GEM Engserv Pvt. Ltd is an ISO 9001:2015 certified organization, certified by TUV India in accreditation with National Accreditation Board for Certification Bodies (NABCB).
Outsourcing is the practice of hiring a party outside a company to create products and perform services that traditionally were performed in-house by the company’s own employees and staff. The decision to give certain functions to an outside service provider should be taken after careful consideration. Once tasks have been outsourced, reintegrating them back into a company can be anything but easy. Organizations should always first check that the benefits outweigh the disadvantages for your company before opting for outsourcing.
Outsourcing has been prevalent do different degrees in different geographies and businesses. As economies grow, greater efficiencies are obtained by outsourcing tasks to specialists. However, for the outsourcing to deliver the expected benefits to all stakeholders and the society, the business ecosystem must be mature. In the infrastructure and real estate sectors in India, a wide spectrum of PMC services exists. At one extreme are organizations that do everything in-house and at the other extreme some organizations only manage a plethora of service providers and integrate all these services while delivering their product.
Project management consultants are external, outsourced agencies responsible for delivering projects on time within the resources and budget allocated. A project management consultant brings in specialized knowledge and skills that empower businesses to make informed decisions throughout the lifecycle of a project, from the planning stage to completion.
Organizations that outsource Project Management also adopt different models. We at GEM Engserv have been associated with many of these business models for outsourcing the PMC services. The variations primarily relate to the functions that are outsourced, the nature of project teams, and the responsibilities devolved on the external service providers. Based on our experience, the following models exist. The entire spectrum of the PMC services is discussed along with the pros and cons of each model and what it takes to succeed with a given model. These models present increasing accountability of and authority with internal resources/teams.
On one end of the spectrum is the model where the entire management of the project from the pre-construction phase till completion/handover is outsourced to a specialist agency.
The PMC is the first service provider on board, immediately after the ‘GO’ decision is taken by the owner. Appointment of all other service providers, contractors and taking care of all activities from planning & design to commissioning is the responsibility of the PMC. This model is not much prevalent in India as owners need a big ‘leap of faith’ in outsourcing he entire project management function to an external agency. It requires a very mature management team with owners and highly responsive, expert, and proficient PMC to succeed.
A very common model is to outsource the construction management to an external service provider, who comes on board more or less at the same time at which major contracts are awarded. The CMC has no role to play in the pre-construction phase and therefore it is not appropriate to label them as PMC. CMC agency is made accountable for timely construction of the facility within budget and conforming to the requirements of Quality and Safety etc.
The challenge for the CMC is that they have to face the consequences of inappropriate (sometimes downright wrong) decisions taken at the pre-construction stage, especially with regard to contracting strategy, quality of contract documents, selection of contractor, and readiness of the design, etc. It requires the owners to rely on the CMC for successful delivery and at the same time have just the right representatives present at the site to keep an eye on the CMC & provide timely decisions on critical issues.
Another model where the owners wish to retain greater authority and accountability internally is the hybrid model. In this, the owner first creates an organization structure of the project team and resource (manpower) deployment plan. Then some resources from each team are outsourced to an external service provider. Typically, the front-line or junior resources are outsourced, and the controlling resources are retained in-house. Sometimes, functions on which the owners do not have a strong team are outsourced more than others.
The focus is to maintain a light organization structure so that scaling down the team during tough times is much faster and easier. For this model to succeed, integration of the internal and outsourced resources is crucial. A cultural mismatch between the two kinds of employees can result in demotivation. It is also important the there is alignment between authority and accountability otherwise there is a tendency to find scapegoats who are the CMC employees!
In this model, the owners retain the overall control of the Project management function but completely outsource some specialist functions. Typical examples are outsourcing Quality control to an independent agency while retaining all other functions in-house. Similarly, there are many instances where only the measurement and bill certification function is outsourced.
This practice stems from the belief that independence between the construction supervision and the Quality/function is more effective in achieving better product quality or independent billing function provides better cost control.
On the opposite end of the spectrum is the temping model in which the entire authority and responsibility for results rest with in-house CMC teams, but a large number of employees are not directly employed by the owners. A service provider, more often a specialist recruitment or a temping agency provides manpower to the project. Needless to say, this should actually not qualify as a CMC/PMC service at all, however, it is mentioned here as the temporary employees are all meant for the Construction Management function.
This model is adopted in a very volatile market where upsizing and downsizing the teams at short notice or frequent intervals may be called for. The challenge in this model could be a lack of involvement and ownership of project objectives by the employees deployed. They may feel it to be a very transactional business and be the least engaged of the lot.
As discussed above, many different models of outsourcing PMC/CMC services exist. Each model has its advantage and challenges. Different strategies are required to succeed with different models. The factors that have a bearing on the success of these models include the organization culture, size of the current and future project portfolio, mindset, and management bandwidth for managing the outsourced services.
We at Gem Engserv have experience in being party to most of these models and have had our share of successes and troubles!