Owner furnished (supplied) equipment (OFE), also known by other terms such as “free issue” presents unique planning and scheduling challenges. The idea is that another party to the contract procures / orders and supplies equipment, material (even services, such as utilities or scaffolding) to the contractor. The notion is that the contractor receives the equipment, goods or services and then erects, installs or otherwise uses these items.
The motivation for this type of arrangement can be one or more of several seemingly logical concepts. Equipment with long lead times for fabrication and delivery may be ordered in advance of placing a contract for the equipment erection or installation. Another motivation relates to cost savings. Some believe ordering equipment and commodities (bulk materials) can be done by a general contractor or owner (owner, developer, employer) and thereby save a markup by a subcontractor. In these cases, an interface is created between the ordering/procurement entity and the execution (engineering, erection, installation, fabrication, etc.) entity. The creation of this interface becomes the issue. [Read more…]