A collaborative construction solution, capable of consistently delivering quality repair, renovation, and new builds, on-time and on-budget, is available to any Public Sector real property owner. All that is needed is owner leadership and commitment.
The Public Sector facilities management sector has long suffered from poor productivity growth and high levels economic and environmental waste. The root cause can be traced to poor owner leadership and commitment and the associated misalignment of owners and other project participants caused by traditional project delivery methods.
Traditional contracting methods typically involve the non-owner participants tendering a lump-sum price based on the owner’s proposed allocation of responsibilities and risks. Each non-owner participant has strong incentives to perform the contract package allocated to it well, but is far less invested in how other participants perform their contract packages. The project becomes a collection of disparate sub-projects, with each non-owner participant rewarded by performance of its sub-project, rather than the performance of the entire project.
Poor performance of one participant will often excuse other participants from the need to strictly fulfil their obligations, or entitle them to claim additional money from the owner. When things inevitably go wrong, the participant’s financial interests are often served by blaming others and defending contractual positions, rather than working collaboratively to overcome the problem.
The over-riding goal of most contractor becomes minimizing the cost of performing the agreed scope or activity and maximizing profit. This is so even if doing more would reduce the owner’s total costs or otherwise result in better outcomes for the owner. If the owner wants a participant to do more than the bare minimum required, to overcome a problem or achieve a better outcome, or to coordinate and integrate its work with those being delivered by other non-owner participants, the owner will typically have to compensate that participant for its additional costs, to restore its profit margin. Traditional construction project delivery simply doesn’t provide any incentive for non-owner participants to deliver outstanding performance in areas that deliver value to the project owner. Just the opposite, traditional contractual incentives, such as liquidated damages and performance security, provide only negative incentives to ensure compliance with minimum requirements.
Finally, the workflow of traditional construction planning, procurement, and project delivery is just plain wrong! Scoping and design of conventionally procured projects is generally completed, or well progressed, before the owner calls for proposals from constructors. Engaging a constructor to provide input during the scoping and design process to try to make the project easier and less costly to build, or to fast track the project by overlapping the scoping, design, procurement, and construction phases, simply isn’t even considered, let alone done. This adversely affects the owner’s ability to run a highly competitive, efficient process for the renovation, repair, or new construction work, and 90% of the time results in the owner paying a higher construction prices and late projects.
It was out of these realities that the concept of integrate LEAN construction planning, procurement, and project delivery was born, and enabled. An example is the 4BT PEP Solution, which embraces a wide and flexible range of approaches to overcome the misalignment of interests associated with traditional contracting, including
- Multi-party contractual commitments to collaborate, cooperate, and act in good faith;
- Continuous monitoring to enable early warning mechanisms designed to alert participants to emerging issues so that solutions can be developed and agreed before the issue worsens;
- Early and ongoing involvement of the design/builder and key specialist subcontractors in the scoping and design process;
- Robust workflows that address the key risks of cost, time, quality and liability;
- Governance that facilitate collective problem-solving and decision-making;
- And so much more….
Thus, LEAN, integrated construction planning, procurement, and project delivery fully addresses relationships of all parties to cost, time, quality, liability, decision-making.