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Where is construction project delivery and procurement headed?

Peter Caulfield
Where is construction project delivery and procurement headed?

Although they’re not romantic partners, project procurement and project delivery, like Frank Sinatra’s love and marriage, could be said to go together like a horse and carriage.

"In their simplest terms, procurement is how a project is sourced, and delivery is how it is implemented," said Warren Perks, vice-president and director of industry practices at the BC Construction Association (BCCA).  "They are reciprocal in nature, with one informing the other."

However as it is defined, project delivery has changed greatly over the years.

Until roughly 150 years ago, masters and journeymen in the trades used and re-used the same tried-and-true materials and techniques.

By the time of the Industrial Revolution, however, tasks were becoming more specialized. The master builder, responsible for both design and construction, began to be replaced by separate designers and builders.

And new materials that had no traditions to guide their use, such as iron, glass and concrete, started to appear.

With the Industrial Revolution came new scientific knowledge and rigorous methods of analysis.

Tradition and rules of thumb were replaced by complex ways of organizing construction, including project delivery templates that could be used again and again.

But change in the construction industry is constant and project delivery has had to adapt to meet it.

"The way projects are delivered must change," said Helen Goodland, principal of Brantwood Consulting in North Vancouver. "The construction industry needs to invest in new technology and new training."

To make construction more productive – and profitable – in the future, Goodland says more project integration, collaborative delivery and modular construction is needed.

Modular construction is of most benefit to several market segments, says Craig Mitchell, director of innovative solutions at Britco Construction in Langley, B.C.

"They tend to be affordable housing, multifamily residential and the hospitality sector," said Mitchell. "Floor plates get replicated with similar suite layouts, which lend themselves to the efficiencies of modular construction.  As the project gets larger, labour costs drop and the speed and efficiency of the project increases."

Mitchell says large multi-storey projects can expect savings of up to 50 percent, as well as improved quality, over site-built construction.

In addition, modular construction simplifies project delivery and procurement.

"There is a lot of upfront design and procurement required as part of the modular process, as all decisions related to construction and finishes have to be made prior to construction starting in the manufacturing process," he said. "But the projects go a lot more smoothly with a lot fewer change orders as a result."

Mitchell says there will be more modular and other forms of off-site construction in the future, because of the shortage of skilled on-site labour.

"Off-site construction makes use of the same quality of skilled labour, but in smaller quantities," he said. "That makes it less expensive."

Collaborative delivery, another Goodland suggestion, will be used to deliver an increasing number of construction projects in the future, says Tim Coldwell, managing director in the Edmonton office of Chandos Construction Ltd.

Chandos practices a method of collaborative delivery called integrated project delivery (IPD), which was developed by private health care owners in California.

"It removes waste and eliminates built-in contingencies," Coldwell said.

The whole construction industry is moving towards some form of collaborative project delivery, he says.

"Buildings have become more complex," Coldwell said. "Procurement and project delivery used to follow the master builder model, with the chief architect able to hold everything about the project in his mind and direct the building. But today it’s impossible for one person to manage the whole thing. You need many different kinds of experts."

Markku Allison, director of engagement and innovation in the Calgary office of Chandos, says IPD is just catching on in Canada.

"There are 250-300 IPD projects on the go in the US, but a relative handful in Canada," he said.

Allison says an IPD project has one team, with the project owner part of the team, and one contract.

"It enables the individual team members to focus on what they do best," he said. "In an IPD, everybody is aligned to do what’s best for the project."

Allison says this method of project delivery is attractive to owners.

"Their risk is made explicit and they can maximize their investment if they have a fixed budget," he said.

Chandos has used IPD on both public and private sector projects.

"The learning curve can be steep," Allison said. "But once all the team members have learned how to use IPD, it is straightforward and will yield simplified outcomes."

Like project delivery, its close relative procurement has existed in one name or another since the pharaohs decided to build the pyramids.

Over the last couple of thousand years, procurement processes have become more diverse and complex in order to deal with changing construction conditions and challenges.

"When I started in the business 44 years ago, a procurement document was a couple of pages and some drawings," said Stephen Bauld, president and CEO of Purchasing Consultants International Inc. in Burlington, Ont.  "Today, an RFP [request for proposal] can be 200 pages, all lawyered up, with absolutely no loopholes."

Procurement has become more formal and there has been more use of tendering, says Seema Lal, a principal in SHK Law Corporation in Vancouver.

Lal says she has seen more use of public-private partnerships (P3s) to procure public infrastructure.

"For the project owner, one of the benefits of a P3 is that it gets to shift some of the risk to the contractor if, for example, there are unforeseen site conditions," Lal said. "At the same time, the contractor knows he’s going to get paid."

If the federal government’s much discussed Canada Infrastructure Bank comes into being, it will lead to more P3s, says Lal.

Procurement of public projects in British Columbia needs a tune-up, says the BCCA’s Warren Perks.

"Due in part to attrition and retirements, there’s an emerging gap in procurement expertise right across the public sector," Perks said.

And, because of the hot construction market, busy contractors can afford to be choosy about which public projects they’ll bid on.

"So there’s an incentive for owners to make the procurement process smoother and more efficient," Perks said.

Public owners whose processes are well structured will be rewarded for their diligence.

"They’ll get a reputation as owners of choice, attracting the most bids and the best contractors to their infrastructure projects," Perks said.

To help public owners whip their procurement processes into shape, the BCCA, with the assistance of procurement educators National Education Consulting Inc., is putting on a series of workshops called the Infrastructure Masterclass.

Beginning in October 2017, one-day courses are slated for Prince George, Vancouver, Victoria and Kelowna.

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