How can Tier 1 Main Contractors shape the industry for the better?
In decades past, industry performance was gauged by how the big players were performing, and since 2008 there have been few positive results. However, a new trend is emerging, with mid-size contractors showing higher margins and better productivity, despite the continuing challenging economic times.
It’s been a wake-up call for the industry, and particularly tier 1 main contractors, signaling that things need to change, and that by focusing on specific areas of business, positive change can be achieved.
Delivering client value
A huge blot on the industry is its inability to effectively predict and manage risk, which has resulted in budget over runs and project delays. It is clear that traditional contractual based relationships and their lack of accountability do not work. Instead clients are now looking for more value based models linked to productivity and performance that can achieve on time and on budget project delivery.
Closer collaboration between subcontractors is needed to achieve this, together with earlier involvement in the procurement process so that risks and outcomes can be more accurately predicted. BIM and related software can provide the necessary tools to facilitate these relationships and more effectively manage roles and responsibilities of the various parties.
New business models
Historically, tier 1’s have traded on their reputation and ability to take on major projects to win new contracts. But clients are recognizing that accountability and delivery hold more value and are now looking for competence rather than confidence when awarding tenders. It’s not the promise that matters as much as the ability to actually deliver on project outcomes.
Tier 1’s have the necessary competence, but maybe it’s time for it to be retargeted into delivering real value for clients. Already rather than aggressive growth strategies several tier 1’s are shifting towards productivity and profitability, and delivering value to clients. It’s a positive shift in the right direction.
Technology is providing innovative tools to help manage safety, scan sites for accuracy and provide critical data for engineers. It is enabling the industry to take a more proactive stance towards managing risks on site, and averting mistakes that could result in costly project delays.
Now if a more strategic approach towards procurement and risk management can become the new culture, it can change the industry for the better. Tier 1’s are ideally positioned to lead the change, but will they?