Owner furnished equipment (OFE) is becoming a common practice on large private projects. OFE has advantages and disadvantages to both owner and contractor. Owners will sometimes pre-purchase materials and equipment to be installed by the contractor. Owner furnished material bring risks. Labor productivity may be affected as much as 6% or more.
The owner’s decision to furnish items that could be procured by the contractor is usually based on one of the following reasons:
- A legitimate, significant price advantage
- An early start-up or compressed construction schedule, usually relating to the purchase of items that require long lead times
The contractor must understand the following about OFE:
- Delivery dates related to the project schedule
- Location of pick-up if contractor must deliver to site
- Know any assembly requirements. For example, some fixtures may require assembly.
If OFE is delivered too soon to the project site, additional labor may be required to move the material several times before it is installed. Be sure to have a clear understanding of any equipment furnished by others. Be sure to account for the labor risks in your estimate.
Remember, estimating is expensive, poor estimating is costly, but quality estimating is profitable.