Posted in Science Engineering Technology

Contractor vs Consultant.

This is a pretty lengthy write-up not yet edited. Plus this needs validation by my civil engineer husband. Here is the unedited version.

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There is this kind of dilemma that civil engineering professionals face in their careers. Whether to continue working for contractors or to join a consultant company.

Among the contractors one may be Class A category or Subcon (subcontractor who leases work from the main contractor – this could be compared to something like ‘outsourcing’). The civil contractors are the grounds persons who are in charge of the actual execution of an infrastructure project whatever it may be.

A steel designs company drawing up the structural drawings could be the structural engineering consultants for a project, in charge of supplying design frameworks (with which normally projects commence).

Consultants are totally different league from contractors, overseeing the execution of a civil project undertaken by and for the contractor on behalf of client(s), hired for a fee. Besides the structural engineers, the consultants could also be mechanical, electrical and even planning etc., the scope for which may be included in the civil projects. For instance, a highway project may have utilities to be provided (such as cable network, sewerage, power supply, water pipelines etc., ) which will have to be summarily executed by the civil contractors for which the consultant companies may provide service. These additional scopes of work entailing mechanical and electrical inputs may be covered mostly by the respective departments etc., from the parent contracting company. It is generally so with mammoth organizations that mostly have functioning civil, mechanical and electrical divisions with impressive logistics and manpower at their disposal. In some cases, for cost cutting, the civil contracting company may also outsource these extra but inclusive works to a third party subcontractor. Many a time this may prove to work out as an economic and timesaving option.

Contracts usually are awarded on the basis of EPCM, Engineering-Procurement-Construction-Maintenance. The contractors may appoint consultants on approval of clients. The case where the clients award only Procurement-Construction and not maintenance, the former may opt to choose the consultants for the projects. There is another contract model BOT which is Build-Operate-Transfer which is mostly the case of those mega projects such as sewerage plants or power plants.

So essentially, the clients could be mostly the state for who private contractors work overseen by a various disciplines of consultants. This is how civil projects of any nature are undertaken for completion. Rarely there are private infrastructural works. Bypassing the housing sector, let me limit this post to industrial infrastructures.

How do projects commence. How are they awarded, and to whom and why.

The idea for civil or mega infrastructure projects germinates as societies grow and the need for civic amenities multiplies simultaneously. This necessitates building of more dams and reservoirs, highways, airports, water pipelines, sewerage, oil tanks etc besides developing housing colonies. Experts visualize the expansion plans and make a way for providing for the facilities in upcoming budget outlays. There are also five year plans, annual plans etc., floated by national governments and state governments with a view to give more impetus to promote better infrastructure to raise the quality of public life. Good statesmen may think a hundred years ahead when executing and commissioning mega infrastructure projects.

Once the ideas proposed by thinktanks get govt nod, first of all a feasibility study may be undertaken. Many ambitious projects get dropped right at this initial stage before they could even hope for a take off.

Next is the environmental clearance which is mandatory nowadays.

When all the conditions are met, finally it may appear that the said project could be undertaken and fulfilled. It is at this stage that the government may think of appointing a contractor who may accomplish the task for them.

Tenders are floated by respective departments inviting quotes from qualified bidders for awarding of projects. In India, the tenders are advertised in national newspapers and government gazettes. The entire process is to be completely transparent to rule out favouritism or corruption. However this is merely a public gimmick. Normally when projects are in the offing and tendering is to commence, the civil contractors stay alert. A kick-off meeting is usually held in order to detail the bidding parties as to the specifications and scope of works to be awarded. All interested or concerned civil contractors are present to hear and receive the specific details. The terms and conditions and time frame are also discussed in the process. The contractors now have amply material and statistics to study before embarking on the process of bidding for the tender.

In an increasingly competitive world, the construction or contracting companies mostly have departments devoted to this stupendous task of procuring projects, bidding on dot without incurring heavy losses for the organization and at the same time making a slender or handsome profit to make the project viable. Through all this they have to keep an eye on the timeframe, manpower and even machinery. The idling of machinery is burdensome and can incur great losses for the company, not just the nondeployment of manpower/labour.

Competent construction companies may bid for the tenders after arriving at their own costs on careful homework on the project to be awarded. A few may engage the services of consultants even at this stage to crosscheck their cost projections. Needless to say, the contractors have to cover themselves from all fronts right from this point. The most competitive bidder will naturally be bagging the contract which will be justifiable normally with this proven track record when it comes to fulfilling civil contract obligations.

