A critical aspect of your commissioning strategy is your commissioning responsibility model. Get this wrong, and your commissioning will not go well at the end of your projects. Listen to learn the important commissioning strategy elements required to set your project up for success.
Welcome to today’s live session on the three project delivery strategies for commissioning. Now, there are often aspects of project delivery that I’m sure you’re familiar with, but there are the end aspects of commissioning for commissioning responsibility models that need to be considered at the beginning of projects, and this is what often gets missed. So, we’re going to go into some great detail today to help you plan the strategy of your projects and plan for success. If you haven’t already, be sure to join the Industrial Commissioning Association. This gets you access to commissioning standards, plates, document templates, all the information that you need to plan for your commissioning success, and all the strategy elements that we’re going to talk about today. Go to icxa.net/join, and you can get instant access to check out all the commission resources that you need to plan for your project’s success.
Today’s topic is the three project delivery models for commissioning success, and this is a critical element of your commissioning strategy and planning for your commissioning, and this takes place right at the beginning of projects during your project concept stage or during your FEED stages, and this decision alone to determine the success of your projects. If you get this wrong at the beginning of projects and you create some of the conflicts of interest that will go through here, then it’s pretty tough to be successful with commissioning later. This is what leads to project success, and this needs to be determined right at the beginning of your projects as part of your project every strategy. I’m sure you’ve heard of your project delivery model, and we’ll go through all the typical project delivery models for EPC or design-build or those such delivery models, but there’s also a key critical aspect that often gets overlooked as you’re commissioning responsibility model. We’ll go through that in detail to make sure that you get this right on your projects. If you get these wrong on your projects, then before you sign contracts, when you’re dividing your strategy, your projects are already in trouble before your project even starts.
This is just a fundamental critical decision that’s made right at the beginning of projects that will determine the success of your projects. The motto we often say is “start with the end in mind,” right? And if you’re not starting a project correctly at the beginning, then it’s pretty tough to succeed at the end. You’ve seen some of these project delivery models. I’m sure you’ve worked on projects that have followed these project delivery models, and you need to choose the proper delivery model that aligns the incentives of each group working on projects with the risk allocation that everyone’s comfortable with as well because if you end up with misaligned incentives, then you’re gonna have misaligned project outcomes, right? When projects run into problems and challenges, and they always will because these are complex initiatives that we’re undertaking, right? When there are challenges, then people will always default back to the incentives that they’re incentivized in their contracts, and in a lot of cases that is time and money, right? Time and money are very important, and those are often the incentives that are incentivized in projects, whether it’s time penalties or liquidated damages or costs due to time delays.
Those are the incentives that groups are going to fall back to if there are problems on the projects, and if they’re only focused on time and money and not focused on quality and commissioning as well, then we’ve all been part of those projects where time and money are the focus, and everybody needs to leave site once out of there, so that commissioning is the one that suffers, right? So, it’s very important to get this correct right at the beginning of projects. These are the six primary key project delivery models that I’m sure you’ve seen in these EPC contracts is very common in large projects world: engineering, procurement, and construction, where there’s one group that will do all the detailed design engineering, procure the equipment, and install everything for construction. There’s also another EPC which doesn’t get maybe as much recognition as it needs to or it should. This is where your EPC contractor is also doing the commissioning. Sometimes you’ll see EPC, and it’s implied that there’s a second “C” there, or it’s not clearly defined, so it’s important to make the distinction between those two because in some cases it does make sense for the EPC to do commissioning, and in other cases it doesn’t. We’ll go through some of those. You maybe heard the term “design-build,” and that’s very similar to an EPC structure where the group that’s installing is also doing the engineering and procurement. There’s another contract structure, “design-bid-build.” I didn’t list it here, but design-bid-build would be the upfront engineering group doing all of the engineering and detailed design, and then the work is being bid for installation.
