Building Strong Contractor & Engineer Relationships in Projects

Regardless of their specific field of engineering, projects involve collaboration among multiple individuals, in many cases from different organizations, and the end result is strongly influenced by how effectively project staff members can collaborate with each other. Successful contractor and engineer relationships are so important for success, that the Project Management Institute (PMI) dedicates two chapters of its Project Management Body of Knowledge (PMBOK) to the topics of human resources management and project communications.

The main challenge when managing the human and communication aspects of a project comes from the short timeframes involved- the project staff is a temporary organization, with individuals that may come from several design or contracting firms. Unlike the permanent organizations of commercial and industrial firms, who can train their staff and build teams over the course of months or even years, in projects it is necessary to achieve collaboration and synergy within just a few days.

There are two complementary approaches that can be followed to ensure project relationships are collaborative and effective, rather than confrontational and disruptive.

• The management approach is implementing best practices, which are field-proven methods that have consistently yielded satisfactory results for engineering companies around the world.
• Of course, this can be complemented with information technologies that simplify communication and collaboration, while allowing team members to complete their tasks more efficiently.

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Best Practices to Improve Relationships Among Project Stakeholders

1) Concurrent Engineering

Concurrent engineering is a concept borrowed from the manufacturing industry, and it consists on shifting from a linear to a parallel approach when developing a new product. Basically, this reduces the time a product takes to reach a market and it enhances collaboration among teams because the entire staff is involved right from the start of product development, even those team members whose roles are more important in the final stages.

Unlike products manufactured in assembly lines, engineering projects are unique and developed by temporary organizations, yet the concept of concurrent engineering can still be applied successfully:

• All project stages, from conceptual design to commissioning and operation, are taken into account right from the start, when changes can be addressed more quickly and with minimal costs and disruption.
• All stakeholders are involved as soon as the project starts, even those contractors whose activities are concentrated towards the final stages of the project.

When a project involves different parties and their activities interfere mutually, conflict often arises and expensive changes may be necessary. This is especially common when trying to coordinate separate subcontractors for civil, mechanical, electrical, plumbing and IT work – change orders are common when the interaction between different building systems is not assessed properly due to a siloed approach to project design. With concurrent engineering, the needs and requirements of all project stakeholders are taken into account even before starting the design phase.

• Construction plans are reviewed along with all parties involved, which means every contractor is aware of how their activities can affect those being carried out by others.
• Interference among different building systems is faster and cheaper to correct during the design phase, and this helps avoid conflict and change orders. 

Other than enhancing collaboration and reducing conflict, concurrent engineering also provides savings for all project stakeholders, for the simple reason that it minimizes the number of change orders and also reduces lead times.

2) Project Risk Management

Basically, a risk is any event of unpredictable nature that can affect the final result of a project, positively or negatively. When risks materialize, they can be a source of conflict among project stakeholders, but it is possible to mitigate conflict if a sound risk management framework is in place. Risk management is a complex topic that is covered in a full chapter of the PMBOK, but its basic principle can be summarized as follows:

• Identifying project risks on an ongoing basis. Different risks become significant at different stages of the project. For example, risks associated with mechanical equipment and its electrical installations are inexistent if the project is still in the excavations and foundations phase.
• Assigning a weighted value to each risk according to its probability of occurring and its potential impact. For example, a natural disaster has a very high impact but a very low chance of occurring, while a delayed batch of materials has a moderate impact but is much more likely to occur. Therefore, the risk of delayed materials has a higher weighted value than a natural disaster.
• Developing a strategy to mitigate each risk. For example, if a piece of mechanical equipment will be handled by a crane and the project is carried out during a windy season of the year, a risk mitigation strategy could be to monitor the weather when activities involving the crane will be carried out.

When risk management is taken into account during project execution, all stakeholders are aware of the events that may arise, and the strategies to counter them are clearly laid out. This enhances collaboration and improves engineer and contractor relationships: when a risk event presents itself or is likely to occur, the staff will follow a predetermined mitigation strategy rather than searching for someone to blame.

Risk management reduces both the probability and negative impact of events that threaten the project, and a favorable outcome of this is reducing conflict among the parties involved. A solid risk management framework helps prevent hazardous conditions for personnel and damage to equipment, as well as the legal consequences than may come with an accident.  

3) Communications Planning

This is another subject that is covered in depth by the Project Management Institute in the PMBOK. Communication is a necessary element of all projects, and it can be greatly simplified when the following elements are established:

• Which documents will be used and what is their required format?
• Who is responsible of generating them?
• How often should they be delivered?
• To whom should they be addressed?
• Communication channels to be used. 

Well-planned communications enhance engineer and contractor relationships even before contracts are awarded.

