In the competitive landscape of the Architecture, Engineering, and Construction industry, firms are racing toward finding ways to enhance cost-effectiveness, efficiency, and productivity for their projects. One such strategy that has gained traction is outsourcing.
The AEC industry can leverage the benefits of outsourcing to streamline their operations, reduce project costs, and invest the substantial time saved on their core competencies.
As per research and market reports, the global market for outsourcing services is expected to expand at a compound annual growth rate(CAGR) of 5.54% during the forecast period 2020-2027, leading to a total market size of US$904.948 billion by 2027.
Why AEC Firms Often Dislike Outsourcing: Key Reasons Explained
Absence of Direct Oversight:
Outsourcing Projects and tasks might cause difficulty in maintaining the same level of quality control as the office team. It is concerning for the AEC firms that the outsourced team might not adhere to the elucidated specifications and quality standards specified by the clients.
Inconsistent Standards and Guidelines:
The standards and guidelines vary for different firms for various projects. Outsourced teams usually follow specific standards, leading to inconsistent outcomes that may require rework or adjustments.
Risk of Data Breaches:
Working with Outsourced team members requires the sharing of sensitive data which increases the risk of breaches or intellectual property theft. It can have dire consequences for a firm’s reputation and legal standing.
Confidentiality Issues:
AEC firms must maintain the confidentiality of client information and project details. Outsourcing can compromise the confidentiality of such sensitive information, making it challenging to protect.
Potential Budget Overruns:
Outsourcing is considered a cost-saving opportunity, but it can include hidden expenses such as management overhead, rework expenses, and quality control that offset initial savings.
Furthermore, it is a complex and costly process to manage contracts with outsourcing partners, especially in case of disagreements over timelines, quality standards, or deliverables.
Integration Concerns:
Outsourcing in the AEC industry can cause difficulty in integrating the produced work with other in-house operations. It usually causes inefficiencies and disruptions to the workflow, causing inconvenience for the firm.
Laidback Project Completion:
Coordination issues among the in-house team and outsourced team can lead to delayed project completion, causing discontentment among the clientele and project stakeholders.
But, does choosing the right outsourcing partner provide certainty about the expected results and timely project delivery?
Common Mistakes by Outsourcing Firms
Outsourcing benefits the AEC industry in ample ways, however, various mistakes by the outsourcing firms can lead to significant losses to the AEC firms. Here are some of the common errors and their prospective impacts:
Unsatisfactory Work Quality
- Maintaining work quality is imperative in the AEC industry, and outsourcing firms might deliver substandard work that fails to meet the stringent quality standards.
- Poor work quality can lead to added rework costs, timeline overruns, and unsatisfied clients.
- Without strict quality measures, the output doesn’t match the desired specifications and expectations, demanding additional time and resources to achieve desirable results.
Communication Failure
- Multiple aspects such as language barriers, cultural differences, or unclear communication can lead to misinterpretations or misunderstandings about project requirements and expectations.
- The communication failure leads to unsatisfactory deliverables, necessitating rework and amendments.
- Disruptive communication networks and time zone differences can result in inconsistent feedback and unresolved issues.
- This might lead to stalled project progress and missed deadlines, causing firms hefty financial penalties.
Disorderly Project Management
- The Outsourcing team might struggle to align with the project delivery timeline with disorderly project management, causing schedule overruns and increased costs.
- Lack of scope clarity and control over the project can result in scope creep where the scope of work keeps increasing.
- Additional work is undertaken by the outsourced team without proper authorization or budget adjustments, leading to delays and budget overruns.
Non-Compliance with Codes and Standards
- Outsourcing firms may not be familiar with certain local building codes, regulations, or industry standards.
- Non-compliance with codes and regulations might result in legal issues, the need for rework, and significant financial losses to meet the required standards.
- Ignorance of the required permits or approvals can bring a halt to the construction sites, leading to costly setbacks and legal disputes.
