If you’re planning a major infrastructure development project, you’re likely facing difficult decisions about assembling your project team. These complicated projects involve not only design and construction services, but also less obvious requirements such as site selection and land acquisition, permits and approvals, site access and haul routing, project logistics, community relations and the like. When so many facets are necessary to successfully complete your development, you’re faced with a decision: select a single-source service provider to manage and oversee the entire project or assemble a team of several specialty service providers to do the job.
Pros of a Single Source Service Provider
Synergy between project phases. While complex infrastructure projects involve many phases, those different scopes often overlap in subtle but important ways. For example, site selection and land acquisition affect the prospects and requirements of project approval, permit requirements affect project design, site access affects construction workflow, etc. When each project component is managed by a separate provider, these overlaps are sometimes missed or left uncoordinated until after conflicts arise in the project. This may cause delays and require added cost and effort to resolve. Combining scope under a single provider increases the coordination and planning across project phases to reduce this risk and increase compatibility of work.
Efficiency and workflow optimization. Expanding scope under a single provider can provide simplicity for the developer. This structure reduces the need for coordination between providers to ensure synergy, address concerns, obtain confirmations and approvals, etc. Furthermore, responsibility for performance is focused on a single provider rather than distributed (often with uncertainty) across multiple providers, increasing contractor accountability. All of this leads to increased efficiency in project management and execution.
Potential cost reduction. Increasing project synergy and efficiency saves time and helps a project avoid setbacks. When you work with a single provider, you only need to negotiate a single contract and fee structure and manage performance and invoicing only once per cycle. Streamlining your project under a single provider reduces process and management redundancies throughout the life of your project. This affects your bottom line, saving money for the project.
Pros of a Multi-Provider Project Team
Varied Expertise. On a large scale and complex project, can you be sure a single service provider has the expertise to handle varied scope types, or are you forcing a provider to perform services outside their area of expertise for the sake of single sourcing? Expanding the project team allows you to retain niche service experts to ensure complex tasks are managed by those with relevant experience and expertise.
Quality Assurance. Multi-provider project teams act as a check on one another because each provider relies on the others to perform their own scope. This puts more eyes on each component of the project and encourages open communication, which helps the project identify issues when they arise. This check and balance can be invaluable. Additionally, you have the benefit of a larger team to address and resolve those challenges.
Risk Mitigation. If a single-source provider fails to perform, the project faces a major setback, whereas if there is a larger project team, other providers with project and scope familiarity can step in to limit the damage or take over the work with minimal delay.
How to Assemble Your Project Team
There is no simple answer to the question of whether to retain a single provider or spread your scope across multiple providers. This must be considered on a project-by-project basis, considering your needs and the availability and expertise of providers. Each pro of single-source provider structure can be easily reframed as the con for multi-source provider structure, and vice versa. This means that the decision is not only about providing benefits, but also avoiding deficits.
Know yourself. Start your decision-making process by first identifying how to you prefer to handle administration of your project. Will you, as the owner/developer, provide internal project management or will you rely on service providers to manage coordination? If the latter, a single-source approach that puts overall project management and coordination in a single set of hands may be preferable.
Know your project. All infrastructure projects require design and construction, but what else does your project need to be successful? As an owner/developer, you should understand whether your work is within a regulated industry or subject to unique approval requirements. Have you identified all utilities and obstacles in your footprint? Does your project require regulated or oversized/overweight hauling such that haul route development, access and permitting concerns play a larger role? Do you have a pre-selected site, or do you need to identify or acquire one? Do the communities within which you wish to build generally favor your project or will you face strong public and/or agency opposition? Whether you’re a multi-national company with frequent development, or this is your first large scale project, you need to understand the ancillary requirements of your project before you can best assign scopes.
Identify reliable providers. Building a level of trust with your service providers is key to ensuring reliability. The best way to build trust is through relationships and experience working with providers who have performed well for you in the past. Until you’ve built that network, start by identifying service provider options who focus their services on your specific market (i.e. if you are developing an energy industry infrastructure project, identify providers who focus on the energy industry). Then within an industry, identify those providers who offer expertise and experience performing niche services. Quality providers will be forthcoming about their expertise and weaknesses as they pertain to the project needs, which will give you the confidence to assign scope. Avoid providers who are focused on grabbing the biggest scope possible, regardless of their proficiencies. Within provider companies, look at the individuals in leadership and on the proposed project team. What is their expertise, experience, and reputation?
Hybrid options. Remember that there are no rules to the team building process. Combine scopes where your preferred provider has a demonstrated expertise in each, introduce additional providers where they don’t. Where you prefer a single project manager for your project, but single sourcing isn’t ideal due to experience gaps, you can diversify your team through subcontracting to keep oversite and management under one hat.
TurnKey Logistics is an energy industry infrastructure project logistics firm. Our expertise is in project management and consulting, project access and haul routes, regulatory and permitting compliance, stakeholder relations and land & asset procurement and management. These ancillary project components are often overlooked and create challenges for energy infrastructure projects. TurnKey can offer valuable and focused expertise to serve your project needs.
By: Brian Stouffer, P.E., J.D., Principal, TurnKey Logistics, LLC
January 11, 2023