Optimal owner contractor relationships based on capital project competencies

Rightsizing of the in-house capital project organization is an industry-wide problem faced by owner companies in the United States. Continuous changes in the in-house capital project capabilities and competitive pressures lead owners to seek ways to realign their relationships with contractors, while leveraging contractor manpower and expertise where necessary. This research seeks to address this problem by proposing a decision process to assist owner companies in the development and execution of capital projects by creating and sustaining properly aligned owner-contractor work relationships. This process defines “relationships” based on the stakeholders' technical and organizational capabilities, identified in terms of project competencies. A relationship continuum is devised for assigning most the appropriate work relationship for each project competency. The concept of competencies is widely used in management literature on organizational strategy. In this research, it is extended to the development and execution of capital projects. This research builds upon earlier work undertaken by the Construction Industry Institute (CII) in 1995–96, and published by the CII under the title “Owner/Contractor Work Structure (OCWS) Process”. The OCWS process was reengineered and modified as a result of three successful applications of the process. The applications were carried out by formally assisting two owner companies in the implementation of the OCWS process and studying the implementation of the process in one other company. The modified OCWS process was validated with the help of a Delphi study. The Delphi validation required two rounds involving experienced project personnel from 32 owner companies and 2 consulting companies in North America. Each Delphi round was conducted by providing each participant with a summary of the process and a structured assessment protocol. The extent of agreement and the consistency of responses were measured by using the Agreement Index and the Intraclass Correlation Coefficient, respectively. The validated OCWS process is expected to provide a tool that can be used by owner companies to accomplish the following: (1) Form optimal work relationships with designers, contractors, suppliers and consultants; (2) “Rightsize” in-house capital project development and execution capabilities to improve capital project performance; (3) Form potentially successful strategic alliances.