• The standard procedure is to issue Requests for Information (RFI) to all prospective contractors. An RFI basically means a supplier will be considered for a project and requests basic information on products and services, but without asking for a detailed quote and proposal. Since and RFI is not an invitation to bid, it should be as clear and concise as possible so that the contractor can deliver a swift response – time is money after all, and suppliers appreciate the consideration!
• After evaluating RFI responses, it is possible to select the specific suppliers who will be considered. Depending on project complexity, the RFI may be followed by a Request for Quotation (RFQ), which focuses on pricing information; or a Request for Proposal (RFP), which asks for additional information other than pricing, such as technical specifications or company information. 

From the point of view of the project owner or investor, it is important to keep in mind that RFQs and RFPs involve plenty of work from part of the contractor – sending an RFI first makes the process simpler and is considered a part of business etiquette. 

Improving Engineer and Contractor Relationships with Technology

1) Building Information Modeling

At a glance, BIM might only seem like a design tool, but it has a great potential for improving communication and relationships in an engineering project. This is particularly true when BIM software solutions are used to model complex systems like mechanical, electrical and plumbing (MEP) installations.

• When project information is presented through an interactive three-dimensional model, the scope of the work can be communicated much more clearly to engineers and contractors; some project features can’t be appreciated clearly with traditional 2D construction plans.
• BIM also displays the interaction and space clearances between different building systems, preventing interference and allowing contractors to coordinate their work. 

When used in combination with concurrent engineering, BIM can be a very powerful tool for planning projects more effectively and achieving a higher degree of synergy among all parties involved.

2) Project Management Platforms

There is now a broad selection of project management tools and applications that enhance planning, tracking of activities and information sharing. Engineers and contractors can collaborate more effectively when information is readily accessible. Some examples of IT solutions that can be deployed are the following:

• Cloud-based Project Databases: When project files are managed manually, it can be challenging to keep track of versions and make sure all parties have the most updated information, and an inefficient flow of information can lead to confusion and conflict. On the other hand, when there is a single database that all stakeholders can access, conflicting information is eliminated.
• Team Management Applications: There are also software solutions and applications that have the goal of simplifying coordination among staff members. These tools can keep track of each individual’s work calendar, to determine the best time to program a meeting and also to send automatic reminders. 

The Kick-Off Meeting: A Key Element of Project Collaboration

You can have the best project management framework in place, but it must be communicated to all parties involved in order for it to be effective. The best way to achieve this is through a kick-off meeting, which has the goal of creating rapport and enthusiasm among the project team, while providing key information such as:

• Project deliverables.
• Roles of different stakeholders.
• Presenting the master plan of the project and identifying potential risks.
• Establishing how performance will be assessed. This includes how project site visits will be scheduled and what they will evaluate.
• Establishing how project communications will be carried out, and presenting the tools that will be used for this purpose.
• Presenting any client-specific policies that must be followed during the project. This is common in industrial plants, where safety risks may be higher than in commercial and residential settings.

Basically, a kick-off meeting ensures that all parties involved in the project are on the same page before starting, setting the stage for collaboration and synergy.

Minimizing Change Orders During Project Execution

Change orders are a very common source of conflict during projects, because they normally involve extra costs that someone has to assume. Depending on the type of contract, these extra costs may be assumed by the client, the contractor, or both. The key for minimizing change orders lies in effective communication, and both clients and contractors are responsible for it:

• The project owner must make sure all information is clearly understood by all parties involved. The concurrent engineering approach mentioned before is very effective for this because it makes sure the entire staff is involved in the project as soon as it starts.
• Contractors are also responsible for analyzing project information in depth, and making sure all questions are addressed as early as possible, when changes can still be carried out in plans and specifications, not the actual project itself.
• If necessary changes are identified during the bidding phase, the project owner must ensure they are communicated to all participants to ensure fair competition.

Closing the Project

Project closure is a critical moment when inadequate management or communication may erode engineer & contractor relationships that have been successful so far. The following are some recommendations to prevent conflict during project closure:

• Using a punch list that has been agreed upon before starting the project. Basically, a punch list details project aspects that don’t meet specifications and must be corrected before the final payment is released. Ideally, the format of this document should be presented during project kick-off, and payment terms must be presented clearly upfront. When there are no surprises, the likelihood of conflict is reduced.
• Documenting project delays during execution. Project contracts often include fines for late delivery, but they don’t apply if the reasons for the delay are of significant magnitude and outside of the contractor's’ control. If delays are documented in detail throughout the project, there will not be disputes about missed deadlines at the end.

Concluding Remarks

Minimizing conflict during an engineering project requires a high degree of emotional intelligence by project managers, and effective communication among all parties involved. Conflict prevention is beneficial from both the human and financial standpoints – a negative project environment can be emotionally taxing for the staff, and the low synergy between the parties involved drives up project costs and extends delivery times.

Editors Note: This post was originally published in September 2016 and has been revamped and updated for accuracy and comprehensiveness.