The relationship between construction owners and their project delivery teams continues to evolve, experts asserted during a recent panel discussion at the Canadian Construction Association (CCA) conference, with some improvements identified but a seemingly equal number of new grievances raised.
The March 8 session was billed as Owner’s Outlook: Procurement Pain Points and Opportunities.
One major success highlighted by panellists was how owners and contractors have been able to work through increasingly troublesome post-pandemic problems such as supply chain disruptions and cost volatility by taking advantage of the more collaborative mechanisms available in progressive procurement models such as IPD and alliance.
“In my experience with the evolution of models, I think it is creating that trust because there’s more transparency,” said Melinda Nycholat, vice-president of operations-procurement with Defence Construction Canada.
There’s trust on both sides in a design-bid-build up to the point of the contract award, she said, but after that, there’s no transparency for the owner, “so it starts to erode the trust and the relationship.”
But with more collaboration, “it’s changed the relationship. It increases the trust because there’s more transparency. That’s why I’ve been a big advocate of integrated project delivery because there’s full transparency all the way throughout the project.”
Fellow panellist Olivia MacAngus, CEO of Colliers Project Leaders, which often serves as a project manager for owners, said the more collaborative approaches have proven beneficial in managing high-risk projects post-pandemic.
“We’ve been trying all kinds of things to manage through what has become a supply chain crunch in a lot of places and it’s been coupled with the COVID experience and this glut of delays and dealing with claims as well,” said MacAngus. “So it’s been not an awesome time, obviously, in the industry for managing through those kinds of things.”
But thanks to progressive procurement, alliance and IPD, “We do see that in some cases, especially in high-risk projects, there’s actually a lot of value there because we can at least mitigate risk or begin to demystify some of the risk associated with projects.”
Nycholat, MacAngus and Ellowyn Nadeau, president of the Winnipeg Construction Association, were asked by panel moderator Wayne Ferguson of EllisDon to enumerate major challenges they face in today’s procurement marketplace. Some of the complaints were age-old.
“I think in our market, there’s still seems to be quite a little bit of resentment from clients with regards to the fact they perceive that contractors are making money hand over fist,” said Nadeau. “That’s just not the case. I would love to see some education within our industry, education of clients, with regards to contractors’ business processes. And the costs that are required to keep a business going and finding work for their 40 employees for an entire year.”
MacAngus suggested for the good of the industry, that comprehension gap should be dealt with through better communication, especially in today’s fraught cost and risk climate.
“It’s not typically a high-margin industry in this country. I think there are definite challenges with how we deal with these things as a program of work and how we’re responsive to changes in the market,” she said.
“As owners and owners’ reps we need to be conscious of maintaining a stable Canadian market for delivery of the programs of work that we’ve got, because there’s still record investment and infrastructure…going on.”
Challenges listed by Nycholat included incorporating increasingly complex federal policy mandates into contracts and obtaining appropriate security clearances.
“Some of these policies are often developed by people who are not familiar with construction so it increases the burden on bidders,” she said, citing new requirements to comply with the Official Languages Act as an example.
Regarding security clearances, Nycholat said, it creates an unfair playing field when one bidder had its papers from a previous qualification and another does not.
MacAngus raised one obvious issue, the difficulty in delivering projects as costs escalate, and a more institutional problem.
“We do see some big challenges around turnover of institutional knowledge in our client organizations…really within the industry as well, where we are seeing a big period of succession in the Canadian market,” she said.
“We’ve got to figure out how we transfer knowledge more effectively through our organizations to make sure we’re able to deliver on programs.”
Part of the owner’s knowledge problem is self-inflicted, MacAngus said, in that the procurement executives are more distant from current market conditions than others closer to the field.
“One of the things we’ve seen is that the procurement departments have been slow sometimes to respond to the changing market requirements,” she said.