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12.04.2017

What is the Value of Integrated Project Delivery?

I was recently asked by an industrial customer to demonstrate the value that Faith Technologies could bring to the table. I immediately responded with our capabilities to deliver electrical, low voltage and controls engineering, turn-key installation from the switch gear all the way through the enterprise supervisory, control and data acquisition, commissioning, check-out and validation via an Integrated Project Delivery model. You could say I was more than prepared to discuss Faith’s value proposition:

“One budget, one schedule, and an integrated design for constructability and pre-manufactured assemblies will have a positive impact on safety, project costs, project schedule and time to market.”

In our discussions with this customer, they noted that on their last project, the owner chose to execute it in a traditional manner, where a general contractor strove to manage a multitude of disparate trades. Each was working from their own designs and schedules, with no building information modeling (BIM) or quality assurance (QA) / commissioning plan.

While the project was eventually completed, it suffered greatly from budget overruns, missed work, rework and overall schedule delays. The end result was the project commissioned and started up approximately seven months (211 days) late. This specific facility was projected to produce approximately $40,000 worth of product daily. They missed the opportunity to produce $8,440,000 in revenue at a 12% EBITDA* (over $1,012,800). How do you think the owners and their investors felt about missing out on this critical revenue and gross profit?

When customers look only at the cost of a project, rather than the value of a properly designed and delivered project, they’re likely to be missing what is really important. Once any delays occur, cash flow and revenue from missed production is gone and can’t be recouped. Missing the value proposition of an Integrated Project Delivery can also have a significant negative impact on the customer’s RoCI**, and subsequently, its investor relations.

It’s incumbent on us to always help our customers understand the value that Faith Technologies can bring to the table, and that we will always have their best interests in mind as we partner to help them achieve their most important business goals, initiatives and needs.

 

*Earnings before interest, tax, depreciation and amortization

**Return on cash invested