Owners and Contractors – Managing a Dynamic Tension – Part 3 – B2B Synergy

“The whole is greater than the sum of its parts” expresses the basic meaning of synergy.
Owners and Contractors, and their Vendors each operate with their procedures. And they need each other. Would linking some of their processes, electronically, provide avenues to save each from wasted, redundant effort? This is not a new idea. What is new is that the scaffolding to enable such business to business (B2B) integration is now available. It does not have to be custom built for each business process or business type.

In Part 1 of this series, we looked at the Owner’s logistical business processes. These occur within each of the stages of a project’s life. These stages, from the Owner Business Process chart, along with the deliverables are transposed into left 2 columns of the Owner-Contractor-Vendor Opportunity Chart in the header of this article.

In Part 2, we looked at, the Contractor Business Process chart and discussed some of the Contractor’s logistical business processes. These processes are also now transposed into the Contractor Processes column on the Owner-Contractor-Vendor Opportunity Chart.

Connecting the Dots

As you can see, in a given project or turnaround lifecycle, the Contractor does not get involved until the Owner, possibly with the help of their Engineer, has prepared a Bid Package in the Contract deliverable. Potential contractors are invited to offer a bid for the work described in the bid documents.
The ‘opportunity arrows’ show potential link points between the Owner’s Procedure and the Contractor Procedure. A link to a Vendor procedure illustrates that there additional businesses can be included in the B2B relationship. This can extend to all stakeholders, service providers, and Union Halls!
The examples shown here are pretty easy to point out and to drill into. It should be clear that the real world relationship between Owner and Contractor is going to dictate the degree to which this type of data collaboration can occur. These articles communicate that technology is no longer a ‘limiter’ to collaboration.
As an illustration, we’ll review a few examples in a little more detail to see how this synergy could happen in practice. The detail-level reality depends on the willingness of the Owner team, especially Owner management, to engage in this process, and to have Contractor teams that are able to take advantage of the Owner’s initiative.

Contracting Cycle

As previously discussed in Part 1, the Procurement team uses the estimated data, along with previous contractual language to build a Bid Package. The integrated solution enables this entire process to coexist alongside, and be linked to, the estimate. Changes to work order or estimated scope should flow, with appropriate ‘heads-up’ notifications, into, or out of, the Bid Package Scope. Currently these processes have a virtual wall between them that prevents nimbleness in responding to scope changes. This situation (separated processes in separate systems by separate teams) is one of the primary reasons for the long lead times mandated by turnaround ‘best practices’. This is another example of practice being determined by current tool limitations. It also is an example of a potential win with new technology.
Providing a trigger-driven sharing of the bid data, along with incremental, approved changes as they occur, to the Bidders is another quick win for both the Owner and the Bidders. Owners use a ‘one-stop-shop’ to create, review and receive comments on the bid document, and also know which Bidders have expressed any interest. Owners respond to Bidders clarification requests once, and all Bidders are immediately aware of the request and the response. Plus, not having to manually enter the material take off is a great time-saver and is far more accurate that the current manual process involving manual entry into a spreadsheet.
Finally, enabling the Bidders the ability to post their Bid/Quote against the Bid/Quote Request further reduces potential for missed line items and details as well as speeds up the process. Upon sign-off by the Bidder, the Owner team is made aware of the completed bid, via a notification, and they can commence their Bid Review with minimal delay. Upon award of the contract, the winning contractor remains as the only contractor that continues to have an open channel to the Owner project. Additional benefits accrue to those that use this channel for the provisioning and execution stages of the project. Some compelling reasons for doing so are provided in the next sections,

Skills Assessment

At the start of a turnaround or project or maintenance program, the Owner is about to have thousands of contractor crafts-people of varying skill levels descend on their plant to do the mission-critical work. They depend on the Contractor to supply people with the requisite skills. Each person’s skill assessment information needs to be in the record. Contractors normally (should) have this data in electronic form in their solution. This knowledge is something that the Contractor should ‘channel’ to the Owner well before the people are on-ste and on their tools. Auditability of technical abilities, such as welding skills, should be in the Owner’s hands in advance of the work. As multiple contractors are involved in the project (20 to 40 in a small turnaround) this onerous process is greatly simplified by integration and collaboration being included in the solution. As each these crafts-people will soon be working (i.e. burning hours) on completing (i.e. earning value) on planned jobs steps, and then getting billed (incurring costs) to the project, having their data leveraged is an added benefit and time saver in the project and cost controls process.

Execution

The lengthy preparation stages, plus all of the equipment, materials supplies and tools that have been ordered, and all of teams that have been mobilized lead to this moment: Execution. This is where all of the planning, communications and attention to detail pays off. The solution should be used to ensure that this stage is executed flawlessly. This does not mean there won’t be surprises. This is the real world, and surprises will happen. However, the team’s ‘muscle memory’ from having been diligent with the details in getting to this point, help them to take surprises in their stride. The risk analysis process should have mitigated the surprises as well.
Now, the mission is to do the work, report progress and track the people and equipment usage.
At the end of this phase, QA and QC turnover teams ensure that the executed work is tested and they sign-off on the quality.
The entire execution phase should be done in the Owner’s solution as the primary ‘playing field’. Data, such as progress (i.e. Earned) and incurred (i.e. Burned) data should ‘channel’ back to the Contractor’s playing field. Both sides benefit from this collaborative approach. This transparency of data reduces the hours spent in reconciling invoice data. This reduces the potential (i.e. risk) for costly arguments and possible litigation, which is also costly.

Is just ‘pie in the sky’?

Or, as stated by a large contractor a few years ago: ‘It’s too good to be true’.
I can understand this view. However, if you had told me 20 years ago that I would not need a set of folded maps to assist me in my drive along Route 66, I would have said something similar. Or that I would not need a watch or a camera. Or that I would be able to read any book electronically if I so wished.
You get the picture. We live in an era when the ‘too good to be true’ of yesterday is the ‘what took you so long’ of today. Massive potential improvements in the Owner and Contractor business relationship are possible with the appropriate intent and focus.
Is this easy to achieve? There are many stories of failure of digital transformation and ERP deployment projects. Management needs to see and understand the problems, and then provide unequivocal support to their teams to supply the necessary, intentional drive to get to this new level of playing field.
Owners can start the ball rolling. This is a logical starting point. Owners have the most to gain. It’s their assets that are expensive to maintain, and that must keep operating and generating revenue. Visionary Contractors, Consultants and other service providers can approach owners with this value-added approach to getting the job done. Contractors may gain a technology-based ‘inside track’ to Owners that need help to get started. Consultants, pressed to show results, can do more than just ‘write a prescription’ for success. They can engage with the digital transformation ‘scaffolding’ and help the Owner in the onboarding process. Service Providers can add to services that they provide by including a ‘Digital Transformation’ skill set to their portfolio.
The technology stars, cloud-based services, mobile devices, data analytics, integrated solution, IoT, have aligned to portend a massive shift in B2B and intra-business process management. According to various reports by Gartner, McKinsey and others, this is certainly not ‘pie in the sky’.
The synergy obtained from starting to make the right moves will be evident in days. You will not need to wait for weeks or months to see benefits. This is in in keeping with our need for ‘instant gratification’. The good news is that the foundation for this concept is deep enough to allow for long term gratification as well.

Thanks for reading this. Comments and suggestions are welcome.
We are here to help you on this journey, should you need the help.

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