A few weeks ago I had the privilege of giving a talk at the second annual ProcureCon Facilities Conference. I summarized the entire event in this post here.
As part of the conference, I moderated one event and then gave a talk on How To Manage Your Construction Supply Chain And Benefit From Self-Performing Contractors.
The topics from this talk are from previous blog articles published on this blog, so rather than writing new articles on the same topics, Today’s post will give a high level overview and link back to my previous articles.
I began the talk by discussing how the construction supply chain works. We briefly reviewed the breadth and depth of the construction supply chain. We acknowledged which tiers of the chain we tend to address more frequently and which tiers we focus on less.
We then discussed the reasons why we need to define cost categories. We discussed how the industry lacks consistent standards and talked about the value defining cost categories brings.
From there we jumped into each of the categories and defined the specific items that belong in each category.
We defined the fee as the costs associated with business operations of the General Contractor and reviewed the labor, insurance, and overhead costs that belong in this category
General Conditions of Construction
The next cost category we defined was the General Conditions of Construction. Here we defined the GCoC’s as costs incurred for managing the work. We also established that these costs should all be specifically tied to project duration.
Cost of Work
Under the cost of work category we agreed that this was the cost category that realized the Owner the greatest physical value and defined it as all of the trade work necessary to perform the work.
Self Performed Work
We then walked-through how you can benefit from Self Performing contractors and discussed a few ways to manage the various forms of profit a self-performing contractor has.
As the talk came to a close, we also touched on travel subsistence costs and Small tools and Consumables. I realize I have not yet posted much on those topics so be on the look-out for a future article to cover those topics.
If you are interested in having a ready reference for these topics, you can download a PDF version of my ProcureCon presentation here. Also, during the talk we got pretty deep into a discussion on procurement policies. In response to that I wrote an article on procurement policies. You can read that article here.
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