Have you ever thought about the floor you’re walking on?
Think about the last large building you were in or even your house! A shopping mall, maybe an airport, or some type of train station or tower. Now think about the floor you walked on. Maybe it was tile, linoleum, or maybe wood of some kind. Now, consider for a moment: Someone took the time to select that particular material, order it, then have it installed.
That journey may have been incredibly complex. It could have been quarried in Italy, shipped to a materials plant in Alabama, then cut in New Jersey before being installed in Manhatten, just to be walked on by you. It could also have been simple: locally harvested wood cut into planks then made into flooring. It doesn’t matter where the flooring came from, there was also a massive layer of risk and responsibility for that flooring.
In a typical construction project
A General Contractor is usually responsible for buying, or ensuring the purchase of, all of the materials and equipment that will be used and installed during the project. There is an acronym for this: CFCI, or contractor furnished, contractor installed. When contractors make these purchases, they take on risk. There may be money lost. There vendor may not deliver on time, leading to a project delay. The project Trade team may have a delay with the material needed to connect the purchase to the building. Material used may have a warranty issue immediately or in the future.
These are just some of the reasons that General Contractors typically have robust procurement departments and/or procurement execution processes in place.
What is OFCI in construction?
Owner Furnished, Contractor Installed or OFCI refers to equipment and materials purchased by an owner to be installed by the contractor. This may be all or just some of the equipment (like when an owner furnishes only long lead items such as generators). There are numerous reasons for owners to furnish their own equipment, but typically it boils down to time or money. Owners may be able to better bulk negotiate purchases or head off project delays due to long long lead items before hiring the contractor for the project.
But remember that massive layer of responsibility and risk for that flooring I mentioned earlier? With the benefits of greater control, and potential cost savings, comes a myriad of responsibilities.
Congratulations, you're now responsible for all this stuff!
If you use a general contractor in a traditional model, they typically handle:
- Ordering everything
- Assuming the risk that it arrives on time, is correctly packaged, undamaged, and performs as expected
- Laydown, storage, or staging until things are needed
- Shipping to where things will be installed or used Preventing loss or misplacement throughout the project lifecycle
- Ensuring the right person is given the right thing to install or use
And a lot of other important responsibilities that are not listed here. Pursuing an OFCI strategy may make financial sense until you start to uncover the larger responsibilities, coordination, and communication that contractors take on.
This begs the question, is pursuing an OFCI strategy the right move for your project?