Final estimate for bidding a tender floated for any civil construction project is arrived at after a detailed analysis of overheads such as material costs, labour, consultant fee etc., to which finally a decent margin of profits could be added. The terms and conditions in asterisk marks need a cautious contemplation on the part of the contractor as these mostly mask the hidden costs and charges. Almost every single ambiguity about charges needs to thrashed and disposed off beyond doubt at this stage. Such details are listed in the project prospectus distributed to bidding contractors during the kick-off meeting organized by the client side. The meeting can be a productive session for eliminating dubious double charging and seeking clarifications on all salient points. More than a tendering manager and his department, a project head can shed some light in this unchartered grey area.

The escalation of project costs due to non availability of raw material or machinery or manpower or rising costs of one or all of them cannot be ruled out, the provision for which has to be safely built in in the bidding figure. Finally projects are undertaken only when they are viable. However, there are bidders for international infrastructure and mega projects today who intentionally underquote to win the bids for the only reason of gaining a foothold in the construction-contracting world such as the notorious chinese companies. Today they are the biggest headache for quality civil contract and construction companies who have an impressive track record and who are economically viable from every point of view.

Here let me give an example. Let us suppose there is a small civil project with a turnover of say 9 million $ in construction costs including all bills such as labour, raw material, machinery, logistics, consultant fee etc. A company may include a decent margin of 10% and quote the bidding price of tender at 10 million $ for instance. The competitors may bid at say, 8 million $, 11 million $ etc. The bidding parties have to detail their specs such as the brands of raw materials they may be going for, the consultants appointed etc., which may have an impact on project awarding. The clients proposing the project must also find the bidding costs economically viable and the project feasible in which case the project may be awarded to meritorious candidate. Normally the least quoting bidder wins the contract.

(In India, kickbacks alegedly play a role in awarding of contracts. Sad.)

There is legal consultancy and bankers involved through all this. Legality of agreement is verified to mutual satisfaction on either side and the bankers issue bank guarantees to the contractor even at the stage of bidding which is one of eligible criteria for a contractor to bid for the tender.

In India, there may be a crucial and complex step to be overcome in respect of certain civil projects such as highway expansions, building of dams etc. This calls for land acquisitions which in turn may give rise to uprisings in local communities and ensuing legal battles and human rights issues. Compensations for displacements have to be factored in therefore. In middle east countries, government is the deciding authority having a final say in all matters.

So after all these deliberations, finally let us suppose a company bags a coveted infra project spanning three years with a turnover running into millions of dollars, with the legal contract successfully signed to mutual satisfaction of both the client and the contractor wherein the consultants are also listed

Next comes the phase of structural drawings just as we have in our housing plans. Housing is the basic infrastructure which we are not discussing in this post. High rises for all their imposing stance also are one of the most uncomplicated projects to undertake. Cakewalk. In housing, architects have an effective role to play but even so, the role of the structural engineer cannot be any less significant. Now this is the kind of civil engineering most of us are familiar with. Urban based and easy to relate to and executed in hospitable parts of the country, the civil projects of such a nature are dream for fresh graduates of civil engineering. Metro rail projects, expansion of sewerage plants, treatment plants, powerplants etc., within urban limits are most sought after jobs by young engineers today.

The approval of the clients and consultants is necessitated right from the structural drawings, in the case of massive infrastructural projects. Clients, as stated, are the parties for whom construction may be undertaken. For instance, if we have a civil project undertaken in Chennai such as Metro rail, then the client could be the railways department or the state or central govt. Consultant could be the specialized agency giving the company input for execution of the project stage by stage, verifying with the contractor if things are proceeding on right lines, checking on progress, deviations etc. Foreign consultants could also be hired for this purpose. As mentioned before, the consultants may be of various disciplines such as mechanical, electrical in order to cover the scope of the entire civil work to be undertaken. In Metro rail station construction for instance, scope for electrical contractor arises where it concerns power supply. The civil contractor may outsource this work on landing of the entire project. Or the clients may decide on awarding the extra scope to a third party bidder. In any case, the civil contractor team will have to work in tandem with the electrical contractor, either his own subcon or a third party one appointed by the client. In Chennai’s civic body projects, the Public Works Department (PWD) could be the client for whom private contractors may be working winning a bid floated for the purpose. Naturally, the lowest bidder of the tender wins the contract. Which is why, some NASA astonaut once remarked that, he wouldn’t want to think that the space shuttle he was flying in into space had been assembled and put forth by the lowest bidder who won the contract!