That project model has kind of disappeared because there are lots of complexities between the engineering and the construction, and often it’s better to have those two groups working more closely together, but I do have an interesting presentation next week on some of the trends in the industry and where that may be trending towards, so definitely check that out next week. Construction management, where there’s a group that’s just responsible for managing the construction, ID-integrated project delivery. This is where construction folks are getting involved very early in the project during some of the FEED stage work and project concept work, BOOTs, or BOO—build, own, operate, and transfer. Those are some of the other delivery models, and I’m sure you’ve seen all of those, but the piece that often doesn’t get discussed enough when project delivery models is being determined is commissioning responsibility models. So, one thing is to be clear: in all cases, the project owner is responsible for the commissioning process. They’ve owned the commissioning process because commissioning is really the owner’s tool to verify that they get what they paid for at the end of the project, right? Commissioning is the group or the process that oversees all aspects of the project to make sure that in the end, the project functions as it’s originally or as its original design intended. Much earlier in the project, the project owner is the one who defines the commissioning strategy, and this is defined prior to awarding any contracts. So, there are three primary commissioning responsibility models that exist, and these are the OEM-first, and the commissioning. So, if there’s a vendor manufacturer that’s building the equipment, it’s often best that they are the ones doing the commissioning because it’s their equipment, and they’re most familiar with it, and they can perform the detailed testing on their equipment, and this can vary on the size of the project.
This could be just equipment-specific, say it’s just a pump working, working on, say, a large HVDC project where there’s an OEM responsible for providing everything kind of as a system. Well, the OEM is best to perform that commissioning because they’re the ones that know and understand their systems the best. Then there’s EPC commissioning, and this is where the contractor group that is doing the installation will also have a specialized team to do the commissioning. Now, there’s challenges with this model, and we’ll go through some of those later because there can be conflicts of interest that are created where the individuals that are verifying the work are verifying their own work from design and construction, and when you have a group verifying their own work, that can create some challenges, and we’ll go through that in this presentation. And then there’s also owner-led commissioning, or either where commissioning is done by the owner or by a third-party group. This is often the best commissioning model if it’s not OEM equipment, where the owner owns the commissioning process and also oversees and leads the execution of commissioning as well, either with the owner’s own in-house commissioning team or a contract directly with the owner to perform commissioning on their behalf, and we’ll go through that one as well.
In OEM commissioning, this is the vendor-led approach, and this is where the OEM commissions their own equipment. This is actually common in a small scale on projects, right? If you buy a three-phase centrifugal pump, that is a very specific piece of equipment. You’ll have the manufacturer come to site and do the startup of their piece of equipment, but where it gets more interesting is when there’s an OEM that’s providing a system-wide solution, such as, say, an HVDC system or maybe a particular water treatment process or the very specific plant process for processing chemical equipment or whatever. When that OEM is providing more of a system-wide solution, then that OEM is best to commission their equipment and their systems, because they’ll understand the equipment the best. They’ll understand the control logic that’s controlling all of the aspects of the processing system, and they’ll understand all the control logic, and often that control logic is proprietary, and they’re the best ones to commission that. So, yeah, this can exist in power plants or in the process industries where it’s specialized equipment that the vendor is providing, and they’re the best ones to commission those. There are some considerations, for sure: the testing of the OEM’s equipment and the factory for factory acceptance testing and integrated factory acceptance testing. That’s an important part to make sure it’s part of your commissioning strategy to oversee the vendor’s, the OEM’s specific off-site testing activities, and when we get later in the process for integration or startup, that we want to make sure that the vendor support is available to continue on right through to the end of the project and essentially to ensure that all integration of all the equipment—not just the OEM systems but all of the systems—integrate into a full system for internal plant process.
Like I said, the OEM is in the best position to commission their own equipment because it’s theirs. They understand how it was designed, how it functions, how it needs to be tested in the field, and particularly the control logic. Now, one thing to consider is that OEMs are unlikely to perform startup activities. They can perform static commissioning, and they can perform dynamic commissioning, but often when it comes to startup introduction of process fluids or first energization or connection with grid OEMs may not be able to do that. In likely cases, they won’t do it because they’re not the licensed operators. They don’t hold the license to operate that particular plant process or that facility, and they’re not going to take on the liability of doing that. That would be still an owner’s responsibility to integrate with an existing bulk electric system or introduction of the process fluid, say, if it’s a water treatment plant and you’re going to be discharging fluids into the river. The license holder is responsible for that, and the OEM is not likely to take on that liability and that responsibility. That would be the kind of split in the roles and responsibilities there. The owner’s operating team is still responsible for startup. The OEM is still involved—they’re witnessing and observing and verifying their systems during startup—but the group actually doing the startup would be the owner’s operator, just due to licensed operators and liability that the OEM or the contractors aren’t likely to take on. So, then for EPC commissioning, for contractor-led approach, this is where the EPC is responsible for installation, all of the construction activities, and then they’re also responsible for system-wide commissioning for the full integration—the static commissioning, dynamic commissioning, possibly startup as well—but same issues may exist for licensed operators.
