Balancing Self-Performance and Subcontracting in Collaborative Delivery Projects

by | May 9, 2022

As the number and size of infrastructure projects continue to increase, while the qualified available workforce continues to decrease, contractors who traditionally identify as “self-performing” contractors find themselves having to make decisions on what scopes of work they ultimately need to self-perform for project success. This is especially true on the “mega-sized” projects. Collaborative delivery projects, such as construction management at-risk (CMAR) and progressive design-build (PDB), if approached correctly from the outset, allow self-performing contractors to concentrate on those packages required to maintain the project schedule, while ensuring a successful project by attracting the “best of the best” subcontractors to perform the other scopes of work.

Setting a large project up for success, with a balanced mix of subcontracting and self-performed work, must begin early in preconstruction and design. After agreeing to the procurement approach, the owner and the CMAR or design-builder must collaboratively inform the subcontracting community that real opportunities will be provided on the project to ensure genuine interest.

Understanding the local subcontracting community is also important. Industry outreaches should be held early in the process—and definitely prior to the formulation of packages—to generate excitement around the project, understand the capabilities of the local markets, and receive feedback on what needs to be considered or provided to attract those that are “undecided” on whether they will pursue a portion of the project.

Prequalification of subcontractors, especially on the mega projects (which in turn will result in mega subcontracts) ensures the contractor and owner can rely on the bids that are received. It also sends a message to the subcontracting community that the selection process will not be based solely on low price. More importantly, the owner will know they are truly getting the “best of the best” when it comes time for selection. Prequalification information can be submitted with the actual bids or can be requested prior to the bidding phase to expedite the selection process and time to construction.

Bid packages must be clear, concise, and complete. In addition to a having a defined scope of work, the bid packages should include a copy of the proposed subcontract which allows proposers to provide comments to be considered as part of the best-value selection process.

Finally, the selection process should be transparent, especially for those packages for which the contractor will be competing. There are no lack of opportunities in the market, and no one wants to waste the time and money required for a procurement only to end up with no, or limited, bids because the subcontracting community didn’t believe there was a real opportunity for them to be awarded the work. A clear process should be established—which might require contractors to submit their pricing early or directly to the owner—to provide the market with a level playing field.

To drive the best value from the subcontractor procurement process, owners and delivery firms should focus on starting early to gain engagement, be detailed and transparent in their packaging, solicit strong qualifications that back up the resources needed, and set clear paths forward for what will be subcontracted vs self-performed.

Shane Lippert, Assoc. DBIA, Vice President - Water Group, Clark Construction

Shane Lippert is a vice president for Clark Construction Group's water division in the Southeast. Shane has over 30 years experience in the construction of water and wastewater facilities.