Owner furnished equipment construction risk, and the gap it creates

Owner furnished equipment construction risk is rarely about the equipment. The unit arrives and it is what was ordered. The problem is the five things around it, each of which sits in a different package and is claimed by none of them.

Why owners furnish equipment at all

There are good reasons and they are commercial rather than technical.

Buying direct removes a markup layer on a large item. On specialist equipment the owner may have a national agreement at a better price than any contractor can obtain. On some categories the end user has a standard and buys it themselves regardless of who is building.

On data centers and healthcare in particular, the equipment is frequently the reason the building exists, and the owner is the party with the relationship to the manufacturer.

So the decision to furnish is usually right, and the saving is usually real.

What gets lost with the markup is the coordination that the markup was partly buying. A contractor that procures an item owns its delivery date, its submittal, its dimensions, its connection requirements and its warranty. An owner that procures it owns those things too, whether or not anybody said so.

That transfer of responsibility is rarely written down, which is where the cost comes from.

The five items that owner furnished equipment construction risk lives in

For every owner furnished item, five things have to belong to somebody, and each is a separate question.

Receiving and storage. Who takes delivery, who unloads, who stores it, who insures it while stored and who is responsible if it is damaged on site before installation.

Setting. Who moves it into position, which on heavy items means rigging, a crane and sometimes a structural opening left open for it.

Connection. Power, water, drainage, gas, data, controls. Each utility is a different trade and each terminates at a point somebody has to define.

Support. Housekeeping pads, supplementary steel, seismic restraint, vibration isolation. Almost always required and almost never in the equipment order.

Commissioning and warranty. Who starts it up, who witnesses it, whose warranty covers it and what happens if the equipment fails a test because of an installation somebody else performed.

Five items, one piece of equipment, and on a typical job the scope descriptions answer between one and three of them.

Why the drawings do not solve this

The equipment appears on the drawings. It is in the right place, at the right size, with the right clearances. The model is coordinated and the clash report is clean.

None of that says who buys the housekeeping pad.

This is a commercial condition rather than a spatial one, which is why coordination software cannot find it and why a clean model sits happily above an unbought interface. The general case is described in clash detection is not a commercial review.

There is a second reason it survives. The equipment is on the owner side of a line, so every contractor scope description quite reasonably says that the equipment is furnished by others. That phrase is accurate and it is also where the reading usually stops.

Furnished by others is not the same as connected by others, supported by others or rigged by others, and the difference between those is the whole cost.

A scope description that says installed by contractor, furnished by owner is a much better sentence, and it still leaves the pad and the supplementary steel arguable.

A worked example

A facility with fourteen pieces of owner furnished equipment, including four large air handling units on structural platforms.

The mechanical package includes connection of owner furnished equipment. The structural package includes the frame shown on the structural drawings. The platforms for the four units are shown on the mechanical drawings, not the structural ones.

Nobody bought the platforms.

It surfaces in month eleven, when the units are delivered and there is nowhere to set them. Supplementary steel, design, fabrication, delivery and rigging come to $310,000. Two weeks of crane rescheduling and storage costs add $100,000.

Found before award, the platforms are two sentences added to the structural package at bid pricing, which is roughly $95,000 of steel with no crane premium and no argument.

The drawings showed the platforms. Both packages were priced honestly. The item simply appeared on a drawing belonging to one discipline and in the scope of neither.

The document that fixes it

One table, produced before the packages are awarded, with a row per item and six columns.

Item and manufacturer. Delivery date and who receives it. Who sets it. Which trade makes each utility connection, listed individually. Who provides the support: pad, steel, restraint. Who commissions it and whose warranty applies.

That table is the whole exercise. It takes an afternoon for fourteen items, it requires nothing that does not already exist, and it converts a class of finding that surfaces in month eleven into a set of questions answered in month one.

It also serves a second purpose that owners undervalue. It is the document that tells the owner when each item has to be ordered, because the delivery date column has to work backward from an installation activity.

Owner furnished equipment ordered late is one of the more common causes of delay on equipment heavy buildings, and it is a delay the owner caused and therefore pays for twice: once in the extension and once in the acceleration of everything behind it.

The table prevents both, and it is one page.

Where it is worth going further is on the two or three heaviest items. For those, a single coordination drawing showing the equipment, its support, its clearances and every utility terminating at it is worth more than any amount of scope language, because it is a picture four trades can disagree with in one meeting rather than in four separate ones.

On equipment heavy buildings that meeting is routinely the cheapest hour on the project. Everybody in the room already knows their own scope, and what they have never seen is the other three scopes drawn at the same point.

What to do before you sign

1. List every owner furnished item by name, with the manufacturer and the model where known.
2. For each, answer the five questions: receive, set, connect, support, commission.
3. Name the trade package responsible for each answer, not the discipline.
4. Work the order date backward from the installation activity, including submittal and approval time.
5. Establish who insures the equipment between delivery and acceptance.
6. Establish what happens to the contractor schedule obligation if an owner item arrives late.
7. Check which drawings show the supports, because supports shown on the wrong discipline drawing are the classic gap.

Item three is the one that makes the table useful rather than decorative. An answer of the mechanical contractor is a discipline. An answer naming the package that will be awarded is a commitment somebody can be held to.

Item six is the one owners forget and then argue about. Late owner furnished equipment is an excusable delay under most contracts, which means the schedule moves and the owner funds the extension.

How this reading is scoped, and what the table looks like, sits in the review packages.

What we do

We build the table: every owner furnished item against the five questions, with the trade package named for each answer and the order date worked backward from the installation activity. Gaps are called out with what closing them is likely to cost. It is a commercial reading of the scope descriptions against the drawings. The work is the constructability and interface review.

Questions people ask