The Role of The Owners Rep. Expands
With the Poor economy forcing owners to make tough decisions about layoffs and budget cuts, one position they should not consider eliminating is the owner's representative. That is because this job has become a vital tool in helping the owner save both time and money, especially as staff sizes shrink and the need for performance and quality-control monitoring rises.
Traditionally, ORs have served as an extension of the ownership team, charged with the task of leveraging industry expertise and project management know-how. But as pressure increases on owners to cut costs and justify expenses, the OR's job is broadening to include expertise in construction economics, contract management and risk management.
The result is that ORs today look more like fiduciary professionals for all things related to facilities management, construction management and, in many cases, real estate as well.
This is a transformation from a decade ago when the OR's main job entailed design management, scope development and bidding and negotiation of contracts. It also included a project management component involving contractor selection, procurement and oversight of cost, schedule and quality.
While ORs still provide those services, they are now being called on to negotiate project costs and schedules. If, for example, a claim for additional time and costs for an owner-driven scope change is filed, the OR is expected to administer the change and ensure that the highest possible value is maintained for the owner. ORs are also playing a greater role in project analysis for distressed assets. Increasingly, developers, investors and banks dealing with such assets are calling on ORs to help with the due diligence process.
Historically, there has been a degree of conflict between the role of an OR and a CM. While many industry professionals believe the conflict can be detrimental to the project, the two can coexist if roles and boundaries are clearly defined. This often results in an effective check-and-balance system for firms.
The prolonged economic slump and industry recession have taken a toll on all stakeholders. Owners who do not have the in-house expertise, resources and inclination to manage the design, RFP management, contract management and construction management of projects are increasingly outsourcing this role to ORs.
Owners also are leaning heavily on ORs to act as corporate watchdogs for compliance and even ethics. This has become even more important as government and others crack down on procurement and contracting corruption and as the notion of zero tolerance emerges.
A former client who is now a partner at an architectural firm says because of the power ORs wield on projects and the trust that stakeholders place in them it is critical that they place the integrity of their profession above the temptation to succumb to pressure to cut corners. He recalls a large condominium project in Manhattan in which the owner faced a liquidity crunch and asked the OR to skew hard-cost projections to get a favorable report from the lender. The OR refused to comply, however, and was subsequently terminated and painted as a scapegoat for the project's demise.
From the supplier side, ORs are integral to the hiring of construction managers and general contractors because ORs manage the bidding process.
ORs are also feeling the impact of the downturn as fewer contracts are available and competition has intensified as the number of unemployed project managers, construction executives and architects enter the field.
The downturn has also imposed downward pressure on OR pricing. Fees are razor thin, and owners' expectations are much higher today as they try to squeeze every ounce of value from scarce capital funding.
ORs must quantify the owner's objectives in a manner that translates economically, operationally and administratively.
Building owners, contractors, consultants and stakeholders should recognize the more involved position of ORs in the pecking order of project management. The dynamic nature of the industry demands that the value propositions of these key players be explored.