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How do whole-process engineering consulting firms conduct design management under the EPC model?

2021-12-23View Original

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As an internationally recognized method for organizing construction projects, the EPC turnkey contract model has gained significant popularity in the market in recent years. However, due to the lack of a trust foundation in the EPC general contracting model adopted in our country, owners usually exert greater control over the contractor’s design work to a certain extent. Driven by the needs of project owners, the full-process engineering consulting industry has gradually become an important supporting force in the construction sector, facilitating the integrated development of design and management services. Therefore, how to adapt to the broader landscape, seize new opportunities, carry out design management services, and fully leverage the value of third-party consulting are issues that companies providing full-process engineering consulting need to address urgently. — 1 — Current Development Situation ▌1. The EPC general contracting model is seeing rapid growth in China’s construction industry. In today’s construction sector, traditional contract models can no longer meet the demands of societal development and the increasingly competitive environment. Given the immense pressure to survive, owners and contractors have begun exploring new construction contract models. The \"Opinions of the General Office of the State Council on Promoting the Sustainable and Healthy Development of the Construction Industry\" (Guo Ban Fa [2017] No. 19), as one of the most important policy documents for the construction industry, calls for accelerating the adoption of the general contracting model. According to incomplete statistics, as of now, ** and various local authorities have issued a total of over 200 policy documents related to EPC. Preliminary statistics show that more than 300 enterprises across the country have been identified as pilot enterprises for EPC projects. ▌2. Owner participation in the design management of EPC projects in China’s low-trust market environment: Compared with international markets, due to the lack of a trust foundation in the implementation of the EPC model in China, EPC models with \"Chinese characteristics\" such as the \"quasi-trust + integration\" model and the \"no trust + integration + strict supervision\" model have been adopted, which can be summarized as a model of strict control. Yin Yilin, a professor at the School of Management of Tianjin University of Technology, has pointed out that the design management by the owners of EPC projects is divided into two phases, known as \"two-stage design\". In the first phase, from the concept to the preliminary design, control remains in the hands of the owner ; In the second phase, control over the design shifts to the main contractor; during this stage, the owner usually strengthens its own oversight, gets involved in the design management process, and conducts thorough reviews of the design outcomes. Therefore, in the Chinese context of the EPC model, the owner usually exerts a certain degree of control over the general contractor. Since design is the forefront of the entire process of construction projects, on the one hand, project owners will take measures to strengthen design management. For example: actively participating in the mid-term review of key outcomes ; Strictly control the quality inspection of design outcomes ; After the contract is signed, guide the general contractor to “optimize the design”. It also prevents the general contractor from engaging in \"excessive optimization,\" thus avoiding losses in performance, project quality, and operation and maintenance. On the other hand, it is necessary to support the general contractor in optimizing the design in a scientific and rational manner, to carry out effective project design management based on the principle of benefiting the project throughout its life cycle as well as both parties, and to strengthen communication with the general contractor and the design department. ▌3. The whole-process engineering consulting model promotes the integrated development of design and management services. Whole-process engineering consulting focuses on the control of overall performance, that is, it integrates the various fragmented consulting services available, utilizes IT platforms for comprehensive, resource-intensive management, and provides owners with integrated consulting services. Another feature of full-process engineering consulting is its broad scope of consulting services. It not only provides high-quality consulting services for major domestic and international engineering projects, but also offers valuable advisory suggestions tailored to various stages of specific projects or organizations. The service covers everything from initial project planning to subsequent operation and management services, including technical consulting, business consulting, and legal consulting. Therefore, it is necessary to avoid combinations of different phases and mutual constraints between independent project elements, while taking into account the overall resource allocation for the project. Design management under the full-process engineering consulting model covers the entire project lifecycle, from project decision-making, design preparation, conceptual design, preliminary design, and construction drawing design to final approval, commissioning, and post-completion review, with a greater emphasis on creating design value. The flow of information reflects the concept of collaboration, with movement from multiple points in various directions. Its essence is to establish a communication and collaboration system through organizational and administrative methods, as well as technical, economic, and administrative relationships among planners, contractors, **departments**, and