This would be the case for large infrastructure. Oil and gas industry sometimes does this back and forth, and it’s very important then, in this case, because this presents some additional risks where you’re having the group that did the installation also verifying their work during commissioning, and it can create a conflict of interest. So, it’s very, very, even more important to define upfront the contract roles and responsibilities and the responsibilities for turnover. It’s important to define how that’s going to look for contractor supervising the vendor commissioning. In a lot of cases, while the EPC is responsible for procurement of equipment, so those vendor involvements for equipment, perhaps how that’s integrating into the contractor’s activities, and in this case, because of the conflict of interest that’s being created here, it’s very, very important to link commissioning to payment milestones to make sure that successful gates within the commissioning process are being achieved and are tied to payment milestones to make sure that the owner is getting the quality systems that they’re expecting to receive. This does create a conflict of interest, and it needs to be thought up front when you’re planning your projects and planning your commissioning strategy, whether or not you’re comfortable creating this conflict of interest, because the contractor is essentially verifying their own work. In the EPC contract environment, that EPC will have done all of the detailed engineering design, they will have done all the detailed installations, and then essentially you’re having that same group verify their design and their installation.
Now, you have to have pretty tight controls on that to make sure that that conflict of interest is minimized, and it might seem okay at the beginning of projects that it’s easy to give the EPC this responsibility as well because they’re saying they can do it, and it’s one less contract for project owner to oversee, but it does create misaligned incentives, right? It’s essentially like the fox guarding the henhouse, and it does require very strong oversight from the owner of very strict contract management to make sure that groups are performing as specified in the contract to minimize that conflict of interest. It might seem all great at the beginning of projects—still in the honeymoon stage, everybody’s getting along great, right? But then at the end of projects, when there are challenges, and there always will be challenges, then the contractor is going to default to the incentives that are in their contracts, which, like I said earlier, is often time and money, right? So, contractor’s pressured to get on, finish the job, and get off-site. They’ve got cost restrictions, they’ve got time restrictions, and what suffers is commissioning, right? So, it does require even stronger contract oversight from the owner to make sure that all groups are doing as specified in the contract, and the EPC may not still be able to perform the startup activities—they’re not licensed operators, or they may not have licensed operators. It depends. There are regulatory requirements, and contractors are not likely to take on that liability since they’re not the license holder. So, it still then may default to the owner’s operating team that’s responsible for startups. That needs to be planned in your commissioning strategy right from the start to make sure that the roles and responsibilities division is clearly defined and what the contractor’s or the EPC contractor’s—where that role ends and where the owner’s role starts for startup. And then the third commissioning responsibility model here is owner-led commissioning.
This is maybe for more sophisticated owners, but not necessarily, because there are lots of big commissioning groups that come in and provide these services for the owner on the owner’s behalf. Not all project owners have sophisticated in-house capabilities to do vertically integrated commissioning, and they’ll still rely on an outside team to come and do the commissioning on their behalf. It’s for a project owner that maybe only builds a project every 30 years—then it’s unlikely they have in-house commissioning capabilities that can manage the commissioning of these large projects. For project owners who do repeatedly complete projects, maybe they’ve built up those capabilities, but that’s often not the case. So, then the owner may choose to have a separate contract directly with the owner, reporting right to the owner, that is the commissioning group, and that group is responsible for managing and executing commissioning through all phases of the project. And this is a good model for owners that don’t have that sophisticated level of commissioning—is to bring in a third-party commissioning group to oversee design, oversee construction, and make sure that all groups are delivering for the contract and meeting the owner’s intended needs at the end of the project, to make sure that all the integration activities take place and that systems are being delivered to the owner that are reliable and can be used for decades of reliable operation. So, in this case, the owner maintains full control of all aspects of the project. This could be done in utilities, this could be done in high-risk industries, but this is where the owner has the most control to make sure that they’re getting what they need at the end of the project.
