Owner’s Representative/Owner Team Roles, Obligations and ...

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Achieving Excellence in Capital Projects Delivery

Owner’s Representative/Owner Team Roles, Obligations and Responsibilities

By George E. Baram – P.Eng., M.Sc., PMP, CCE, Fellow AACE International

The new wave of Worldwide capital projects planned for the next decade, along with the possible

emergence of new “non-traditional” Owners, such as new PPPs, Joint venture companies and

consortiums with the possibility of very limited or no experience in managing / executing capital

projects, comes potential risk of non-performance/ non-compliance resulting in missing project

deliveries on time and on budget as well as the rise of disputes among stakeholders.

This article addresses the Roles, Obligations and Responsibilities where the Owner’s Representative

(including Owner’s team) usually encounters during different phases of the development & execution of

capital projects and the required actions in dealing with all stakeholders on the projects.

To simplify, in this article the words “Owner” or “Client” meant the same entity and “Owner Team” v.

“Owner Representative” also to mean the same party”.

To get started, one would look at the Owner’s role to be fairly wide and variable, depending on a

number of important considerations, such as:

- The Contractual Arrangements

- The Phase of the project

- The size and complexity of the project

- The Industry and the project development phases and Life cycle

- The Owner’s knowledge, input and experience in terms of:

o Business / product knowledge (i.e. Operation, Technology)

o Owner’s Project team and core knowledge of project execution operations

o Historical experience with similar project and/or contractors

Additionally, Owner’s rep will need to play active role with obligations and responsibility with a number

of stakeholders among the Key ones are:

Owner’s Enterprise and Corporate requirements

Stakeholders – Financial institutes, Banks, Government entities, External and Internal

Prime Contractor(s)

Consultants and Sub-Contractors – local and International

Project Sponsors, Executives, and Owner’s team

Operation team and/or other Integrated Projects, if applies


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Different “Role” at different Phases:

There is no “one size fits all” for such role. However in general, one can distinguish between “two”

traditional overall phases: Pre-NTP (Notice To Proceed) Phase and Post-NTP Phase.

In either phase, the starting point is to come up, as early as possible with clear and concise definition of

what is called Division of Responsibility (DOR). Although one can rely on the bidding documents which

may contain “high level” of such DOR, a credible and more reliable DOR should be derived from the final

detailed agreement with the best practice in mind.

Such DOR may take different shapes and level of details depending on the phase and the size of the

mandate or project but also heavily dependent on the type of project delivery methods selected for the

project. Such clarity and detail identifications, when reflected in the DOR document will dictate the

Owner’s needs, team size and required expertise to cope with the project and the contractor(s). Few

extracted examples below illustrate different DOR levels at different phases.

Pre-NTP phase(s)

During this phase, the Owner’s rep usually work with consultants and design firms on early phases

studies (Conceptual, Pre-Feasibility and Feasibility Studies, also called FEL1, FEL2 and FEL3) and on some

circumstances, a pre-execution phase called FEED (Front End Engineering Design) may get implemented

to accelerate the design and “key” procurement deliveries at the time of providing the final financing

and ultimately the NTP. At this phase, Owner rep and team would likely:

Work with the Owner’s enterprise for internal compliance, requirements and internal risks

Work with and providing feedback to other stakeholders on the project

Work with the design development / consulting firms who are preparing such studies ensuring

the compliance with the client initial requirements.

Coordinating the needs for the pre-construction phase in term of preparing (sometimes with

early contractor’s involvement) the site development, early works, Government requirements,

permits and environmental compliance. Among the key tasks involved in the above are:

Table 1 below list number of key “High Level” tasks and activities where the Owner’s rep and

team actively involve with. Such involvements come with required actions and obligations, per

agreement and per project schedule especially with Contracts arrangement that requires more

approvals, submittals, RFIs, changes/variations and authorizations by the owner’s team.

Other Owner Team interfaces with Design Consulting firms (incl. contractors), at pre-NTP:

Connecting and sourcing, at early phases, with local external consultants and advisors

Preparation for early awards and early works

Investigating for required Government and compliance, permits and regulations

Defining, at high level the Interface and dependency on other integrated projects, if applies

Coordinating with existing plant the operation team (existing or incoming)


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Establishing project requirements detailed for specific/next phase capturing:

o Objectives

o Scope of Work

o Operation and Input philosophy

o Technology

Establishing a Project Delivery Approach that “Fit” the project in terms of:

o Client’s risk/tolerance – EPC v EPCM,

o Project Phase

o Local market capabilities

o Contractors’ risk appetite and

o Team experience and requirements.

(refer to previous articles, on Linkedin, for the author on the project delivery approach)

Table 1 – Owner rep and team interfaces with different stakeholders during Pre-NTP phase


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At the NTP

The readiness of the Execution phase at the NTP milestone is among the most influential factors for

project success. Such readiness can be defined in different ways and by different parties. However

among the common agreed upon milestones and tasks that require Owner’s Rep input, depending on

the contractual arrangements and delivery method, are the following: (the list can be extended and

detailed differently and below it is summarized at the highest level)

Availability of Funds

Alignment on Objectives and Expectations – Mutual understanding of the business deal – refer

to the figure below.

o Proper Hand-off of the project from previous phase

o Transferring responsibility, knowledge and understanding the final deal

o The availability of the “Key” project team members as early as possible

o The availability off the overall plan with look-ahead schedule for the next 3 months

o The final agreed on Project delivery methods with detailed Roles and Responsibilities

clearly defined among parties

Well defined and detailed Project Execution Plan (PEP), usually provided by the selected

contractor(s) with input (signed off) from the owner’s team on key issues related to:

o Input from the Operation team (when required)

o Engineering Execution Plan

o Procurement Execution Plan including Contracting and purchasing authority approved

and delegated

o Construction / Site management Execution Plan (Including HSE, Security and sub-

contractors’ Plan)

o Quality Management Plan

o Risk Management Plan

o Project Staffing, Organization, team

o Project Management Plan including Project Controls, Monitoring and Reporting

o Input and interface Plan in relation to:

Operation requirements

Other on-going/integrated projects

o Project Controls Management Plan to include:

Detail estimate at the required level (usually (+/- 10% at this milestone) with full

explanation of the basis of the estimate and sources/assumptions. Also

separating clearly the different cost categories among, contractors’ Owner’s

Operation, contingency, risk and reserve.

