A Complete Guide to OR Services

Undertaking a significant capital project comes with numerous inherent risks. Many moving parts are involved, a lot of money is at stake and projects are becoming increasingly more complex and demanding of time and resources from the Owner. Moreover, each project is unique, differing vastly in terms of scope, objectives, budget, teams, schedules and regulations. This complexity requires a high learning curve, rendering it challenging for the Owner—even one with construction project experience—to successfully execute their goals and objectives. In addition to that, the Owner already has a full set of responsibilities outside the undertaking of a project.

As the Owner of a building or facility project, how can you overcome these challenges, reduce your risk and successfully turn your vision into reality? One way to considerably mitigate your level of risk is by hiring an advocate, or an owner’s representative, with the specific set of skills, knowledge and expertise to look out for your best interests and efficiently guide you through the planning, design, construction and occupancy phases (the overall development process), to ensure a successful outcome.

What Is an Owner’s Representative in Construction and What Do They Do?

In the construction world, an owner representative (also called an owner's rep) is an industry expert hired by the Owner of a building or facility project to act as the Owner’s advocate and represent their best interests. This can be particularly helpful for projects where the Owner has limited knowledge of design and construction, or lacks the time and resources in-house to effectively fill this role.

There are numerous inherent risks related to the overall development process that can hinder a successful project’s outcome. Owners will often find the project development process daunting because they don’t fully understand where all of the inherent risks exist. All too often project goals are not met, causing the Owner to question their decisions and the abilities of the participants they’ve chosen to work with, and whether they have the Owner’s best interests in mind. Engaging the services of an owner’s representative is the safest way to appropriately manage and mitigate the inherent risks involved in the project development process.

The reality is, project teams are compiled of many different consultants and contractors, each with their own ideas and sometimes conflicting interests. An owner’s representative is the only member of the project team whose one main overriding interest is to execute the Owner’s project goals and objectives. Working together with the Owner, the owner rep acts on behalf of the Owner on the performance of their duties and responsibilities and making sure the project stays on track, on schedule and within the approved budget, thus allowing the Owner to make informed decisions in a timely manner.

Just like the conductor in an orchestra knows the precise timing to bring in the various instruments, in the correct sequence, and in just the right harmony in order to create a beautiful concert, an owner’s representative keeps the project running smoothly – making sure everything progresses as it needs to progress, team members are engaged at the right time and are meeting their contractual deliverables.

An owner’s representative is responsible for representing the Owner’s interests throughout all project phases—from inception, planning and design to construction, completion and closeout. The owner’s representative serves as the liaison between architects, engineers, contractors, testing agencies, utility providers, municipal authorities, financial institutions, FF&E (Furniture, Fixtures and Equipment) vendors and other specialty consultants and third-party vendors. The approach of an owner’s representative should be collaborative but also focuses on accountability and assurance that all project team members are working towards the Owner’s goals and objectives. The true value of the role of an owner’s representative is in providing a process in which the success of all team members is encouraged, not hindered.

To summarize, some of the fundamental responsibilities and expertise an owner’s rep brings to a project include:

Representing the interests of the Owner with the sole purpose of achieving the Owner’s goals and objectives.
Acting as the Owner’s eyes and ears and keeping a pulse on the project.
Confirming the project meets the Owner’s requirements, budget, schedule and regulatory agencies guidelines.
Establishing clear lines of communication and ensuring all team members are working towards achieving the Owner’s project goals and objectives.
Maximizing the value of the Owner’s investment. A skilled owner’s representative can recognize where inherent risks exist and appropriately manage and mitigate these risks.

The specific services provided by an owner’s representative varies based on a project’s scope and the Owner’s requirements. Typically, the owner’s representative provides project management oversight throughout all phases of a project. Some of the owner's representative scope of services (or the major services an owner's rep provides) include:

Budget and schedule management.
Stakeholder management.
Establish the project communication plan.
Risk management and mitigation.
Quality management and contract enforcement.
Managing requests for proposals and bids.
Selection and procurement of project team members.

When Is the Best Time to Engage the Services of an Owner's Representative?

An owner’s representative can be engaged early on during a project’s inception phase or later during any stage of a project such as: project inception; planning; design; construction; closeout and occupancy.

That said, it’s preferable to engage an owner’s representative during the initial project inception so as to collaborate directly with the Owner to establish the fundamentals of the project. This could include aspects such as identifying the Owner’s goals and objectives, establishing a vision for the project, determining a realistic budget and schedule, helping with site selection and assembling a project team and project delivery method best suited to meet the Owner’s needs.

