Last edited 20 Oct 2015

Pre-construction services agreement PCSA

Pre-Construction Services Agreements (PCSAs), sometimes referred to as Pre-Contract Services Agreements enable clients to employ contractors before the main construction contract commences.

Typically they are part of a two-stage tender process, used in the first stage to procure contractor involvement in the design process. This can enable the contractor to:

This early involvement of the contractor should improve the buildability and cost-certainty of the design as well as creating a better integrated project team and reducing the likelihood of disputes.

The PCSA will define the services that are required of the contractor during the pre-construction phase and is generally similar to a consultancy agreement. It should make clear whether the contractor is undertaking design work, whether they will have any design liability, and what will happen to this liability if they are not appointed for the second stage. It should also set out the method of payment, and any provisions for deferred payment.

The contractor appointed under the PCSA will not necessarily be appointed for the second-stage construction contract. However, the client inevitably loses leverage in the second-stage of the tender process, as the contractor becomes embedded in the team and potential competitors lose interest once they find out that another contractor has been awarded the first-stage tender. However, a longer period of familiarity with the project creates better relationships as well as a reduction in learning curves and programme performance, and so, whilst tender prices for two-stage contracts may initially be higher than single-stage tenders, which are subject to full competition, the final account tends to include fewer variations and fewer claims. Competition can be introduced into the second stage by an open-book approach to the tendering of sub-contracts.

It is important that the client ensures they have some means of securing an alternative bid if second-tage negotiations fail, albeit this is likely to result in delays and difficulties regarding design liability.

PCSA’s are often used on design and build projects to obtain early input from the contractor. They can also be used can be used to obtain pre-construction services by specialists, appointed either by the contractor, or by the client (for example on a construction management contract) or on Private Finance Inititiave (PFI) or Public Private Partnership (PPP) projects to obtain contractor input to a consortium bidding for a project.

The JCT publishes two standard forms of PCSA, one for general contractors and one for specialists.

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[edit] External references

  • Maxwell Winward: Pre-Construction Services Agreements.