The level playing field assumption: A ‘go or no-go’ cautionary tale
October 7, 2019 by David Bowcott
Your construction company is about to bid what you believe to be a very attractive new project. Your firm has been prequalified along with three others, the RFP document has been issued and you are set to compile your best terms for the labour and material necessary to complete the job.
During the bidding process, you are making a lot of assumptions about your competition – and the most common one made by contractors is that they are on the same “level playing field” as their competitors. In today’s construction marketplace, jumping to this conclusion could be a very costly mistake.
With the pace of change at an all-time high, construction today is an extremely dynamic space. The Canadian construction industry has been flooded with new contractual models, operational best practices, technologies, engineered solutions, globalized supply chain strategies and construction materials. In such a fast-changing market, you cannot assume you are on the same level playing field as your competition. It is vital your firm is up to speed on all the new solutions being used to improve productivity and reduce risk.
So, how do you stay up to date? Taking a close look at some of the key areas of change will help your company create a roadmap:
Is your firm familiar with all of the contractual models being utilized both at the prime level of the contract and below? Are you familiar with public-private partnership models? Have you worked on construction management at risk contracts? Do you know what an Integrated Project Delivery procurement model looks like? It is absolutely vital that you are not only up to speed with these delivery models, but also familiar with the usual risk allocation to all contract stakeholders under the models.
Operational best practices
With the drive for increased productivity pushing contractors to continuously improve their operations, many new practices have been introduced. Both large-scale improvement practices like Lean construction and more focused efforts, such as improved counter-party risk prequalification and improved “go or no-go” practices, are key areas to watch. Globalization has also been a significant contributor to construction stakeholders exchanging and adapting operational practices with the help of joint venture partners from different parts of the globe.
If you haven’t noticed yet, there is a tech explosion within the community that designs, constructs and operates the built environment. The following are some areas you should be keenly aware of as they are improving productivity and reducing risk, thus making the bids of your competition more competitive:
- Technologies that vet design documents for accuracy
- Technologies that assess your proposed project schedule
- Technologies that reduce the risk of injuries and speed rehab
- Technologies that replicate the as built project in real-time and compare it to the underlying design/BIM model
- Technologies that inventory all data in an immutable format to ensure there is a single source of project truth
- Technologies that can limit risk by providing real-time weather reports with accuracy within the hundreds of metre range
- Technologies that can sense water damage
- Technologies that can ensure your subcontractor and suppliers are up for the job you have given them
- Technologies that monitor the asset post-construction and provide predictive maintenance warnings
Manufactured construction, top-down construction, enclosed jump-from systems and floating foundations are just some of the engineered solutions that could be used by your competition to gain an upper hand.
Supply chain solutions
The globalization of construction has opened up many new supply chain markets that contractors are accessing to create advantages around the pricing of manufactured components and materials used for construction projects. Further contractual strategies are being utilized to optimize pricing for labour and materials used on projects by tapping into the suppliers and raw material providers at a more leveraged entry point.
Several new materials have been introduced to the marketplace including cross-laminated timber and self-healing concrete. In addition, the way materials are transformed into project components has changed — think 3D printed materials. Monitoring these new materials and the methods used to bring them to the job site, will help ensure you remain competitive.
The field is not level in today’s construction marketplace and your firm needs to be diligent when it comes to assessing the “right” job for your company to pursue. You should not only know your advantages and disadvantages, but should try your best to understand the strengths and weaknesses of your competition. Compiling as much knowledge about how level the playing field is going into a job and establishing a strong “go or no-go” vetting process will ensure you take advantage of your strengths, exploit your competition’s weaknesses, and win profitable work.
David Bowcott is Global Director – Growth, Innovation & Insight, Global Construction and Infrastructure Group at Aon Risk Solutions.
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This column first appeared in the October 2019 edition of On-Site. Click here to read through the entire issue.