How do Owners organizations strike a balance of managing from within as much as possible without external service providers?
I see this debate quite often in the industry and I discuss this topic quite often with my clients.
The economic climate of the past ten years or so has forced the global industrial community to become increasingly specialized and Owners organizations have become very lean (reduced internal headcount and increased specialization).
Because of this, industrial knowledge in TAR and Capital Project management have migrated out of the Owners organization and now Owners are faced with two main issues; they no longer posses the specialized knowledge & expertise or they have an unhealthy reliance on external contractors.
In my opinion, the Owner has to strike a balance between internal headcount and external support, there isn’t a simple formula to figure out what is correct, as each organization is unique in their needs.
The primary drivers are the size/complexity of the work load as compare to the capabilities of the in-house organization. Owners should always seek to migrate knowledge and subject matter expertise into their organization in order to protect their interests on smaller/routine work and use external resources when the workload or complexity of the work overloads the in-house organization. The key is to recognize (honestly) what the organization is capable of managing efficiently and effectively.
This situation has become critical in the recent economic condition; many Owners organizations have cut back on the utilization of external resources in order to reduce costs. However, we have found that because of the lack of “in-house” specialized knowledge the Owners have been unable to properly execute their strategy … resulting in increased costs, reduced profitability, etc.
I also firmly believe that the more proficient our clients become in our industry, the farther we can take them into the detailed intricacies of our expertise. Thereby allowing our clients to gain more substantial improvements though a higher power of knowledge.
