STEP 5. IMPLEMENTATION 31 Insourcing Versus Outsourcing Tactics The final decision the utility will have to make is if and how to split the design and construction work between an internal (insourcing) or external (outsourcing) workforce. Given that a resiliency program will likely consist of spending above and beyond current activity, a critical question is can and/or should the work be undertaken with the existing engineering and construction workforce? The answer to this question is based on a nuanced understanding of the utility’s internal capabilities and access to competent and experienced external service providers. In part, the anticipated program will require a realistic evaluation to determine the resource needs for design, procurement, permit acquisition, project management, and construction. As always, contingency planning for large outages would be able to include these resources as on-site with minimal mobilization. The use of internal construction crews for this work requires especially careful consideration, as much of it is likely to be underground and may require specialized skills not present in an internal construction workforce. For many utilities, contractors are used in a peaking capacity; an assessment of the amount of work within a resiliency program and the ability of internal construction crew capacity to handle routine work in addition to specialized work must be assessed. This work may disrupt or delay the day-to-day activities of supporting the customer and company operations. A highly targeted resiliency program is likely to include 3-10 years of work activity. Over this timeline, it is appropriate for a utility to consider building an internal construction workforce with the skill and capacity that can execute this work. A host of questions will require answers before the utility takes this path including if new in-house personnel, crews, and equipment are brought on, what happens to these assets at the end of the undergrounding program? The application of contracted resources that are hired and then released based on the work pace is perhaps the simplest answer to the question of how to execute a resiliency program. Selecting the scope of work for design, construction management, and construction resources is the next challenge. The project delivery system selected will help answer the question on the breadth of the scope of services but not the specifics. As an example, the use of design/build answers the question of how the assets will be built and implies a broad set of services that many singular firms may not be able to offer, but it does not define the specifics. Exhibit 5.3 Project Delivery System Selection Three Critical Questions for the Utility to Answer? Interpretive Note: GC=General Contractor led; CM=Construction Manager led; EPC=Engineer-Procure-Construct type build approach; GMP=Guaranteed Maximum Price. Source: Continuum Capital propriety Project Delivery Decision Matrix. Used with permission, contact Mark Bridgers, Principal, Continuum Capital, MBridgers@ContinuumCapital.net or (919) 345-0403 for discussion or permission to use. How will you Contract? Bid Select Bid Negotiate How will you Manage? Internal GC/CM Outsource How will you Build? Design/Bid/Build Design/Build Traditional delivery approaches, including EPC, CM with GMP, and DesignBid-Build tend to fall short in fast paced, highly regulated, and resource constrained construction environment Resiliency Program Delivery
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