So what’s it like when an owner decides to self perform?
Let’s imagine owner self-perform on a very small scale. A couple lives in a house. They decide to install window treatments. (I know, most people say “blinds” or “shades”, but only people in the business say “window treatment”, which is the generic term for both blinds and shades.) This owner is “self-performing” because they do the work themselves. They could have hired someone to install that window treatment. They chose not to.
Owners self-perform because they can. Why hire someone to do something when you can do it yourself?
First, an owner may have the technical capacity to self perform, and therefore simply be comfortable with this method of project delivery. Need to do some interior renovations? Got the crew to do it? Go ahead!
We’ve witnessed organizations with the in-house capacity to self perform, but also with the in-house desire to self-perform at the staff level. There are organizations out there who employ facilities staff who used to be contractors. These are men and women who know how to execute projects, and are now part of a facilities staff. They ache to do interesting things during their day job. Self-perform can be part of a solution.
Second, an owner may perceive long-term advantages in self-sufficiency. If there is a certain type of work that is regularly needed, it may prove beneficial to bring that capacity in-house. The market can be chaotic. Sometimes the market has capacity to provide a certain service. Sometimes the market lacks this capacity. Having that capacity in-house brings certainty to owner operations.
Third, owners may favor financial certainty over financial risk in procuring services. A carpenter on staff may cost $80,000 per year. That number will be a constant year after year. Contracting for carpentry services may be more volatile. One year may see $40,000 in contracted services, followed by $120,000 the next year.
This leads to a final reason to have staff capable of self-performing: these staff are part of the team. There is a difference between employees and contracted labor. Employees may understand an organization better than contractors. They may grow to have real skin in the game.
What are the drawbacks of self-perform? Well, the drawback is that an organization with the theoretical capacity to self-perform may not have an actual capacity to do so. A crew with contracting experience from five years ago is not the same as a contractor who is currently in business. A project manager who five years ago used to run projects may no longer have the tools in place to run a project right now. Estimating, scheduling, knowledge of vendors and subs, payment procedures, how to bid: these are all areas where one can get rusty, can get out of touch.
Contractors may also bring perspectives in-house staff cannot. They work for other organizations, and can develop a more worldly view to their services. This is especially true with professional services, such as engineering and architecture.
So when should an owner self perform? When they can do so and yet not be afraid to hire the expertise they know they lack. The goal of projects is to execute the project, be fiscally responsible, and also provide the participants with a level of professional satisfaction. As long as the owner is willing to recognize these goals occasionally compete with each other, self-perform can be a very good way toward producing successful projects.
Do we recommend self perform over contracted services? Not necessarily. We see large organizations take a blended approach. Some services they keep in-house. Others they look outside for help. This question is a “comfort zone” question. Look at your comfort zone, keep good records of actual project cost. If you bring services in-house, keep those people happy and fulfilled. If you contract out, keep those people happy and fulfilled.