There are some contractual considerations: it’s important to enforce vendor deliverables and make sure that the EPC is meeting their portion of the commissioning obligations, whether that’s every activity leading up to construction completion or whether that’s some of the beginning static completion activities. The EPC may still have a role for vendor startups and aspects like that, wherever the handover is defined to hand over to the owner’s commissioning team. It does require a very structured approach for documentation for commissioning to make sure that at the end of construction—how that’s defined for construction completion, payment milestones are associated and that the document deliverables are clearly defined so that the owner’s commissioning team has everything that they need to proceed with the smooth commissioning and startup, and then definition of trial operation and the handover requirements that the owner’s third-party commissioning group is responsible for to turn the systems over to the owner’s plant operators. So, in this case, this model maximizes the owner’s ability to meet the project objectives. It does require a little bit more sophistication on the owner’s half, but you can always have a third-party commissioning group involved that is the group that executes plans and executes commission on behalf of the owner, should the owner not have those in-house capabilities. This might seem like a lot more work—just one more contract to manage, right? It would seem so much easier to give to the EPC right at the beginning and let them manage commissioning, but you do have to be aware that does create a conflict of interest, and that will be years later that you realize that, once commissioning actually starts. But creating a conflict of interest at the beginning of projects isn’t always the best idea because there will be challenges. In this case, though, the owner does have direct responsibility to oversee all aspects of the project and make sure that they get what they paid for. But if owners are only doing commissioning every so often—every few decades—then they may not have the capabilities to do the in-house commissioning and maybe need a third-party commissioning contractor or a separate contract to oversee and perform, plan, and execute commissioning on the owner’s behalf.
Regardless, it must be clearly defined in contracts, and this is why we put our commissioning strategy together if you’re getting a project—to make sure that that clear definition of where construction ends and where static commissioning starts is clearly defined in contracts so that everybody has a clear view of goalposts they must achieve for their scope of work. In this case, for owner-led commissioning, the owner is in full control to integrate all the new assets into existing facilities. So, this is common in the electrical industry as well because if you have an existing bulk electric system and you’re going to be adding new assets to the system—such as, say, a synchronous condenser or HVDC system or a new power substation—integrating those new assets into the existing system can be quite complex and very operationally specific, and it’s best if the owner manages those activities to make sure that the integrity of their existing system is maintained while new assets are put in service. These brownfield projects are lots of fun and extremely challenging when new assets are being integrated into existing facilities, and owner-led commissioning is often a good model in those cases to make sure that everything goes smoothly. The owner’s operating team is then responsible for startup, has a key role as part of that commissioning team to make sure that everything is integrated correctly. Now, these are the things that get missed at the beginning of projects, right? Nobody’s thinking about commissioning several years prior—they’re focused on getting the work started, they’re focused on getting the engineering started, they’re focused on awarding construction contracts to get the contractor mobilized to site—but this is all the stuff that determines the success of your project at the end, and if you don’t get this right in contracts, then it’s impossible to clean up later because the contract’s written, and as you know, if it’s not in the contract, then it’s not going to happen, right? So, I put together some of the factors to consider for establishing your contracts at the beginning when you’re comparing some of these commissioning responsibility models. Some of these we’ve gone through for the three models that are here, but who acts against commissioning? Well, I think that was straightforward: OEM commissioning, EPC commissioning, or owner-led commissioning. Scope of commissioning: where OEM maybe commissioning only equipment-level commissioning, but that could be more wide-scale for aspects of OEMs that are providing a full, complete system, such as an HVDC system for power transmission. In those cases, it would be more than just equipment-level—they would also be responsible for integration-level and system-level commissioning.
In the case of larger system-wide systems, the owner would still be responsible for startup, so then some of the risk of integration would still lie with the OEMs, but it’s important to define that boundary before contracts are awarded. In the case of the EPC commissioning, the EPC is responsible for system commissioning, but the risks can shift in this instance as well, right? As I said, if EPCs are incentivized for time and money in contracts, then when things get squeezed at the end of projects—as they always do—then that’s what they’re going to default to: how they’re incentivized in contracts, which can be a challenge and maybe somewhat of a conflict of interest. And in the case of owner-led commissioning, then the owner assumes all of the risk, but they also assume all of the control to make sure that they’re getting what they need. What industries are these common in? It can depend on the complexity of your system, so it’s maybe not industry-specific, but it’s more system complexity and determining what’s the best commissioning responsibility model for your project—something to look at in advance when you’re going through your risk profiles before contracts are awarded: how are you going to structure contracts based on your system complexity?