other relevant entities, ultimately achieving an optimal balance so as to fully realize the social, environmental, and economic benefits of the project construction. — 2 — Challenges ▌1. The diverse and differentiated needs of clients regarding design management services. Against the backdrop of reforms in the construction industry, clients are paying increasing attention to the meticulous management of projects, the quality of management, as well as the scope and level of expertise of their consulting partners. However, due to market influences and the level of awareness regarding vendors offering design management services, there are many challenges in actually implementing design management for construction projects. Meanwhile, the demands of clients for design management services are becoming increasingly diverse and differentiated, which places higher requirements on service providers. ▌2. Full-process engineering consulting firms have a vague understanding of the aspects involved in design management. Design is an important component of the full-process engineering consulting process, yet these firms have disputes and insufficient understanding regarding the definition of design management as well as its scope of services; they hesitate due to unclear boundaries of responsibilities. In the blue ocean of engineering consulting, to overcome cognitive barriers and resolve disputes, it is necessary to reach a consensus on the scope of services, rights, responsibilities, and benefits. ▌3. It is difficult for full-process engineering consulting firms to find a way to enter the field of design management. Although many such firms are seeking ways to intervene in the design process for management purposes, cost constraints mean that many consulting companies focus mainly on passive quantity calculation and pricing, lacking the motivation to move beyond their traditional services and engage actively in design management. Finding a breakthrough in the closed cycle of lack of business, lack of experience, and lack of capability is a core issue. — 3 — Development Path For companies engaged in full-process engineering consulting, the three most important types of resources are human resources, organizational resources, and market resources. Most consulting firms rely on the external environment and hope to drive business transformation through the guidance of **industry associations. Therefore, the development path of the design management business for whole-process engineering consulting firms revolves around three key elements: business organization, information and technology management tools, and the external market environment. ▌1. Business organization building: Talent is the foundation, and organization is the guarantee. A good organizational structure not only enhances team cohesion but also enables the team to achieve the sum of individual capabilities. It is necessary to fully leverage the organizational value of the company, shifting from relying solely on individuals to using organizational power to foster employee development. Integrate company resources into the entire organizational structure to gradually enhance the overall design and management capabilities of both employees and the company, thereby increasing corporate value and creating a “1+1>2” effect. The design innovation and reform carried out by full-process engineering consulting firms do not involve completely overhauling or destroying the existing corporate structure and work processes. Instead, at the current organizational management level, these firms respond promptly to changes in the industry environment and customer needs, and on the basis of the traditional supplier model, they transform or optimize aspects such as culture, organizational structure, systems, and platforms – representing a completely new business supply model. ▌2. Construction of an information technology support system: The further development of information technology is changing traditional business processes and rules in subtle ways. Design management can be carried out more effectively and efficiently on information technology platforms, while the performance and service value of consulting firms can be reflected on collaborative platforms. (1) Database construction: Various information and data in the construction industry have become fundamental resources, and technical parameters are inevitably used in the design management process. Although cost estimators generally have little understanding of design, and there are professional barriers, every project begins with schematic design drawings; all indicators and data can be converted into cost information for analysis and evaluation. The construction of longitudinally comparable and horizontally standardized databases provides a solid data foundation for design management. These data are the “weights” used in negotiations between consulting firms and design agencies. However, building a database cannot be accomplished overnight; it requires the gradual collection and accumulation of empirical data throughout the project. It is a process of continuous improvement and refinement. (2) BIM technology support: With the development and advancement of information technology, big data based on network technology will be more widespread, diverse, and easier to access than ever before ; BIM technology can provide mature and high-level technical support for design management. Combining BIM technology with digital technologies represented by big data can significantly improve the level of information integration in the construction industry and the efficiency of project participants. This enhances the convenience for consulting firms to carry out design management tasks, as well as their initiative in strengthening complex design management based on objective conditions. Consultants using BIM technology need to get involved at the early stages of the modeling process carried out by the design team, rather than