Confidentiality concerns
- Negligence towards robust cybersecurity measures puts sensitive project data at risk of unauthorized access and theft.
- Data breaches can lead to major financial losses, legal liabilities, and reputational damage.
- Unauthorized use of proprietary information can lead to loss of intellectual property rights, causing the firm severe financial and competitive damages
Inefficient Contract Management
- Ambiguously stated contracts can lead to misinterpretations about deliverables, timelines, and responsibilities.
- Such poorly defined agreements result in disputes and financial losses to the AEC firms.
- It becomes challenging to assess the success of an outsourcing firm without clearly elucidated statistics, leading to potential inefficiencies and project setbacks.
Lack of Innovation and Adaptability
- Outsourcing firms might rely on conventional methods and lack innovative solutions to architectural and construction problems.
- A lack of innovation can prevent AEC firms from staying at the forefront of the market and limit the firm’s ability to offer cutting-edge design solutions.
- The inability of outsourcing firms to adapt to changing project requirements and incorporate feedback immediately hinders project progress and causes financial damages to the AEC firm.
Financial Mismanagement and Hidden Costs
- The initial cost estimates might not have descriptive details about the finances and do not account for additional expenses such as overhead management costs, unexpected rework costs, and quality reassurance costs.
- These unanticipated costs can eliminate potential cost-saving benefits to the AEC professionals and lead to financial mismanagement for the firm.
- Fluctuations in exchange rates are a concerning factor with international outsourcing partners.
- Such fluctuations can raise the project costs unexpectedly, affecting the profitability and budget.
The stated mistakes might help the AEC firms to develop a better understanding of the outsourcing process, and make a final call weighing the pros and cons of the situation.
Remote Hiring: An Alternative Solution to Outsourcing
Remote Hiring refers to hiring a team or employees to work outside a conventional office environment with flexible working hours. Hire architects and engineers with expertise in various domains as an extension to the internal team.
The AEC firms can delegate remote hires for a temporary period to execute specific tasks for the company. Remote Hiring can be a favourable alternative to outsourcing for expedited business growth.
But, how can AEC professionals hire dedicated architects and engineers who are reliable and do not pose a threat to the commitments of the firm concerning finances and timelines?
Dedicated Resource Model
The answer to eliminating the outsourcing hassle is the Dedicated Resource Model (DRM) solution by Virtual Building Studio, enabling the AEC industry to hire the top 1% of architects and engineers who join your team within 3 days.
By adopting the dedicated resource model, firms can avoid the hassle of recruiting, training, and retaining talent. It allows the firms to meet their short-term and long-term goals with immediate access to a top-grade talent pool selected after a meticulous screening and interviewing process by team VBS.
Benefits of adopting DRM solution
- Access to the top 1% talent pool of architects and engineers
- The selected professionals are tested for their logical and technical abilities and soft skills.
- The onboarding time is reduced to 3 days with no burden of recruiting and training
- The dedicated resources seamlessly integrate into the firm’s work culture due to their extensive prior training.
A successful integration of DRM
AECOM - a leading infrastructure consulting firm, faced difficulties like limited BIM expertise, project timeline constraints, and high costs for outsourcing architects and engineers. With the Dedicated Resource model (DRM) solution, they onboarded 50 architects and engineers in just 8 months.
Not only did the company overcome these obstacles, but also achieved enhanced team efficiency and competitiveness without increasing the budget.
The globally spread remote team enabled the company to deal with skill shortages in their area and provided the expertise required for various projects.
Conclusion
The AEC industry landscape is constantly changing and so are the ways firms are handling projects. The developing technologies, strategies, and business can significantly contribute to a project but also raise questions.
By addressing these concerns and understanding the potential pitfalls, AEC professionals can make informed choices with their employing methods and utilize their resources effectively. Remote hiring with DRM is a long-term scalable option when you need an architect or engineer to enhance the efficiency of ongoing projects.
