Summary
How you package your technology scope is a pre-construction decision, and it sets how much of your margin makes it to completion and whether the building opens on time. It isn’t a cost question to settle at an evaluation stage, it’s a packaging question to think about much earlier.
A four-package route looks like the safe, competitive choice, and most of the time nobody questions it. What it costs you appears later, in the variations and claims that gather, and in the four programmes that all depend on each other.
Put one accountable partner across your solutions and one team takes ownership of the joins typically associated with four subcontractors
You give up some immediate line-item visibility at tender (which you get later on) and some supply-chain control. What you protect is your margin and the date the building opens.
Let’s think about how you package a building’s technology when a scheme comes in. HVAC, AV, appliances and connected technology, sent out as four competitive scopes to four specialists, the way it’s always been done, and a routine pre-contract call. It’s a bigger call than it looks. It’s one of those early decisions that sets how much of the margin you tendered reaches your final account, and whether your new expensive technology is ready on the day you’ve contracted to hand the building over.
A four-package route is the default choice for good reasons, your commercial team would defend. You get four competitive tenders, specialist against specialist, a clear breakdown your QS can benchmark and review, control over who does what, and the option to swap one package without disturbing the other three. None of that’s wrong. The catch is that the cost of it doesn’t show up on any of the four prices you’re levelling. It appears later, in the variation itself and in the claim that tends to follow it.
Where does your margin go?
Start with where the money goes on a fragmented job. A lot of the avoidable cost in construction comes from information not crossing cleanly between the parties, and four packages build four of those boundaries into your technology scope. The Get It Right Initiative reports the direct cost of avoidable error at about 5% of project value, rising to 10 to 25% once you count the indirect and latent costs, worth £10 to £25 billion a year across UK construction. The mechanism the industry enables is this, and in our case as HVAC, AV, appliance and connected technology specialists, you’re buying the processes and expenses of these specialist solutions four times over. The joins between HVAC, AV, appliance and connected technology don’t belong to anyone, so a variation that changes your AV scope impacts your HVAC programme, and an appliance delivery that slips delays handover. Each one is a change event, and a change event is where your margin erodes, in the variation itself and in the claim that tends to follow it.
The sentence is grammatically incomplete. Suggested correction: “HKA’s CRUX research, reported by RICS, found that change in scope is the leading cause of delays and disputes worldwide. And when a change does harden into a dispute, it gets expensive: the sums claimed averaged 35% of a project’s capital value, with time extensions averaging around 16 months. Most of your changes won’t go that far, but it’s a good example of what a single change event can become once it’s argued instead of resolved quickly. Fewer parties means fewer boundaries for a dispute to form around. Trust one accountable partner across four solutions and the number of change events that become disputes is handled inside one contract, so the number of change events at completion is reduced through close coordination internally rather than argued.
What happens to your programme
Four packages means four programmes that depend on each other, with four parties who each look after their own. When one arrives before another is ready, or a change surfaces late, the fix causes a delay. And a late change costs more to absorb, because procurement has already happened.
If you put your technology scope with one trusted partner, there’s usually one specialist programme to work to, and one team coordinating it from start to finish. That’s a lot easier for your site team to manage, because dependencies between HVAC, AV, appliances and connected technology get sequenced inside one plan, rather than coordinated across four separate schedules yourself.
WWhere the risk lands, and whether the building opens
There are a few risks to consider with tendering for four packages. The first is what happens when a fault impacts more than one system, when nobody is technically responsible for it. When a fault impacts two scopes, you’ll probably see two suppliers point at each other and your team ends up managing it, right through the defects period and into occupation.
The second is day-one readiness. Appliances arrive last, and something like a missed power or drainage connection is what stops a finished building from opening. For you as the main contractor you’re accountable for delays, with liquidated damages and a messy final account to think about.
Put one accountable partner across all four solutions and that partner is responsible for a fault wherever it’s found, and for the coordination between technical solutions. The risk that was split across four contracts is now one party’s.
Is there a trade-off?
There’s a small trade-off here. In a traditional sense, consolidating four technology packages means less competition at tender, and less direct control over each specialist in your supply chain. Your QS will tell you that, and they’re right to want the line-item control that four separate packages gives them.
But what that point of view misses is the coordination dividends that come with one partner handling all four. Your QS still gets all the details, just delivered in a slightly different way, with the consolidated bid itemised to the same breakdown as four separate costs.
We would question what the real cost of this traditional approach is. Do you see it in the variations that accrue across multiple packages? Or in the four dependent timelines that all stack across your programme?
On a large, heavily serviced building, that cost usually outweighs what the four separate bills buy you. On a smaller, simpler scheme, it may not.
The decision
How you package your technology scope is a pre-construction decision. It sets the margin you aim for and the date you open. Made early, with one accountable partner across the four solutions, it protects both. Made as four packages out of habit, it reduces your margin and impacts your programme, exactly where it’s hardest to get back.
Sources: the cost of avoidable error from the Get It Right Initiative, reported by the ICE; the leading cause and cost of claims and disputes from HKA’s CRUX Insight research, reported by RICS; and the rising cost of late change from the MacLeamy curve. The industry figures describe the pattern, not the effect on a specific scheme, which should be confirmed against that scheme.
Recent Article
Where a four-package technology tender wastes money
A four-package route looks like the safe, competitive choice. The cost shows up later, in variations, claims and four programmes that all depend on each other.
Read ArticleMargin leak inside four technology packages
Package a scheme’s technology as four scopes and you pay for the same management layer four times. One trusted partner across the scope prices it once.
Read ArticleReady to stop managing four suppliers and switch to one?
Fill out the form and we will be in touch within 20 minutes.