Testing and performance verification: vendors test all the equipment; they also will test the integration of dynamic commissioning if they’re providing a system-wide solution. EPC ensures system-wide testing and performance verification are completed on the owner’s behalf, and then for owner-led commissioning, that’s the responsibility of the owner to perform the static commissioning, dynamic commissioning, integration activities, and startup as well, and there are various contract risks, as I’ve talked about here as well. In the case of OEM commissioning, there may be some vendor gaps if they’re only focused on the particular system that they’re providing—that there may be an interface between another system being provided by somebody else. It would still be the owner’s responsibility to make sure that there are no gaps. In the case of EPC commissioning, I’m sure you’ve seen these games where the EPC tries to shift the blame to the vendors or to the owner, right? It does create that conflict of interest, and you do have to be aware of that when you’re structuring your contracts to minimize that and your contract oversight to minimize that potential issue. For owner-led commissioning, this does require a little bit more sophistication on the owner’s behalf, and it does require strong coordination and owner’s oversight from the owner, especially if there are multiple contracts—then the owner manages the interface and is responsible for that interface between contracts to make sure that the entire plant project process system is being built and commissioned per the intended outcome.
And then the last piece here: what are some of the pros and cons? Well, in the case of OEM commissioning, the OEM understands their equipment the best, so they must be the ones that commission their own systems. It would be very difficult for a group that’s never worked with a particular OEM’s set of equipment to go in and understand their control logic, and they may not even get access to their control logic because it’s proprietary. So, that’s a pro: the OEM does understand their equipment the best and are the ones that are best to commission their own systems. For EPC contractor-led commissioning, this can ensure vendor compliance, and maybe from an owner’s perspective can be viewed as less complex because there’s one less contract to manage, but as I said, we create that conflict of interest. And then in the case of owner commissioning, there’s a single entity that’s responsible for the entire system integration—for static commissioning, for dynamic commissioning, and startup. It guarantees a more comprehensive approach across the project for startup activities. Some of the cons of OEM commissioning are they may not be focused on the system-level aspects or the other integration aspects outside of their scope and rely on either the owner or the EPC to manage some of those integration activities. One of the big cons for EPC commissioning, like I’ve mentioned, is that the EPC often—I’m sure you’ve seen—tries to push commissioning risks to the owner or to the equipment vendors, and this does require very strict contract enforcement to make sure that this commissioning responsibility model can be successful on your projects. And in the case of owner-led commissioning, one of the cons is this does require experienced commissioning leadership that can lead large projects to success, so it does require a little bit more sophisticated approach, a little bit more depth of leadership on the owner side to oversee the contract and make sure all the activities for design, construction, installation, and commissioning are being enforced for the contract.
I have mentioned it a few times: we do want to avoid setting up our contracts at the beginning of projects to have misaligned incentives. If the EPC contract is incentivized for time and money—which they often always are, right?—time and money is the language of contracts, then that can create some challenges here as well because the owner’s project initiative incentive is, of course, time and money, but also quality and reliable systems. And when everything gets squeezed at the end of projects and time, money, or quality has to sacrifice for the others, contractors will always focus on time and money, right? And then quality becomes a secondary thought, which, of course, impacts commissioning. One less contract is not always the best approach—it depends on your specific project situation. It can seem desirable at the beginning of projects to give that commissioning portion of the work to your EPC contractor because EPC, of course, says they can do the commissioning—whether that’s true or not, right?—so it just might seem like it’s one less contract interface to manage, but do be cautious when you’re planning this commissioning strategy at the beginning of your projects because it does create this obvious conflict of interest and creates challenges at the end of your projects well in advance of even getting to that portion of the project. So, everybody’s in the honeymoon stage at the beginning of the project—everybody’s excited, “let’s build this new project”—and with the time and money constraints that always come at the end of projects, people will always default to how they’re incentivized in their contracts. You can’t blame people for that—it’s human nature, right? People are always gonna default to their incentives, but those are the challenges they’re created at the end of projects if that’s the commissioning delivery model that you’re going to pursue.