Contractors enter the picture after the structural design companies (also consultants) because they are the implementers of any project as per client requirements. We are not discussing clients here who may be viewed like film producers. The clients role ends with production supply such as financing. The clients may have specifications that may need to be adhered to.

The contractors also mostly engage Consultants for their services for a fee bundle. The clients may need their professional counselling to check whether the work undertaken is to satisfaction and standards prescribed. There is a window for time schedule as well to ensure progress. Mostly the consultants are appointed to the mutual agreement of the client and the contractor. We have to remember here that the consultant loyalty will always lie with the client.

‘Who to work for’ is a big question that arises in every budding civil engineer’s mind. A contractor’s job is that of execution and a consultant’s work is to oversee, kind of cool, even as the client pays for the work. So young engineering graduates always want to gyrate towards consultant offices as working under a contractor is tough and demanding in worst climatic conditions. Even the package drawn by consultants may be better than the contractors who may however merit bonuses on remarkable performances of showing profits.

For that matter, core engineering such as mechanical or civil or chemical never pay as much as the software industry. However there is slow and steady growth in these divisions and the pink slips may never be heard of. The core sector never goes out of fashion although like anything else, gets updated continuously. In my experience I have found the core engineers to be very passionate about their chosen careers. Unless one has the right attitude, he/she must not opt for core engineering in my opinion. The going is tough. Not everyone can become part of the management. Core engineering deploys more works people on the ground.

Married to a civil structural engineer who has always wanted to work only for a contractor so that he can be in the thick of action doing the actual work. My husband is not for the consultant kind of table work which he admits is no cakewalk either. Structural engineering can fry one’s brains. On the other side is my son who is a structural engineer specialized in steel structure. He would like to work for green projects and would want to involve himself in software applications in the field of civil engineering. For old school guys like my husband, this is unthinkable. Years of running around under scorching sun, commanding power and running the show and controlling his team and executing the projects give him the adrenaline rush. Today’s youngsters who play computer games instead of street cricket in hot Chennai sun, says my husband, lack the stamina and vigor and mental strength that are demanded by tough industrial civil engineering projects such as his.

‘If everyone wants to straight away become a consultant, then who will dirty his hands and foot and work for the contractor? who will actually execute a project and accomplish a good infrastructure?’ asks he. If no engineer is willing to man an oil well or the rig or the powerplant, then the world will only grind to an abrupt halt. Someone has to do the essential job. Someone has to be there at the spot where oil spouts out where temperature could touch 70C. Someone has to man the reservoirs. Which is why he says, he prefers working for a contractor over consultant.

Today there are advanced machinery for everything, but for decades, for excavation works etc., manual labourers used to be led first. Poisonous gas accumulations such as methane have proved to be lethal in many a case with workers losing life. Even today there are instances of cranes crashing, mudslides etc., taking toll on labour forces. This is how mostly heavy industrial projects begin and function.

There are areas of civil engineering (mostly table work) that are totally mechanized like for instance that of the draftsman. Yet just like we have to have to multiplication tables by heart and know how to use the log book if we have to in case of not having a calculator, the civil engineering men must have their basics thorough.

No wonder not many have an appetite for this kind of work. One has to be both physically and mentally stronger to remain and work in the field for a lifetime. Even your grasp of finance and management must be good because, there is a motive for undertaking huge industrial projects as far as companies are concerned: these infrastructures pay well. Where the mathematics may go wrong and the bidding costs could be low quoted, the contractors risk incurring heavy losses. This is why they go for bank guarantees without which they cannot qualify for the very bidding process of a floated tender. For securing such a bank guarantee of a decent limit, the contractor must have a proven track record. This is where pre-qualified contractors rake the moolah. Freshers have to tough it out.

This is not to state that the companies use substandard materials to secure a project or increasin profit margins. There are standard checks at every stage to ensure that quality is maintained for which the contractors may have a Quality department. The specs have to be listed even in the bidding document which will be uncompromisable unless otherwise there is a block in the supply chain.

Civil companies have Purchases department in charge of the purchase requirements. They take care of the raw materials.

Machinery department overseas overheads such as cranes and other tool and machinery etc.

Logistics department may take care of the transport including movement of labour from camps to setting up of portacabins.

Quality department and safety department have an effective role to play in entire process of execution of a project.

Document controller keeps track of all the transactions and records beginning with the work of the Tender department whose work is over with the bidding process and procurement of the project. Documents pertaining to purchases, machinery, logistics, labour, consultants, clients etc., are maintained in chronological order. These become permanent records of the project for the contracting company.

