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Improving Contractor Performance to Achieve Better Project Outcomes

Published: 2013


A dss+ Case Study

 

Our client - a global electricity generation company engaged in the financing, capital construction and operation of multiple electrical power facilities – had contracted out virtually all responsibility for capital project execution.  After experiencing multiple construction related fatalities as well as significant scheduling and budgeting overruns, the client reached out to dss+, an owner/operator with extensive experience with contractors and capital project management, for help. 

 

dss+ was brought in to conduct a thorough assessment of 13 separate projects around the globe, specifically focusing on owner and contractor performance, both independently and relative to each other.  Further, the consultants, were asked to provide detailed recommendations to develop competencies in both project and contractor management.

 

Utilizing dss+ methodologies and best practices as a benchmark, the dss+ consultants visited the individual sites to assess the operating culture, focusing on leadership, organization structure and management processes.  They also reviewed the contract development process, the contractor environments and contractor performance measurement.

 

Based on their assessment, the dss+ consultants identified significant gaps in capital project governance on behalf of the client, which manifested in a high level of autonomy for contractors.  This not only heightened risk, but also made it more challenging for the client to affect change and manage contractor performance.  This was exacerbated by the lack of detailed language about the relationship between owner and contractor in the actual contract, leaving few options for recourse. 

 

To address this, dss+ consultants recommended a bifurcated strategy that focused on improving the culture on site, and also strengthening contracts to drive improved outcomes.

 

To address culture, dss+ consultants recommended a more “hands-on” role for owner management, both to drive execution effectively and ensure that contractors perform to expectations.  Capacity building was another area of focus, with a particular emphasis on felt leadership, supervisory proficiency, performance measurement and incident investigation and follow up.  Further, dss+ consultants recommended the company organize a global safety committee, comprised of leaders from all regions.  This would provide a forum to share best practices and opportunities for improvement; promote a common corporate culture; and ultimately create a more consistent global contracted environment.

 

To address contracts, dss+ consultants noted that the contracts must be more robust, and leaders developing the contracts must be more vigilant in specifically defining accountability, performance metrics, corrective actions and incentives for good performance.  Moreover, they recommended that the contracts should provide more detail on critical processes and constructability issues, thus reducing the ability for contactors to take shortcuts that could endanger employees or capital assets.

 

Based on the actions taken by the company following the engagement, the client has been able to drive improvements in their ability to manage and measure contractor performance, create better contracts, and develop more fruitful relationships with the contractors.