Optimizing Project Success in Mexico through EPCM
By Erick Kuri, Mexico Business Leader and Operations Manager
Context + Value of EPCM
Protecting costs, time, and quality. Ultimately, project success is the result of three interrelated factors: costs, time, and quality. However, not all factors impact projects to the same degree and some owners aim to intensely focus more on one factor and are willing to prioritize others to a lesser degree in order to achieve a given strategic outcome.
Interestingly, EPCM can offer simultaneous value in all three factors via a clear understanding and management of the entire project cycle. Through EPCM, as a project team is preparing their proposal, they include a tentative schedule to break down exactly how much time will be spent on each phase of the project. At the same time, estimated budgets are also presented at the proposal stage. This process gives owners the chance to approve these pre-defined project factors or suggest revisions based on what elements are most important to their needs.
As a result, this grants both the stakeholders as well as the project team a significantly greater degree of insight than traditional project management affords and helps avoid “surprises” that might derail a project for cost, schedule, or quality reasons.
Today, in Mexico, time is often the most important consideration, with stakeholders willing to place money and/or quality as secondary priorities to meet schedule conditions.
Here are insights.
Added value in Mexico. Cost, time, and quality are factors that are often defined by the culture operating within them. Owners foreign to Mexico do not typically have an intimate, current understanding of the culture, market, and costs. In Mexico for example, this naturally leads to increasing levels of confusion and concern when projects do not progress as anticipated.
EPCM is a method of delivery uniquely qualified to alleviate this potential source of confusion and provides owners foreign to Mexico with a thorough local understanding of all relevant elements. Savvy native project teams are engaged for the lifecycle of a project and are in a better position to break down the process and meet owner expectations than more traditional teams located out of country. Leaders coach the owner and help them attune their perspective regarding work standards and timelines as they are perceived by project contractors.
Sometimes strategies and expectations that are normalized elsewhere are not culturally accepted in Mexico, and advocating for them can damage business relationships. Taking the time to account for cultural differences is an important factor for success that is routinely neglected by project teams unfamiliar with this part of the world.
Rewards + Conditions of Satisfaction. Expert project teams also lead owners to understand how to optimize EPCM contracts by creating important milestones, as well as rewards and penalties, all linked to performance. A reward for good service, such as a share of any remaining funds from completing a project under budget, is just one clear, but powerful way to keep all parties oriented to project success.
In addition to performance-based compensation, conditions of satisfaction can be drafted to help owners meet objectives by specifically defining what they are anticipating. Having clear expectations – measurable and following the SMART guideline – is one of the first steps to a fruitful partnership.
It is common in Mexico to have general contractor companies involved in projects – they only coordinate and subcontract services. However, their success depends upon the subcontractors they select, making the relationship inherently difficult to manage from the owner’s perspective. Subcontractors do not hold a contract with the owner – they have a contract with the General Contractor company. Therefore, owners must be incredibly careful to work with a project team that can provide the majority of their offered services in-house so that stakeholders have direct influence over their performance, offering rewards linked to specific, pre-defined outcomes.
EPCM helps augment industry and/or trade-specific expertise to guide owner stakeholders through processes and/or markets that might be unfamiliar. Owners do not need to understand construction or how the market works – they can focus on their core business and the EPCM project team handles construction project-related issues.
Low involvement. Owners do not have to be overly burdened in the design and construction processes with EPCM. Their savvy EPCM team manages even minute details and ideally coordinates with a single project manager from the owner’s side. This affords everyone involved in the project, from the decisionmaker to the frontline contractor employees, a level of clarity that does not require much time to achieve.
How scale and geography factor. Because the emphasis is on directing the details so that owners can focus only on major decisions, EPCM’s method does not offer the same value to all owners. Some stakeholders might have an in-house construction company that executes their projects, and would likely find less value in EPCM’s process. But that would be unique as most businesses don’t have that scale of expert support. However, a large company might be expanding to international sites in locations where they do not have established networks. In such a situation, EPCM handles the expansion process on the ground, offering owners invaluable local knowledge.
While EPCM might not be a perfect fit for every owner, its principles are universally beneficial. Local insight is irreplaceable in projects outside a company’s origin, but, unfortunately, its importance is often overlooked by more traditional teams until surprises or disruptions develop. Approaching a project with cultural knowledge and domestic contacts streamlines planning and execution processes.
Common Tough Challenges where EPCM offers the solution
Keeping all aspects of a project within the same team from the proposal to the finished construction in a foreign country removes a layer of “scope creep” that can develop in projects with multiple parties. Coordinating details, responding to client concerns and requests quickly, as well as maintaining the flexibility to adjust course when necessary allows EPCM teams to tailor their approach to individual business needs.
If teams lose sight of construction needs and timelines, the engineering solutions might not work regardless of how well-done it is. Project managers keep these timelines in mind as they relate to design, engineering, and construction. These “masterminds” cover everything from hiring contractors to working with in-house specialists to ensure all aspects of the project, including details like securing permits before the construction contractor is hired.
Ultimately, EPCM gives owners a substantially greater insight into the entire project cycle as well as its management which results in fewer surprises that might challenge a project for cost, schedule, or quality reasons. In Mexico today, EPCM offers a unique value as time is often the most important project factor to optimize project success.
Ing. Erick Kuri is the Mexico Business Leader at SSOE Group (www.ssoe.com), a global project delivery firm for engineering, architecture, and construction management. With nearly two decades of in-country experience as a manager and engineer, Erick has extensive project knowledge with automotive / manufacturing facilities and distribution centers in dozens of cities throughout the Mexican industrial corridor. In addition to having local resources and knowledge of the Mexican construction market, Erick is able to execute projects more quickly and more cost effectively for SSOE’s clients. He can be reached at 52.477.391.0420 or by email at email@example.com.