How do you know which contractor to select for the job?
In the past, the Australian construction industry has seen a raft of mergers and acquisitions.
According to a study by Frost & Sullivan, ww2.frost.com, Mountain View, Calif., this trend may be driven partly by the competitive advantage required to win new large projects. The study reveals that for the client, the primary factor for selecting a contractor is track record and expertise. Findings of this study were obtained from in-depth interviews with 30 client-side project managers across Australia, across various industries, both from the public and private sectors.
The work of the client-side construction project managers is becoming increasingly difficult due to the increasing complexity of projects, along with the regulations which govern them. The need of client-side project managers to reduce overall risks increases, as the average size of construction projects in Australia continues to rise.
For example, demonstrable expertise and the track record of contractors will play a significant role in the acquisition of new projects. According to Frost & Sullivan, this is because clients are under significant cost pressures, and the scale of the capital outlay for construction projects causes them to adopt risk minimization strategies, with the contractor’s capabilities given high priority.
Moreover, managing cost overruns was the most mentioned challenge faced by client-side construction project managers. In the past, cost overruns may have been viewed as unavoidable, and clients are increasingly trying to proactively manage this issue. For instance, clients are starting to bring contractors on board at an earlier stage of the planning and design process, so budgeting can be made more accurately and cost savings are maximized. According to Frost & Sullivan, it is predicted that adoption of the ECI (early contractor involvement) model is likely to expand, particularly in the private sector.
Client-side project managers can find complying with regulations to be a significant challenge. Complex regulations and increased bureaucracy was the most mentioned macro challenge client-side construction project managers had to overcome.
Changes in communication solutions were identified as the most significant shift in the impact of technology in the construction industry. Notably, was the increased use of construction-collaboration platforms which enabled project managers and various stakeholders to share documents and updates of the project seamlessly. According to Frost & Sullivan, inefficient communication was the primary source of dissatisfaction with contractors, and the increased adoption of this technology is a step in the right direction.
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