creating the models themselves; their role is to inform the designers of the required standards for the design quality and to extract the necessary information from the models. ▌3. Establishment of a supportive external market environment: The overall design management practices for full-process engineering consulting firms are still under development; a favorable external support environment provides these firms with greater motivation and confidence to develop and transform their business models. For consulting firms, the two external entities are ** and industry associations. Looking at the development of the consulting industry abroad, **the role of industry associations cannot be underestimated. As a partner of both the developer and the consultant in construction projects, the owner has a significant influence on the implementation and advancement of design management activities. (1) **Standardized guidance: In construction projects,** there are usually two roles. The first are industry managers and macro-level regulators, and the second are owners of public investment projects. As macro managers, it is necessary to promote various forms of consulting service models, encourage consulting firms to update their service approaches, and provide cross-phase consulting services in areas such as investment decision-making, construction, and operation and maintenance. Throughout the entire project process and lifecycle, in response to market demand trends, a single phase of services or combinations of different types of services are driving the development of the design management industry. **As the owners of public investment projects, it is necessary to guide and encourage the outsourcing of design and management services for non-public investment projects. (2) Leadership through industry associations: As a pioneer in the reform of the consulting industry, the Construction Cost Management Association needs to adapt to the new circumstances and seize new opportunities. It should take the lead in coordinating with associations in various provinces, guide the industry in carrying out design management tasks, and standardize business operations, service standards, risk management, and fee structures. The association should organize forums and seminars, conduct specialized training sessions, foster academic exchanges, and strengthen cooperation between universities, enterprises, and consulting firms, so as to encourage consulting firms to actively pursue design management projects. (3) Owner support and trust in construction projects enhance awareness of design management. The design phase is the initial stage of a construction project, determining its direction and success. Property owners should attach importance to design management at the strategic level, support the use of market-based approaches for project design management, and enhance awareness of design management services. If necessary, a professional company can be hired to provide services for them. Increase trust in the consulting party and delegate appropriate authority. Given that the role of consultants is relatively weak among various construction parties, it is not easy to reach the competence and standard of British quantity surveyors or American cost engineers. Therefore, owners should strengthen their support for consulting firms providing design management services. On the one hand, it enhances the trust of clients by boldly delegating certain design management tasks, thereby achieving \"decentralization\". This is also an opportunity to raise consultants’ awareness of owners, allowing for a gradual reduction of the pressure on owners in terms of project management, and enabling their skills and capabilities to improve steadily. On the other hand, granting certain powers to consulting service providers enables them to engage in negotiation and check and balance with design institutes and design agencies. Conflicts between the consultant and the designer are inevitable, especially when optimizing the design. At this stage, the support of the owner is needed; it is not about pursuing speed at the expense of costs, but rather achieving value addition for the project through proper design management. Incentives for design management service fees. Although the impact of design management is difficult to measure accurately, it can be presented as a value-added service to traditional consulting services. Owners should not ignore the achievements of consulting firms, as this might dampen their enthusiasm. The design management services provided by consulting firms should be appropriately rewarded based on the funds saved and the owner’s satisfaction, or the reward amount should be included in the calculation formula for the agreed-upon consulting fee \[Consulting fee = Estimated amount × Basic rate + (Actual amount – Estimated amount) × Reward rate\]. This not only promotes the development of design management services offered by consulting companies and improves service quality, but it also highlights the importance of design management to the owners, thereby strengthening further cooperation between the two parties. As the construction industry in our country becomes increasingly standardized and owners demand more sophisticated services, full-process engineering consulting represents an inevitable trend for the future development of engineering consulting firms in our country. Full-process engineering consulting firms need to be thoroughly prepared in terms of business organization, information technology, and the external market, in order to meet the needs for comprehensive coordination, cross-phase, and integrated services in construction projects. They should provide owners with comprehensive, multi-phase design management services, actively promote the innovative and sustainable development of full-process engineering consulting, and achieve maximum benefits for both parties involved.

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