How to Improve the Owner-Contractor Collaboration in Construction

Understanding the Relationship Between Owners and Contractors

In any large construction or capital project, owners and contractors must work as partners to deliver complex assets safely, on time, and within budget. The owner is responsible for defining what needs to be done, including the vision, budget, timeline, and quality standards of the project. Meanwhile, the contractor is the expert hired to execute that vision and deliver the project according to the agreed requirements

Both parties have commercial objectives: owners seek to aximize the long-term value of their investment, while contractors aim to complete the work profitably while managing cost, risk, and resources.

Typical Challenges in Owner-Contractor Collaboration

Effective collaboration between project owners and contractors is essential for successful project outcomes, yet several issues often hinder this crucial partnership.

1. Mistrust and conflicting incentives

A common issue in the collaboration between project owners and contractors is the lack of trust. According to a KPMG survey, only 31% of construction owners reported having a high level of trust in their contractors. It is often the case that owners suspect contractors of profiting from frequent scope changes and variations, seeing them as opportunities for additional claims.

However, in reality, while changes can generate extra work orders, they more often cause delays, disputes, and costly rework that hurt both parties.

2. Miscommunication and fragmented project data

Inaccurate information is another widespread issue of construction collaboration. Owners and contractors often rely on different systems, spreadsheets, or tools for tracking project costs and progress. As a result, project teams spend hours reconciling mismatched data instead of solving problems.

In fact, a survey by PlanGrid and FMI found that construction professionals waste an average of 14 hours per week on non-optimal tasks. This included 5.5 hours searching for project data, 4.7 hours resolving conflicts, and 3.9 hours dealing with mistakes and rework. Thus, when owners and contractors lack a single source of truth, lost time quickly turns into missed deadlines and increased costs.

For example, imagine a contractor updating progress in an Excel sheet while the owner relies on separate cost reports. Any misalignment can trigger unnecessary disputes over claims, payments, or performance.

3. Reactive problem-solving instead of proactive planning

Another issue is reactive project management. Many projects spot issues only after they escalate. Why? If there are no early warnings, project teams have little to no time to mitigate risks or adjust plans efficiently.

For example, when change orders pile up on-site without integrated tracking, the true cost and impact often surface too late for corrective action. This reactive approach drives up contingency costs, fuels disputes, and damages the relationship between owners and contractors.

At the end of the day, both owners and contractors benefit from strong collaboration and solid project execution.

4. The impact of contract types

While not inherently a problem, the type of contract in place can significantly influence how owners and contractors interact throughout a project. Each contract type carries its own incentives, risk allocations, and behavioral drivers, which can either strengthen or strain collaboration.

For instance, reimbursable contracts may encourage openness and flexibility but can lead to concerns over cost overruns if not carefully managed. On the other hand, lump-sum contracts offer cost certainty for owners but can push contractors to minimize expenses, sometimes at the expense of quality or scope clarity. Unit-rate contracts fall somewhere in between, often requiring rigorous quantity tracking to avoid disputes.

If not aligned early on, the contract structure can inadvertently foster mistrust, discourage transparency, or promote adversarial behaviors. Therefore, it’s essential for both parties to understand how their chosen contract model influences collaboration dynamics and to establish clear communication, change management processes, and shared expectations from the beginning.

Improving the owner-contractor collaboration in construction

Overcoming these challenges requires a deliberate shift toward transparency, centralized data, and standardized processes. By implementing strategic changes, owners and contractors can foster a more cooperative environment that drives project efficiency and mutual success.

1. Align communication and create transparency

First, improving collaboration in projects starts with building trust through transparency and clear communication. To make this happen:

• Give both owners and contractors real-time access to scope, progress, and cost status
• Replace fragmented updates with centralized and live dashboards
• Automate notifications to ensure everyone stays informed

Instead of juggling endless email threads and outdated spreadsheets, use a centralized project controls software platform like Cleopatra Enterprise to unify all communication flows. Such tools will enable owners and contractors to access up-to-date forecasts, change orders, and live performance data. Furthermore, automated reports will keep all parties aligned and reduce finger-pointing when unexpected changes occur. This visibility helps build trust and keeps the whole team working toward shared targets instead of isolated agendas.

2. Create a single source of truth for project data

Beyond aligning communication flows, it is crucial to centralize all project data to ensure consistency and eliminate discrepancies that lead to disputes.

• Eliminate silos by integrating cost, schedule, and performance data in one place
• For consistency, make sure all updates go through a single system
• Make data accessible and auditable for both owners and contractors

Software platforms like Cleopatra Enterprise combine cost estimations, schedules, progress updates, and forecasts in one place. Instead of reconciling multiple spreadsheets or conflicting reports, owners and contractors should rely on a live database with clear version control. In addition to saving teams hours spent looking for data or resolving discrepancies, this reduces disputes regarding payments or performance. It is easier to respond quickly when both parties have access to the same current information.

3. Standardize processes

Finally, standardizing processes is key to keeping everyone aligned:

• Adopt shared work processes for approvals, progress tracking, and change management
• Automate repetitive tasks like status updates, reporting, and notifications
• Use consistent project controls standards across owner–contractor teams

By standardizing how work is planned, tracked, and reported, owners and contractors can manage risks before they escalate. Workflows, integrated schedules, and automated cost forecasting give project teams early warnings when deviations occur. This enables both sides to adjust scope, budget, or timelines before it is too late. Being proactive not only improves collaboration but also reduces rework and costly surprises down the road.

In construction projects, successful delivery relies on more than technical expertise; it relies on robust collaboration between owners and contractors. When both sides communicate openly, share reliable data, and follow consistent processes, they foster stronger relationships and achieve better project results.