Construction management is a procurement route in which the works are constructed by a number of different trade contractors. These trade contractors are contracted to the client but managed by a construction manager (CM).
The employer places a direct contract with each of the trade contractors and utilises the expertise of a construction managers who acts as a consultant to coordinate the contracts. The trade contractors carry out the work and the construction managers supervises the construction process and coordinates the design team. The CM has no contractual links with the trade contractors or members of the design team. Their role includes preparation of the programme, determining requirements for site facilities, breaking down the project into suitable works packages, obtaining and evaluating tenders, co-ordinating and supervising the works.
Construction management differs from management contracting, in that management contractors place contracts with works contractors (equivalent to trade contractors in construction management) direct, whereas construction managers only manage the trade contracts, the contracts are placed by the client.
Construction managers are effectively acting as a consultant to the client, the client takes the risk for the trade contractors' performance. In legal terms the management contractor is acting as a principal whereas the construction manager is acting as an agent.
As the client is required to place and administer the trade contracts (of which there may be a large number) and perhaps to accept price uncertainty, construction management is only appropriate for experienced clients.
The construction manager is generally appointed early in the design process so that their experience can be used to improve the cost and buildability of proposals as they develop, as well as to advise on packaging, the risks of interfaces between packages, and the selection of trade contractors. Construction manager's are often appointed at the end of the concept design stage.
Appointing a construction manager enables some trade packages to be tendered earlier than others, and sometimes, even before the design is completed. For example, piling might commence whilst the detailed design of above ground works continues. This can shorten the time taken to complete the project, however, it means that there will be price uncertainty until the design is complete and all contracts have been let.
The services provided by a construction manager might include:
- Advising on the development of the brief (if appointed at this stage).
- Advising on the procurement route.
- Advising on appointments (such as site inspectors).
- Advising on the feasibility, interfaces, buildability, cost and programming of the design.
- Advising on statutory approvals.
- Defining key performance indicators for trade contractors.
- Advising on the need for mock ups, samples, tests and inspections.
- Acting as the principal contractor.
- Cost planning and cost control.
- Preparing a construction programme and defining methods of working on site.
- Identifying potential trade contracts.
- Tendering trade contracts.
- Consenting to sub-contracting of work by trade contractors.
- Arranging for site accommodation, welfare facilities, fences, hoardings, roads and walkways, drainage, power and water supply.
- Co-ordinating setting out.
- Arranging labour for certain site activities (such as cleaning).
- Managing site inspectors.
- Co-ordinating the release of information.
- Managing and co-ordinating trade contracts, including acting as contract administrator, carrying out or co-ordinating inspections, issuing instructions and certificates, etc.
- Co-ordinating the work of statutory undertakers.
- Witnessing tests and co-ordinating commissioning.
- Collating as-built information, building owner's manual, building user's handbook, project handbook, health and safety file, pre-construction information and construction phase plan.
- Monitoring key performance indicators.
- Managing the site.
- Chairing site progress meetings and preparing progress reports for the client.
Construction managers are likely to be paid based on reimbursable costs (such as site facilities, staff costs, statutory fees, offices, and so on), and a management fee, comprising pre-construction and construction fees, which may be fixed, or calculated based on an agreed formula. It is important to establish what is included in the construction manager's price (for example, insurance requirements or payment of statutory fees) and to agree the limit of the construction manager's delegated authority in issuing instructions which affect the cost of the project.
As a construction manager performs a consultancy and management role (unlike a traditional contractor), their appointment may be on similar terms to the consultant team. They may be required to hold professional indemnity insurance and to provide collateral warranties for tenants, purchasers or funders, and collaborative working with the consultant team will be vital to the success of the project.
When is it appropriate?
- On large, complex projects were the advantages of CM can be put to use e.g. upfront buildability knowledge, programme advise, specialist input from trade contractors
- Where early start on site is key
- Flexibility in design, procurement, construction strategy
- Where price certainty before commencement is not key
- Where the client is experienced in construction
What are the advantages?
- Overall project duration reduced by overlapping design and construction
- Construction manager can contribute to the design and project planning processes
- Roles, risks and relationships for all parties are clear
- Changes in design can be accommodated without paying a premium
- Prices may be lower due to direct contracts with trade contractors
- Client has means of redress to trade contractors through direct contractual links
What are the disadvantages?
- Price certainty not achieved until last trade package is let
- Changes to later packages may adversely affect packages already let - expensive
- Need an informed, pro active client
- Client has a lot of consultants and contractors to deal with – not just one – more fees
NB: The Chartered Institute of Building (CIOB) created a new profession of 'Chartered Construction Manager' in 2013. CIOB's use of the term 'construction manager' is a much broader one than the contractual definition described above. They describe construction management as, 'Management of the development, conservation and improvement of the built environment'. This might involve any role managing construction activities, rather than the specific role of managing trade contractors who are contracted to the client.
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