Choose the best delivery model for your capital project

By Julia Stefanishina | February 21, 2019

The world’s economies are changing. Globalization, our lessening dependence on carbon-based fuels, and dwindling resources are driving business practices to change, too. The winners in the race for market share will be organizations that can remain agile.

They'll be the ones whose project managers are able to leverage the best technology, systems, and people to deliver capital projects—safely, on time, and on budget—that grow or improve the business or its value.

Effective project management is a balancing act. Every project is different, with its own priorities, conditions, challenges, and risks. The magic, when it happens, isn’t really magic at all. It’s the result of meticulous planning and painstaking execution, linking project priorities with the organization’s risk appetite, the team’s capabilities, available funding options, and stakeholders’ expectations.

Choosing the best delivery model for your project is the all-important first step. It doesn’t matter if it’s a toolshed or a multi-billion-dollar processing facility. Is all about ownership, accountability, and risk.

Usually, the owner has the greatest stake in the project’s success. And often, the most to lose if it fails. Even when responsibility for project delivery is delegated or shared with a third party, overall risk often still rests with the owner.

It's easy to be overwhelmed at the number of models and processes that exist for delivering major projects. Each has its own pros and cons. To select the one that’s best for your project, think not only about the project specifics and risks, but also about your capabilities as an organization. Do you have the right people with the right experience and know-how? The financial resources? Does your operating model support one approach over another?

Hatch's Major Project Delivery Models Summary Guide divides projects into four main categories.

Traditional. In this model, owners do it all using their own employees or ask other parties to deliver some limited portions of work—basically extending missing internal capabilities (e.g., Design-Build or Design-Bid-Build).

Collaborative.  Here, different teams come together, and more work is being planned, delivered and managed by other parties — contractors, designers, engineers.

Integrated.  Risks and benefits are proportionally shared by all parties involved in the project’s delivery.

Partnership.  The design, construction, and operation is handled by one party to the benefit another.

Of course, permutations and combinations abound. Three of the four major models have their own variations and subcategories and, depending on the granularity of analysis and payment strategies, sometimes the list can be longer.

For the benefit of the reader, we have listed major delivery models within each group creating a “cheat sheet.” It will help you navigate through major models and conduct high-level comparisons. Each model has its own catalogue of risks, the need for different capabilities on the part of participants and partners, and different use cases to help project managers recognize when to apply which.

So invest the time and resources to get this part right. Consider not only project specifics, but also organizational readiness. If there’s any doubt, call in experts who are familiar with all the considerations. They have the experience to help you evaluate your needs and find the best strategies for meeting them.

Analyze the project-specific business cases, the risks, the internal capabilities available, and the funding structures until you see the whole picture. Consider everything honestly. Then consider it all again in light of your company’s internal readiness and its ability to deliver results under any model you may choose.

To download your copy of the Hatch Project Delivery Models Summary Guide, click here.