Commodity vs Value-Added Contractor Services

Precisely-defined terms should be used to help aid understanding. RT-205 defined 25 terms for use in the study, with that for “differentiation” being key for clarity amongst both the team and industry participants in the study. (RS205-1, p. 7 and Appendix A)

 

Workshop data showed that the industry frequently suffers from a major “disconnect” between various stakeholders, with a “translation barrier” blocking useful dialogue between owners and contractors on the topic of value-added services. Owners are frequently unable to articulate their specifications and needs to contractors, and then to receive a clear response back about net value-adding services. However, useful dialogue can be achieved. (RS205-1, p. 9)

The research team captured 80 potential differentiators and used owner, contractor individual and “paired” (input from both owner and contractor) projects to test for alignment and actual net “value-added.” While owners and contractors generally agreed on the general list of differentiators and the most important of them, they had markedly different views on which would provide the most net value-added. (RS205-1, p. 17)

The research defined 12 categories of differentiators and identified several key differentiators which are statistically linked to net value-added. These fall under seven of the 12 categories:

1. Risk Management
2. Facility Operating Performance
3. Customer Relations
4. Safety
5. Financial Considerations
6. Delivery Methodology
7. Quality Management

The team additionally identified differentiators that actually detract from net value-added, both at the pre-qualification and the final bidding stages.

(RS205-1, pp. 30-31)

 A revised value-added contracting model can be used as a guide to the differentiators that achieve the greatest net value-added for owners, and hence can help contractors win contracts.

RS205-1, Communication and Evaluation Tool

This tool can be used by both owners and contractors. For example, owners can use the tool to: (Appendix B)

1. Identify and communicate the primary functional capabilities they are seeking from their contractors, along with importance weighting.
2. Compare their assessment of the contractor’s capabilities vs. the contractor’s self-assessment. Significant differences can be used to guide in-depth assessment and communication.