Interface Consulting’s experts can assist organizations with developing a contracting strategy for their capital projects that aligns with their business goals and supports meeting project metrics.
Unless an owner has a large in-house engineering and construction staff, firms generally depend on outside contractors to design, procure, and construct their capital projects. Contracting strategy describes how the owner will approach the market for these services based on external factors and internal owner capabilities, and generally entails determining who will perform engineering, procurement, and construction, how the contractor will be reimbursed, and what the owner’s oversight role will be.
Contracting Strategy Focus Areas
Contracting strategy is based in part on the following items:
- Competencies and size of the owner’s project team
- Capability of the owner’s organization
- The degree of project design maturity
- The owner’s need to maintain control of the project and make changes as necessary during execution.
- Whether schedule or cost is paramount
- The condition of the contractor market
- Whether it is a seller’s market or the owner is in the driver’s seat
Because selecting a contracting strategy is based on internal and external factors, the decision is not always obvious. Interface Consulting’s methodology for developing a contracting strategy looks at a variety of factors that can affect the client’s business and project objectives. The graphic below indicates critical issues that should be addressed in developing a contracting strategy.
Contracting Strategy Inputs
The graphic below illustrates the internal as well as the external factors that Interface Consulting assesses in recommending a contracting strategy. Each of these factors is carefully evaluated by our experts to develop a strategy comprehensive of the client’s needs and capabilities as well as factors outside their control. In Interface’s experience, all of the below factors are vital to contracting strategy and must be addressed.
Contracting Strategy Factors
Interface Consulting’s Contracting Strategy Development
When developing a contracting strategy, Interface Consulting assesses the contractor market via a series of in-depth interviews with the support of the owner. Assessing the overall contractor market is a critical exercise that is often overlooked. However, in Interface’s experience, many projects fail because of misalignments between the owner’s project team size/capabilities and the contractor’s capabilities, the owner’s and contractor’s compensation expectations, or the amount of the owner’s control over the construction process and potential changes. Without proper analysis of the contractor market, these discrepancies are often not addressed until disputes arise.
Interface Consulting’s contracting strategy is developed in the following steps:
- Assess and prioritize internal factors
- Assess contractor market and contractor capabilities and drivers
- Create contract strategy issues list based on internal and external factors
- Develop project contract strategy summary based on prioritized criteria
- Develop first pass contracting map in workshop
- Create path forward work plan
The final contracting strategy is developed with the owner in a series of workshops to ensure that critical issues have been addressed.
Expert Analysis and Support
Each project is unique and faces its own set of challenges and risks. Interface Consulting relies on its broad industry knowledge, market research, and the expertise of its consultants to develop comprehensive contracting strategies that support clients’ business and project objectives.