However, although engaging the owner’s rep sooner is better, that’s not always possible or realistic. Don’t let timing prevent you from bringing in an owner’s representative later in the game. Owner’s representation services can be incredibly valuable at all stages in a project’s timeline.

5 Benefits of Engaging an Owners Rep

As we’ve touched on, the role of an owner representative provides a unique and vital skillset essential to delivering a successful project outcome. Let’s take a look at five of the main benefits of hiring an owner’s representative.

To Look Out for the Owner’s Best Interests. An owner’s representative is the only member of the project team whose one overriding interest is to execute the Owner’s project goals and objectives. The ultimate objective is for the owner’s representative to become an extension of the Owner and the Owner’s staff. The owner’s representative can then confirm all project team members are aligned with the Owner’s mission and actively working towards achieving it.

Improved Risk Mitigation and Peace of Mind. There are numerous risks associated with any capital project. For example, budgets can be exceeded, deadlines missed and regulatory requirements overlooked. A skilled own rep can identify where these inherent risks exist and implement a project management plan and help the Owner appropriately manage and mitigate them.

Time and Money Savings. It is the job of an owner’s representative to help deliver a project on time and within the approved budget. An experienced owner’s representative recognizes when project costs are too high or low and will look for opportunities where the schedule and budget can be brought back into line. Moreover, engaging the services of an owner’s representative means that the Owner can continue its day-to-day operations without getting diverted by the project and losing focus on their other responsibilities.

Enhanced Communication. An owner’s representative serves as the central point of contact, establishing lines of communication between architects, engineers, contractors, testing agencies, utility providers, municipal authorities, financial institutions, FF&E (Furniture, Fixtures and Equipment) vendors and other specialty consultants and third-party vendors. An owner’s representative facilitates communication across team members to ensure information is being shared/communicated in an efficient and timely manner. The owner's representative provides a streamlined process in which communication, and ultimately success, of all team members is encouraged, not hindered.

Informed Decision Making. As an experienced construction professional, an owner’s representative can help explain complex issues, manage conflicts and advise on matters that are outside of the Owner’s sphere of knowledge. The owner’s representative can assist the Owner in making informed decisions that keep the project on track.

Finding an Experienced Owner’s Representative Firm

The role of an owner’s representative needs to be filled by either by an Owner’s in-house staff or, an independent third-party owner’s representation firm, or both. It’s critical for the Owner to objectively evaluate its project management capabilities and current workload in order to determine if it needs the assistance of a third-party.

When engaging the services of a third-party, it is crucial that the firm is independent, objective and unbiassed. The owner’s representative should be in no position to financially benefit from any particular outcome of the project. Additionally, the owner’s representative should place great emphasis on verifying that deliverables from the design and construction team are aligned with what is contractually required and coordinated with the deliverables of the other specialty consultants and contractors. This allows the owner’s representative to confirm with certainty that the entire project team is working towards the Owner’s goals and objectives and they are reporting accurate information to the Owner. Because the owner’s representative has a fiduciary responsibility to the owner, they will always act only in the best interests of the owner.

In addition to seeking out an independent, impartial owner’s representative firm, three additional key requirements and qualifications to look for include:

A firm that specializes in providing owner’s representation services, with extensive industry experience on similar types of projects.

Expertise in all aspects of construction (planning, design, architecture, engineering, etc.) coupled with excellent project management skills and a proven track record of coordinating the team members, schedules, materials, equipment and budgets necessary to achieve a successful outcome.

A working understanding of how to best balance delivering consistent service with the flexibility to tailor its services to meet the needs of the Owner.

How Much Does an Owner's Representative Cost and How is The Fee Derived?

Owner representative fees are typically structured as a percentage of the total project budget or total construction budget, depending on the size and complexity of the project. For large capital projects with a construction cost of over $5 Million, typical project fees range from 1-3% and are determined based on a sliding scale and on either the construction or project costs.

Conclusion

The success of any project is dependent on the critical attention to management of the project budget, schedule, quality and communication. To help mitigate risk and deliver a successful project outcome, many Owners are seeking out the guidance and expertise of an Owner’s representative.

Engaging the services of an owner’s representative is the safest way to appropriately manage and mitigate the inherent risks involved in the project development process. Working together with the Owner, the owner representative acts as its advocate, representing its interests with the sole purpose of executing its goals and objectives, providing accountability among team members and ensuring the project stays on track, by adhering to the project schedule, budget and quality goals and objectives.

For more information on owner's representation services and how our owner’s representative firm can help support your vision and accomplish your goals, contact The Mehaffey Group. We offer a range of construction consulting services such as Owner's Representation, Cost Management/Estimating, Infrastructure Management, Cost Segregation, Real Estate Advisory Services and Technical Services.