Reduce Risk Through Early Owner Involvement in the Capital Project Lifecycle
By Jeff Wing
Risk has accompanied every venture ever undertaken. Ask any capital project owner. A successful capital project is tomorrow made flesh-a built dream taking shape through informed risk aversion and plain boldness. But unless the project owner possesses a crystal ball or the means to shape the future, no capital project is a guaranteed home run.
There is, of course, a way to tilt the project in the direction of success. How? Simple: Use available owner-centric construction management technologies to identify hidden risks, drag them into the daylight, and send them packing. This process can-and should-begin before a single shovelful of soil has been turned. If we think of the capital project as a novel, we’re talking about the prologue. Though you may know it as preconstruction.
Construction software has been around for a while. It has become practically ubiquitous in the building game, and owners are climbing aboard in haste. Why? One loaded word: visibility. For all their project authority-not to mention their profound financial exposure-owners have not always had unfettered access to the inner workings of their projects which the digital solutions now offer.
Today a project owner is in the middle of the action, using construction management technologies that were once the sole province of the GC. These cloud-based construction management software solutions for owners provide autonomous owner visibility and presence throughout the project life-cycle.
A burgeoning marketplace of these technologies is changing the project owner’s role, finally providing them the means to manage risk with both hands on the wheel. And let’s face it; the earlier risk is addressed in the project life-cycle, the better.
Early Participation Is Early Ownership
Preconstruction is where success gets fundamentally baked into the project, and where it is in the owner’s greatest interest to be a participant. That’s the owner’s opportunity to be present at the creation, so to speak. From BIM to bidding, construction management technologies place today’s owner in the middle of those preconstruction processes and phases. Since their execution is critical to downstream project success, the owner’s active presence in these processes may assure them of the investment’s soundness. Here are a few key preconstruction phases in which the capital project owner may wish to take an active interest.
Better Planning During Design Reduces Rework
Once having decided on a project’s design, owners in the know understand the early, predictive importance of Building Information Modeling (BIM) in making the design a viable reality.
Design coordination within a virtual model of the build assures that schedule-and budget-wrecking rework is identified and eliminated before it ever becomes a problem. Rework-a deceptively tame noun that carries much investor sorrow-accounts on average for 5% of the overall contract value. A study of construction rework found that 346 construction projects yielded nearly 20,000 total rework instances over a six-year period-reducing mean project profit across the sample by 28%.
Rework is expensive, and by its nature, surprising. It doesn’t have to be. The owner may want to be present during this phase when the project meat is being put on the project bones, and rework-in-waiting is discovered and eliminated.
Prequalify Contractors to Relax During Construction
Risk aversion follows vendor qualification like night follows day. Maintaining and securing the necessary mazework of prequals has everything to do with using up-to-the-minute qualification technology to find the best, and diminish the risk associated with uneducated contractor choices.
Good prequalification software should keep everything as clear as a bell, easy to reference, and locked within a secure online platform.
Compare Bids In A Common Software Platform
Comparative vendor pricing that also folds in the myriad other contributing considerations-it’s a headache that may not be completely necessary.
As an owner, you want to be inside this process, especially if your capital project management technology promises to make it painless. Bid management software looks at the dizzying array of potential candidates, pre-sorts the qualified leads (see above), and lays out relevant candidate details with crystal clarity. This is the owner’s shot at seeing exactly how prospective contractors will do the job. The aspirin ROI alone will be noteworthy.
From Guesstimate to Estimate
Cost tables are a handy thing-to the extent they have aged reasonably well since the last time you used them. Project management software can report current costs of materials, permitting, labor, machinery more dynamically, offering accurate estimates that result in budgets you can trust.
Having an eye on this process means first-hand knowledge of the very foundations of the project’s spend forecast. Aren’t these the peripheral details that can haunt the owner’s concerns about the project as they accumulate?
Luckily, modern management technologies put the owner in the room where these decisions are made. And thanks to the cloud-based nature of these technologies, you don’t even have to be physically in the room to be in the room.
Own the Handoff to Construction, Then to O&M
Planning and risk management go together like strawberries and cream. Today’s capital project owner can use a digital management solution whose very theme is risk-aversion.
The capital project today doesn’t have to be a distant investment. It may be a transparent, cloud-based collaborative space where all documentation, communications, labor-tracking, and real-time reports can be found.
The best form of risk mitigation is technologically-informed risk avoidance. With the right construction management platform, the owner may have absolute, unfettered visibility-and the degree of active participation they choose-throughout the project’s entire life-cycle.
The comparatively sedate precon period is the time to leverage the owner-centric technologies now available to expunge risk wherever it can be found in the project to come. And the risk will be found-that’s exactly what the technology is for. And the owner will sleep-if not like a baby-then like someone who can see right into the evolving middle of the investment. ◾️
Jeff Wing is a Strategic Content Writer at Procore Technologies where he reports on a construction industry driven by the individuals who comprise it. Construction is not a chain-link jobsite, nor a multi-colored table on the Bureau of Labor website. Construction is millions of beating hearts, each with a dense and resonant back story.
Originally published at https://www.procore.com on October 19, 2020.