Change Management Plan

Detailed level 3 schedule that can be rolled up into a master schedule or further

detailed to the sub-contractors level 4.


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Figure 1 – Alignment at the NTP between Owner and Contractor(s)

Below is a typical list of “Front End”, challenges (i.e at or around the NTP milestone) that are

repeatedly demonstrated as potential causes of project failure. However, number of these challenges

can directly be caused by the Project Owner’s team or reps for its either action or in-action accordingly.

► Lack of clarity of objectives with effective EARLY Kick-off

► Undefined and/or unclear Roles and responsibilities within parties

► Poor leadership from both sides – Owner’s and Contractors

► Failure to determine the real drivers of the project

► Poor delegation of responsibilities – weak leadership from both sides

► Untested, unreliable, misleading or wrong information – Unrealistic targets

► Not enough resources available to assess the business needs and proceed with successful

“Transition” phase from Business Development to FEED/Execution Phase

► Political pressure and stakeholders/ Owner’s interference

► Reluctance to seek or accept advice

► Lack of strong sponsorship and active interference

► Wrong people in the wrong place

► Poor Judgment, Blind Optimism with biased sponsorship

Post-NTP Phase (Full Execution and Construction):

With the above, and in reaching into the Post-NTP and Execution/Construction Phase the Owner’s rep

role falls typically into contractual compliance tasks from the Owner’s point of view and involves

ensuring that Cost, Schedule and Quality are met and clearly reported on by the contractors.

Additionally, there are other “embedded” contractual challenges where fair amount of effort to be

spent, by the Owner’s rep and team on ensuring contractual compliance and delivery.


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Early in this phase, the complete “Owner’s team” is clearly defined and assigned vis-à-vis the

contractor’s team (staffing plan) and the key driving elements on the size and expertise of the Owner’s

team is the contractual arrangement agreed on, at the NTP or in some case at little earlier date.

I general, in the case of the EPCM (Cost Reimbursable or fees for services arrangement), the Owner’s

team size is usually larger than an EPC case (Fixed Price or sometimes LSTK), with more roles, obligations

and responsibility at risk in the hands of the Owner’s team. Tables 2 and 3 below illustrate DORs at

“High” level, listing number of tasks where the Owner roles and responsibility are allocated. With such

allocation come the obligation and responsibility, by the Owner in both EPCM or EPC cases, ensuring the

contractors’ needs such as authorizations, approvals, sign-off, Owner’s provided equipment and

directions, etc. are all provided timely and within the required formats.

However, it is to keep in mind, as is often the case, that the contractual arrangement is neither full

fledge EPCM project delivery model nor Full EPC project delivery model and may varied in between the

two ends, hence, preparing proper and reflective “Division of Responsibility” between the Owner and

Contractor teams, becomes critical as well as challenging and time consuming task.

Practically and for successful implementation, each item listed in the tables above is further detailed on

its own or being part of a larger task followed and managed with a team member from the main

responsible party and signed off or approved/authorized by the counterpart party. Such arrangement,

where there are two counterpart team members (Owner and Contractor), sometimes called “Zipper

Staffing Plan”, ensure addressing and controlling all key issues on behalf both parties.

Below is a list summarized by Jim Zack, from Navigant Construction Forum listing common 10 mistakes

(learning lessons) that Owners do, in relation to some common and sensitive project issues with major

influence on performance, cost and schedule?

Owners should not:

1. Involve in solving Contractor problems

2. Proceed with variations before agreeing on time and cost on such

3. Fail to agree on variations time and cost on a daily basis

4. Use Requests for Information (RFI) and contract interpretation to correct errors and redesign

5. Object to written notices

6. Require contractor to finance project variations

7. Refuse to deal with extension of time on a timely manner

8. Refuse to deal with indirect costs when variation orders are issued

9. Fail to settle variation orders “full and final”

And Should

10. fully read and understand the contract

The Division Of Responsibility document (DOR) is a fairly detailed list as the contract may dictate and

ought to be addressed jointly by both Owner and Contactors team with clear line of communication and

reporting regularly. Refer to example in table 4.


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Table 2 – HIGH Level Division of Responsibility between Owner and Contractor – EPCM


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Table 3 – High Level Division of Responsibility between Owner and Contractor – EPC


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Table 4 – Example Detail Level on Division of Responsibility between Owner and Contractor – EPCM


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In conclusion, it is clear that the roles and obligation of Owner’s rep and team in dealing with

capital projects cannot be overemphasized and ought to be clearly defined and allowed for

contractually. If not well considered qualitatively (team knowledge and experience) and

quantitatively (proper staffing to handle the required tasks) it could become hindrance to

project progress, bases for interference and causes to many delays, cost overrun, disruptions

and uncertainty of outcome.

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