Transcript Owner Core Competencies - Construction Industry Institute

CII’s Core Competency Toolkit
Helping to Cope
with the
Core Competency Crisis
Ed Merrow
IPA
What Is A
Project Core Competency?
A set of project functions or skills
that are a source of
competitive advantage and
cannot be effectively and reliably
sourced from the market.
Project Management
Resource Crisis
• Core project competencies in manufacturing
and extraction industries have been on a
long-term secular decline in U.S. and Europe.
Project Management
Resource Crisis
• The confluence of a number of factors has
generated this situation:
 Owner outsourcing has created fewer stable owner
positions.
 Long-term decline of U.S. manufacturing plus sharp oil
industry cycles have led to engineers exiting the
industry.
 In U.S. and Europe, number of graduating engineers
has fallen more than 25 percent in U.S. since 1985.
 Rapid growth of IT positions in 1990s made computer
engineering appear much more desirable.
 Demographic realities face owners and contractors
equally.
 Rise of two-career households has decreased mobility.
Owner Competencies with
Median Age over 45 Years
Convert Research to
Project
Conceptual
Estimating
Conceptual Design
Environmental
/Permitting
Project Management
Project Controls
Continuous
Improvement
0%
10%
20%
30%
40%
50%
60%
70%
80%
Percentage of Companies
90% 100%
Effect of Owner Competencies
on Project Cost
Research to Scope
Conceptual Design
Cost Estimating
Project Controls
Permitting
Construction Mgmt
Detailed Engg
-20%
-15%
-10%
-5%
0%
Cost Effect of Maintaining Competence in Owner Organization
Effect of Owner Competencies
on Project Schedules
Research to Scope
Conceptual Design
Procurement
Cost Estimating
Permitting
Construction Mgmt
-35%
-25%
-15%
-5%
5%
Schedule Effect of Maintaining Competence in Owner Organization
15%
Zero-Sum Game Myth
• Owner out-sourcing was driven more by head-
count than value calculations.
• Excessive outsourcing has damaged both owners’
projects and contractor organizations.
• Better staffed owner engineering organizations
provide more stable interface with contractors.
• Owner business, legal, and purchasing people are
often not equipped to make right match of
contractor and contract type to project situation.
• Result has been problematic projects and a much
more contentious atmosphere.
• Loss of owner competence
contractors.
 a gain for
The Perfect Project Storm
• Large increase in capital spending.
• Rapidly increasing difficulty of projects.
• Rapid run-ups in material costs.
• Very difficult contracting environment.
• Years of neglect in core competencies:


loss of engineering talent available to industry.
out-sourcing to contractors who have not been
able to hold competencies.
• Very unfavorable demographics.
• Increasing immobility of U.S. and European
project management resources.
Now Is the Time to Use
CII’s Core Competency Toolkit
• A surge of work, domestically and
•
•
•
•
•
internationally.
Projects are bigger and much more difficult.
Owner and contractor resources: never been
thinner.
We have to “Do more with less.”
Improve integrating owner/contractor
competencies.
The Owner/Contractor Work Structure (OCWS)
process can be especially helpful for alliances.
CII’s Core Competency Toolkit
OCWS Process
• Basic decision process/framework to assist in defining
and communicating sourcing strategy for capital
project competencies.
• Involves several steps and corresponding worksheets
to document decisions.
• Documents roles and responsibilities for competence
development and maintenance.
• Provides a framework for managing and
benchmarking project competencies:
– A key element of organizational effectiveness.
– Used by IPA to help owner companies benchmark and
design effective in-house engineering organizations.
Owner Core Competencies
Implementation Sessions
Location: Dallas 5-7
Times: 3:15 - 4:15 pm and
4:30 - 5:30 pm