I’ve got some commissioning resources that can help you sort some of this stuff out on your projects if you’re interested. We’ve got an ICA Commissioning Project Audit—this is where we push your project team to commissioning excellence through implementing digital data management strategies for the leading-edge commissioning software, defining some of these aspects that we’ve talked about for commissioning strategy and how you’re defining your contracts at the beginning to avoid some of these conflicts of interest, developing that contract precision that you need. What are the elements that need to go into construction contracts to make sure that commissioning aligns at the end, as well as the implementation of the ICA Global Commissioning Standard into your commissioning processes and your project delivery models to guarantee a standardized approach to commissioning for better results each time you build your projects? So, if you’re interested in a commissioning project audit, you can go to icxa.net/audit. We can help you identify the gaps in your commissioning delivery models to fill in some of these processes for strategy, for contract frameworks, and optimize your commissioning execution so that you can improve the handover process at the end of your projects and your project targets. For individuals who want to learn more about this, we have our Intermediate Leadership Program and our Advanced Leadership Program for commissioning.
These are a great way to get up to speed on some of these strategic elements of commissioning because technical skills alone will not get you to commissioning success. Although the aspects we’ve talked about for contracts, for digitalization, your strategy—all of the project management aspects you need to be implementing, your commissioning leadership, your commissioning planning—these are all of the aspects that go into a successful project at the end, and if you’re only focusing on the technical, then you’re missing a large portion here. So, our commissioning leadership programs give you that additional depth of knowledge on all these additional problems—you can lead your projects to success, and you can check that out at icxa.net/leadership. Here’s some other resources that might help you out as well. Like I mentioned right at the beginning of this presentation, if you don’t already have a copy of the ICA Global Commissioning Standard, go to icxa.net/join—there’s no cost to join. You can get access in there—you get access to the nine documents that make up the commissioning standard. Get that in your hands, get it to other people on your projects, and that’ll help you implement everything that we’re talking about here on your projects as well. And for discussions you may be having with, say, your project managers or your project sponsors or executives—they don’t necessarily want to see the whole nine-document standard—this is a very helpful brochure that you can use for some of those discussions to give them an overview of what this is and why you need to use it on projects. You can download this one-page PDF brochure at icxa.net/brochure—get that PDF document and use that for discussions with your management to show them why you need to be doing these things on projects and why you need to be having these discussions at the beginning of projects to plan for your project success. But I will be doing another of these live sessions next week, same time. This will be the delivery strategies for project success related to how AI is going to be transforming some of the things that we’re working on on projects—from the front end of projects for design and for commissioning at the end of projects—so definitely watch your email and check out that presentation that’s coming up. It’s going to be quite informative, I think, on some of the things that are coming down the pipe here for this agentic transformation that we’re in right now. So, definitely join me next week—we’ll go through that topic as well. Those are the links there for any of the resources that you might need help with. Oh, now go through your questions.
So, John says, “Well summarized, thanks, Paul. In many cases, the OEM is the EPC, or at least the ECM, in which case the owner-led commissioning model is followed. Relying on a third-party commissioning group can be very risky, and it does require having a highly qualified internal team to supervise.” I agree—yeah, so there’s a couple different nuances there as well. You’re right—it is having a third-party commissioning group can still be part of the EPC where the EPC has their construction groups, and maybe they subcontract out to a specialized commissioning group. That’s one model, and that can still create a conflict of interest because it’s still the same EPC that’s controlling those two groups—the construction and the commissioning—and they could be influenced negatively in that reporting structure. Another model would be where the EPC is only responsible for construction, and then that subcontract or contract to the commissioning group is directly with the project owner—so that you don’t have the construction groups and the commissioning groups reporting to the same entity. That split can help to differentiate or prevent that conflict of interest and allow the owner more control to make sure that they’re getting what they paid for at the end of the project. Although, you’re right—it does require a little bit more sophistication and a qualified internal team to manage that commissioning group. And then, I guess the third level would be where that is a vertically integrated in-house commissioning team that’s been developed over years—the owner has those resources in-house and can plan and execute that commissioning—but that requires a higher level of sophistication, which is great if owners have that, but that’s not always the case and sometimes defaults to some of these other project delivery models.
“OEM means original equipment manufacturer?” Yep, that’s absolutely right—the group that designs the equipment and builds it in their factory then would also be responsible to commission that equipment on site, and like I said, that can be just a simple piece of equipment for equipment-level startups—for a pump, for a compressor, or something like that—where it gets very interesting is when the OEM is providing a system, and they’re providing all of the pipes, pumps, motors, valves, transformers, everything, control logic—as providing a system—then that OEM is best to commission their equipment because they’re the ones that designed and built it and understand it best.
