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Owner/Contractor Work Structure

RT-111 Topic Summary
RT 111

Overview

Seamless alignment of owner and contractor personnel is a key to project success. Owner companies are increasingly shifting project responsibilities to contractors which may result in inadequate staffing to develop and execute capital projects. Owners want high quality capital projects as fast as possible at the lowest possible cost with no harm to workers or the environment. To accomplish this, owners and contractors must work together to clearly define roles and responsibilities to avoid gaps, eliminate duplication of effort, and share risk.

The Owner-Contractor Work Structure (OCWS) was developed in 1997 to provide owners with a decision-making process to identify project competencies, determine whether these competencies are core or non-core to the owner, and decide upon the most effective approach to outsourcing different project competencies. A new updated and simplified version of the OCWS, the Core Competency Toolkit, was issued in 2005. The Core Competency Toolkit provides a practical tookit for defining the extent of involvement of owner and contractor personnel in various project activities and provides a rational decision making approach for hiring as well as outsourcing.

This toolkit was developed from the owner’s perspective. Every project begins with the owner’s business objectives, and the owner defines the extent of the contractors’ role in the project supply chain to achieve those business objectives.

Key Findings and Implementation Tools

1 : Project Competencies

Thirty recommended project competencies were identified to support the capital projects delivery process. Examples include:

  • Conceptual Cost Estimating: Preparation of estimates at various stages of scope development for purposes of project option selection
  • Constructability: Incorporating construction knowledge and experience into project development and execution
  • Construction: Installation of permanent facility equipment and materials including all support required to do so
  • Construction Management: Management oversight of field construction operations and startup
(RS111-1, p. 8)
Reference: (RS111-1)

2 : Perceptions

Perceptions of business unit managers, operations managers, technical managers, and project managers are:

  • Most downsizing is driven by attempts to reduced fixed costs.
  • Reengineering of entire organizations has occurred.
  • Loss of expertise has occurred through retirements.
  • Owners have fewer experienced project managers.
  • Contractors are not adding skills necessary for outsourcing.
  • Contractor responsibilities are increasing, but staff size is not keeping pace.
  • Owner representatives today often lack decision-making authority, resulting in poorly informed decisions by owners, with varying effectiveness. 
(RS111-1, p. 11)
Reference: (RS111-1)

3 : Four Competencies

Of the 30 key compentencies, four competencies should be retained by the owner and one competency (construction) should be outsourced. The remaining 25 competencies are subject to structural alignment. (RS111-1, p. 13)
Reference: (RS111-1)

4 : Implementation Tool #1

IR111-3, Core Competency Toolkit. Use of the Core Competency

Toolkit will help define owner and contractor roles in capital projects to ensure proper alignment of resources while minimizing owner costs.

Cited benefits to using the tool include:

  • Systematic approach to determine key project competencies
  • Vehicle for documenting decisions related to competency evaluation
  • Vehicle for discussion when different viewpoints are represented
  • Rationale for evaluating project skills and resources needed
  • Instrument for eliminating gaps and minimizing overlaps through alignment of work relationships between owners and their contractors
  • Instrument for rational organizational change
  • Source for improved capital project effectiveness and an ingredient in achieving project success
IR111-2, Owner/Contractor Work Structure Process Handbook (Archived-superseded by IR111-3)                    
Reference: (IR111-3)
RT-111

Key Performance Indicators

Improved cost, Improved schedule, Improved operations & maintainability

Research Publications

Core Competency Toolkit - IR111-3

Publication Date: 08/2005 Type: Implementation Resource Pages: 88 Status: Tool

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Owner/Contractor Work Structure: A Process Approach - RR111-11

Publication Date: 01/1998 Type: Research Report Pages: 326 Status: Reference

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Owner/Contractor Work Structure Process Handbook - IR111-2

Publication Date: 04/1997 Type: Implementation Resource Pages: 178 Status: Archived Tool

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Owner/Contractor Work Structure: A Preview - RS111-1

Publication Date: 12/1996 Type: Research Summary Pages: 22 Status: Supporting Product

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Tags

Knowledge Areas:
Project Organization & Communication
Project Phase:
Commissioning & Startup, Concept, Construction, Detailed Design (Engineering), Detailed Scope, Feasibility, Handover & Closeout, Procurement
Project Function/Role:
Architects & Engineering, Commissioning & Startup, Construction, Health, Safety & Environmental, Procurement & Contracts, Project Controls, Project Management, Quality Management, Risk Management
Industry Group:
Buildings, Heavy Industrial, Infrastructure, Light Industrial
Regions:
Africa – South Africa, Asia – China, India, Southeast Asia, Australia, Europe – Scandinavia, Russia, Middle East, North America – USA, Canada, Mexico, South America – Central America, Brazil
10-10 input Metrics:
Human Resources, Organizing

Keywords

Competencies, Organizational Structure, Rightsizing, Outsourcing, Alignment, Project Resources, Work Structure, Downsizing, Alliance, Partnering, Construction Management, Project Management Oversight, rt111

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