on risk.
The same goes for remuneration methods, where risks related to estimation errors, market and labor rate indexing, equipment and materials, subcontractor insolvency and other economic risks will be allocated differently depending on whether one opts for a lump sum, unit price, cost-plus, or target price, with or without a guaranteed maximum price and/or sharing of savings and overruns.
The various risks will in turn be addressed, notably through insurance, bonding, subcontracting, risk reserves and contingencies, etc., but they must be managed coherently according to the principle: more risk = more remuneration.
To identify the method best suited to its needs, the owner may, among other things, determine:
- the applicable regulatory framework, notably for public clients;
- the role it is willing to assume (project management, holding of licenses, etc.);
- the degree of control it wishes to have over the design, beyond the statement of its conceptual requirements, or even the desire to obtain several different preliminary concepts that, in principle, meet those requirements;
- the degree of competition it wishes to control (the whole design and works, the works only, splitting into lots, etc.);
- the role of technological equipment and the associated timelines, including whether it wishes to call on various alternatives such as pre-procurement with or without subsequent assignment;
- the cost-benefit ratio of coordinating certain stakeholders at the pre-construction stage;
- The possibility, or not, of undertaking the work before the design has been finalized and Class A budgetary and schedule estimates have been obtained (fast track);
In case of doubt, it is generally recommended to choose a method that favors coordination of stakeholders at the pre-construction stage, which allows benefiting from their respective expertise and improving the quality of conceptual documents before the timelines and costs of each change are multiplied by the reality of an active construction site.
We hope these few tips will clarify things for you and help you achieve greater success in carrying out your projects.
