In the logistics real-estate sector, it was already game, set and match, and the general contractor had emerged the clear victor. Enter an unexpected player: The customer!
Why is project management making such a strong comeback? Do customers really have no option but to choose between the extremes of a project manager and a general contractor? Between risk and lack of transparency? Could "Co Design&Build" be a viable alternative?
The back story…
In the early 2000s, developer-investors became actively involved in the professionalization of the logistics sector by offering what were referred to at the time as next-generation buildings. Their idea was to move quickly and "conquer" all of Europe by offering high-quality logistics platforms within a short space of time.
The platforms were built before securing a tenant, as investors were sure that they would have found one before the work had completed.
The challenges facing the few developers of the time were simple:
But then comes the twist…
The advent of the financial crisis closely followed by the economic crisis forced investors and tenants to question the existing model. This marked the start of an important shift that was equally influenced by the sharp growth in e-commerce and the rationalisation of logistics costs.
With the right resources at hand to manage risk and achieve savings, the project management model has now become a viable alternative. In recent months, traditional general contractors have been passed over for a number of important projects, and all signs indicate that this is a trend that is set to continue.
A difficult dilemma…
Ensuring that customers' expectations in terms of quality and schedule continue to be met will still require expertise and effort. Once the tendering phase is complete, the cost of the design phase and subsequent construction phase is pretty comparable whether you're looking at the project management model or the general contractor model. Customers that use both models often confirm this. This can be explained by the purchasing methods of general contractors, the high levels of competitiveness in the market and the minimal provision they make for the risks they take.
However, the reality on the ground at the end of the project can often be very different.
If a general contractor provides a price guarantee, they often retain any savings achieved over the course of the project solely for their own benefit. Similarly, because of the lack of transparency in their proposals, it can be quite the challenge to manage the changes and adaptations requested by users, who are continuously looking for greater levels of flexibility and efficiency. Against this backdrop, it's easy to understand the frustrations of technical teams on the project owner side. Despite their expertise, they have no say in decisions that are made and often not even shared by the contractor.
Project managers that work on the basis of transparency and collaboration will not provide a price guarantee for the entire cost of a project. The customer still has to bear the risk of company insolvencies and unforeseen events on the ground, and they still have to live with the uncertainty of slippage in prices and deadlines until they sign off on each company's final statement of account.
There is no one good or one bad solution. There are two very different proposals, and one difficult decision to be made by the project owner.
Is this extreme choice the only one available to customers?
What if there was another option? One that was...
This is the challenge that the "Co Design&Build" solution is seeking to address – how to combine the benefits of the turnkey solution with the benefits of project management; two options that are perfectly legitimate but require a radical choice. The "Co Design&Build" model provides a compelling alternative.