“The leader is typically not the same party as that which is contractually responsible for the execution of a particular part of the overall commissioning scope—may be stating the obvious, but it is still worth a mention that that is often the case”—and it depends on the strategy that you define right at the beginning of projects, right? It may be the same party, or it may not be the same party contractually—it can depend on industry, it can depend on level of sophistication by the owner, it can depend on the specific systems within that particular project and the level of risk that everybody is comfortable with—but how that’s defined needs to be defined right at the front. When we look at construction contracts, they’re usually pretty light on details of any of this stuff for commissioning. It’s challenging because, in those cases, contracts are being used to start the project, but they’re not necessarily being used as tools to finish the project, and those are the projects that never end well, right? Because nobody put the thought upfront into the contract structure or the project delivery model, the commissioning responsibility model, and try to figure that out later—or if there is some sort of high-level definition, it’s not thoroughly defined in contracts. The goalposts aren’t clear for anybody on what the end of construction means, what the end of commissioning means, and everybody’s getting into disputes because it wasn’t clearly defined upfront in contracts. I’m sure you’ve been part of situations on projects like that before.
“Someday I would love to hear your view on IPD commissioning. I find this delivery model the hardest to execute through the commissioning process due to the many shortcuts the team makes.” Yes, there does seem to be a prevalence in the industry to have construction folks involved early, right? Progressive design-builds, early construction involvements—where the contractors are getting involved early in the design aspects—and this makes sense. It makes sense for groups to collaborate more when we’re finding out projects, right? Having the construction folks involved earlier can certainly help to alleviate design issues or constructability issues or find a better way to modular building aspects—this is all valuable input from construction groups—but nobody in the industry seems to be thinking about early commissioning involvement. The focus is exclusively on construction, and I don’t get it because you better have a plan to finish your project before you start it. Having a plan to build it is great, of course, and you want to efficiently be able to build it, but not having a plan to finish your project is a fundamental flaw on projects. You need to start with the end in mind, and really, if you don’t have a plan to finish your project, then you probably shouldn’t be starting it. When people are defining these commissioning strategies, they often do it to themselves, right? Because they haven’t properly thought out how they’re going to finish the project and what are some of the challenges that are going to take place at the end of projects—what are the particular conflicts of interest that may be created with an IPD commissioning model or project delivery model, and how is this going to result in shortcuts at the end of the project?—because nobody’s thinking that way. Here’s an adventure, like I said—everybody’s still in the honeymoon phase, and everybody’s getting along just great, and “how could this possibly go wrong because look at the team working so well together,” right?—but wait till the pressures come later—the time pressures, the cost pressures—and it’s not anybody’s fault, but it’s human nature, right? There are gonna be aspects of shortcuts that are gonna be taken, right? Because people have to behave how they’re incentivized in contracts, and if you create those conflicts of interest right at the beginning of projects, then don’t be surprised later when people follow those incentives because that’s how you incentivized them—that’s just human nature, that’s just the way it goes, right? So, this does require some upfront strategic thinking to make sure that you’re not setting your project up for shortcuts, like you say, or misaligned incentives at the end during this challenging phase of the project. So, definitely a good question, Gregory. Definitely check out next week’s presentation—they’ve got a pretty in-depth discussion on how the AI agentic transformation that we’re in is going to revolutionize the construction industry, whether people like it or not.
We’ve seen in the last six months the software engineering industry be completely transformed—they’re saying in the next six months from now, 90% of the code generated worldwide will be generated by AI, and by the end of the year, pretty much all of the code will be generated by AI—so that’s a pretty quick transformation that completely decimated the software engineering industry, right? So, the other engineering fields aren’t too far behind—from electrical engineering to mechanical engineering—and it’s going to completely transform the industry, and that’s probably what the industry needs. It’s due for an overhaul because it’s been stuck in stagnant progress for the last several decades. So, definitely check out my presentation next week because some of you will love it, and some of you will probably be quite scared by it. So, definitely join me in a week from now—we’ll have a great discussion on some of the things that are coming in the construction industry. So, I appreciate everyone joining today—lots of good questions, lots of good discussion. Hope to see you next week.
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