Comment: Contractors and suppliers need to work together

Sougata Nandi, founder & CEO of 3e Advisory and 3e Apps, writes about the importance of maintaining solid MEP supplier, contractor, consultant and developer relationships

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Sougata Nandi, founder & CEO of 3e Advisory and 3e Apps.
Sougata Nandi, founder & CEO of 3e Advisory and 3e Apps.

It has become more imperative than ever, for the four major stakeholders in any project development phase, to work beyond “contractual” terms and conditions, and focus on value based projects. Value that achieves triple bottom results, not only for the end users, but also for the stakeholders themselves. Such triple bottom line results are not always achieved through water tight legal contracts, which are essentially designed to determine commercial value of each end result, each input and each extraneous situations. Rather, holistic triple bottom line results are achieved better, by adopting ethical business practices and through appropriate management of inter-dependent functionalities.

We can no longer keep delivering regular built-environments that only serve the purpose of the housing people. With the crisis of climate change, built-environments need to be green buildings, well buildings and potentially net zero, all at the same time, as a standard. The planet simply cannot afford limited buildings that epitomise all of these and become the rare flagships for case studies and awards. Every building needs to become award winning and truly have net zero impact on the environment, if not a net-positive impact. For this to happen successfully, and as routine, stakeholders can no longer live in their silos with the simplistic philosophy of “I have delivered my scope of work, for which I was contractually engaged”.

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So, while the ultimate leadership needed to deliver built environments that achieve best triple bottom line results lie on the developer/client, each stakeholder must contribute, not just contractually, but ethically as well. The first step towards realising this is to acknowledge the fact that the stakeholders are inter-dependent on each other. While in the world of project management it is unfair to expect “gold plating”, in the spirit of delivering the required built environments, each stakeholder must offer their updated experience and expertise to the project; in many cases even when not specified in the project brief.

For example, when a surface car park is specified in a project by the consultant, the contractor should offer a DEWA Shams compliant Solar Photovoltaic System as the cover for the car park. Such a feature might have neither been specified by the consultant, nor priced for by the client, but on the basis of life-cycle costing, the contractor can demonstrate its triple bottom line value to the client. This approach will necessitate that the contractor liaises with the relevant suppliers of such systems, who are equipped with the right technology and who may also have access to funding for such an additional feature, enabling the client to accept such a variation at no additional cost. This is a fairly straightforward example, where a tangible business case is possible, supported by innovative financing scheme for such projects.

However, simple though it is, such a use case demonstrates the working in tandem of contractor and supplier, to develop a business case and go beyond the contractual terms and conditions, to deliver value to the client and ultimately, end-users. Of course, such a use case is made possible in Dubai currently, largely due to the DEWA Shams framework.

Contractor and supplier relationship is intertwined with the relationships with the consultant and client. Ultimately, the consultant will validate and the client will have to approve any initiative by the contractor and the supplier and as such, contractors and suppliers are heavily interdependent on each other to make collaborative business cases for the project. In the current climate of innovation and disruption, contractor-supplier relationships will have to be stronger than ever.

Notwithstanding the new wave of innovation, most projects are still plagued by the mundane, run of the mill, design and development process. New technologies are continuously being injected into the construction industry and all of them face the hurdle of colliding with status quo.
VRF is a classic case in point, where in its early years of advent in the UAE, suppliers were struggling to push the as yet locally tested technology into the construction process. Consultants kept insisting on data from actual case studies locally and contractors by and large played a passive role, with some consultants even declaring “VRF is not at all energy efficient”. Thanks to the resilience of the suppliers and to some extent the contractors, the market transition took only about two to three years, for VRF to have become almost mainstream now, where consultants are regularly specifying VRF in projects. This short time frame was significantly better than many other such initiatives.

In effect, the contractor – supplier relationship, and in turn their collaboration with consultants and clients have matured well in an established construction industry like that in the UAE. To a large extent, these relationships have been streamlined by the authorities through imposition of mandatory regulations like Estidama and other green building guidelines, in addition to standard building development codes, especially when the issues at stake are green buildings, well buildings, net zero buildings etc.

DEWA Shams is again one of the best examples given the fact that DEWA regulates strictly the design development process and also has a list of approved consultant, contractor and equipment. With such a mechanism in place, the stakeholder relationships are efficiently managed, providing sufficient comfort to the clients and delivering resilient projects.

In conclusion, it must be acknowledged that the regular and frequent advent of new technologies and the client demand for innovation, can together help catalyse stronger inter-stakeholder relationships. Forward thinking contractors and suppliers need to work together to overcome the mindset that, ultimately a project’s deliverables are the responsibility of the consultant. While suppliers can, and will, introduce new technologies to the industry, they will need strong support from the contractors to make the business case with the consultants and clients.
While in some cases the supplier’s innovation may be welcome, concerns will remain as to a contractor’s ability to install and commission the new technology such that it delivers on its designed promises. Suppliers thus need to continuously train contractors and consultants on their new products. Forward thinking clients should be willing to allocate higher budgets for their projects that can only support such financial investments.
A strong collaboration between contractors and suppliers can transform the construction industry rapidly and this relationship requires continuous investment for built environments to become sustainable projects, as standard. The statement, “I will only supply and install equipment specified by the consultant” is no longer a justifiable or acceptable business ethic.

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