There may be safety hazards involved for which education and training are mandatory as a precautionary method of prevention. Safety departments handle that and almost every single day an infrastructure project starts with safety protocol. This shows, safety is hardly taken lightly anywhere or any moment. The materials in the projects may weigh a ton, one may have to work at an altitude, climb a dizzy crane etc., that may require standard industrial safety uniform complete with industrial safety boots and steel helmet and aprons to be worn by the workmen.

There is a methodology as to how they go about executing a project from the scratch.

On procurement of project starts the planning outlay, the budgets, the phases of execution and more than all the deployment of manpower and procurement of raw material on assessment. The excess raw material is also not affordable. For instance cement excess procured earlier than the time of requirement or excess in supply will have to be waste if not utilized by another site project, out of which no profit can be seen for the current project. Thus there is a catch here. The resources have to be maintained in such that nothing idles even for a single day. Resources usage and availability may fluctuate but everything has to be balanced.. Extra resources get mobilized at once to alternate projects by any company to ensure that no manual effort or raw material or machinery goes wastes. So many many costs cutting and string pulling to ensure that a decent profit is still made possible for the team.

All this involves a lot, lot of working out of engineering charts, scales, drawings etc. Which is where memory power comes to a great advantage. The ability to remember formulae and industrial standards and tables and figures and stats in hundreds and hundreds to reel out as and when needed without reference is the biggest plus for a project head. You have to have everything in finger tips. When I think that thousands of engineering graduates emerge out of our universities these days without a clue as to what the subject is about, I feel exasperated. When you cannot translate what you see in 2D into 3D, there is no use in learning. Industrial visits by our professional colleges may hardly be sufficient or serving any worthwhile purpose. You need hands on approach in this area.

One of the project head’s role is to finalize the sequence of execution or the phases of execution in order. Just like you cannot fell a tree sitting on a top branch, you cannot commence a project without mapping out the entire project in your mind stage by stage. For instance, the utilities are underlaid which must precede any other construction activity. Pre-existing structures also need to taken into cognizance. There have been instances when in the drawings supplied information on the same has been wanting. Industrial accidents can result from this oversight.

An ambitious project head visualizes the project right from the bidding stage for the tender to structural framework and consultant services such as mechanical, planning, electrical etc.,, taking into consideration the budget outlay and the profit projections, manpower and raw materials, supply chain, time schedule etc to its execution and completion, with a pre-conceptualized order of sequence to follow. His involvement in the project may start with the tendering but not necessarily. A loyal and devoted team may be a big bonus. Teams are decided right the moment the bid is won.

One irony is that, at times the tendering department may be staffed with engineers who lack site experience and who cannot carry on a project themselves taking responsibilities. This can result in shortsightedness on the part of the tenderers and they may peg the quote at a far higher or lower rates than feasible. Too low a quote can procure a project but could net losses for the company. Too high a figure may force clients to drop the company from the race. The range of bid has to be practical and affordable to the client and profitable to the contractor at the same time. The client may first shortlist the eligible companies out of which the final pick is made on studying other important factors such as quality of supply chains, manpower, previous track record of the bidder etc.

Involvement of the project heads in advance in the tendering process therefore may be much valuable step for a contractor firm. Inputs from the site experience and over all management of manpower and material can add to arriving at an approximate bidding figure that may match expectations and work out for all parties concerned.

Manpower deployment on procurement or raw materials and machinery follows.

Volumes of tri-partite correspondence between the contractor, consultant and client come into the fore as each and every inch of progress needs to be reviewed and overviewed and corrected. More meetings, more reviews, more reworkings follow.

Let us say the project is off to a colourful start and proceeds as per schedule or is slightly behind. Every single day of delay is billed separately which can add to losses for the contractor. Accumulated delays can set off a project drastically as time lapses. Sometimes the delay is unavoidable and therefore can be accommodated by the client side on consultant approval. These may later be adjusted by way of variations running into months, that can be billed by the contractor.

Sometimes the client side also may come up with additional scope of work which can also be billed by the contractor.

Rarely the contractors may tie up with other companies for joint venture should the turnover of the project be massive. This increases risk factors for viability and also decreases eligibility criteria for many contractors for even bidding the tender. Normally in such circumstances, a mid or decent level contractor may tie up with a pre-qualified global construction company who may have an automatic bidding access to any civil infra tender worldwide. Agreement between the JV partners will in that case become an inside matter for the contractor. Profit sharing and manpower sharing as well as material allocations are sorted out in advance by the two giant contractors. Signing authorities could also be dual.

Mobilization of raw material and deployment of manpower on smooth functioning of supply chain and nonwastage of any of these added to effective documentation can move the project dramatically forward in a positive way. The morale of the teams working in tandem has to be high at all times. Together the civil project family work the project day and night in an attempt to minimize delays that can be billed on the company. Every hour and every resource saved can add up to their annual bonus, as they are aware of. Yes, this is what they become as they move from project to project: one family. The project head endears himself to his team and their loyalty to him is moving.

For the sheer thrill of such a project execution, some men do not want to move up the ladder to upper hierarchy where you only get to decide on things but not execute the projects. This they may do for their career satisfaction. Also management guys are of different stock unlike the man on ground zero: they can never visualize or execute a project like some gifted men commanding the respect of their teams do. In order to be in such a commanding position, you need to be strong in all areas of relevance.

Project team meets every morning to decide on course of action that day. They also pre-plan fweeks ahead and schedule work as necessitated by the order of sequence suggested by the project head. Construction managers and junior site engineers and site supervisors take control at various steps and down the ladder we have the actual manual labour deployed for the project. These usually are accommodated in a campsite where they are provided food and shelter under the care of the construction company. Mobilization of labour force needs to be quick and effective.

Project sites also have in them medical facilities and safety aids.

Greening of projects is also now undertaken.

Any deviation from the approved drawings or plans will amount to non compliance warranting the Non Compliance Report (NCR) issued by the client. It is important for a contractor to look into this aspect and make the necessary corrections to dispose off such claims beforehand.

Coordination between the civil team and the consultants finally moves the project in a forward direction. The construction company civil site deployment works in tandem with various consultants including mechanical, planning, structural and electrical heads to pull it. As the routine sets in and the project starts taking shape, the civil family heaves a sigh of relief.

A project running ahead of schedule is unheard of mostly but is not altogether impossible. In rare cases, I have heard of this miraculous feat. Such a runaway project is a goldmine for the contractor. A project completed ahead of schedule is like a feather in the cap of the contracting company.

Successful is a project when the client is satisfied with the final output as the contractor team hands over the infrastructure for commissioning to the clients in the presence of the consultant firms. Moment for jubilation!

In the year 1998 when I flew to Malaysia with my son, my husband received us at the airport. He did not drive us straight to our flat as I expected him to. He stopped at the interchange of the Cheras Kajang expressway in the KL suburb which was executed by him complete with RE wall, flyovers etc. We spent thirty minutes here before heading home even as I was bone-tired. But I understood how important it is for some men to look at the projects they have accomplished and pat themselves.

Since then I have been to every single mega/infrastructure/industrial civil project of my husband, access to some of which are denied. Where entry is not permitted, I have watched from the periphery. I have watched his reservoirs and dams, highways and underpasses and bridges and flyovers, huge lofty circular tanks to hold oil, pipelines in hazardous zones where CO2 or H2S ran merely centimeters below the surface…

Salute the civil engineering fraternity for their relentless efforts in giving concrete shape to our dreams! Really a drop of tear rolls down my eyes as I type this…

I married a young man who said his first wife was civil industrial engineering. I hardly paid attention to it. I realized this only with years.

Married into hardcore engineering and medico family, I learnt in course of time what hardwork is all about and how commitment to work is by itself a religion.

I have a brother-in-law who is a metallurgy specialist, probably No.1 in India or at least south India, who runs his own heat treatment plant employing hundreds of workers.

My other brother-in-law is a devoted private practitioner who has never taken a vacation in decades, as his patients are his first concern.

I can understand how one’s occupation or profession or art or whatever becomes their passion. This kind of passion touches me most. The dedication stumps me.

My pranaams to all men who devote so much of their energy and time to such creative passions and processes be it engineering or art or music. You have to have it in you to come to this point. In my understanding of Dharma, these men can have no punar janam. Such is their commitment to their passion, which is also one way to attain Nirvana or Moksha or Mukthi or whatever.

I count it as my life’s greatest blessings that my path has crossed with that of these great men. I can’t ask for more.

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Party time: After successful completion of every massive industrial civil engineering/infrastructure project, the construction company’s team celebrates. Milestones such as achievement of thousands of safety manhours are also observed time to time. Nothing like a rewarding bonus package to egg them on to go on and on by the contractor.

Now tell me, who should a young civil engineering graduate fresh out of university opt to work for?

Motivation is the need of the hour for our GenNext to propel them into realistic tangible engineering that can translate into value addition to our society. Our kids lacks a big source of inspiration. Retired engineers can look into this and provide counselling and consultancy services for young engineering graduates.

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