Management contract: appointing the management contractor

Management contracting is a procurement route in which the works are constructed by a number of different works contractors who are contracted to a management contractor. The management contractor 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 (and the risks of interfaces). More value is obtained by early appointment. Within this plan we suggest that the management contractor is appointed on completion of concept design. Earlier or later appointment might result in certain activities being re-allocated between the consultant team and the management contractor (for example the role of cost consultant).

Appointing a management contractor enables some works contracts 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, but does mean that there will be price uncertainty until the design is complete and all contracts have been let.

[edit] Agreeing the procedure that will be adopted

The client may decide that they require advice from independent client advisers or member of the consultant team to help them make the appointment. The client may also wish to appoint a contract administrator to administer the management contractor's contract. If this requires new appointments, go to the work stage: Management contract: appointment.

The client determines the selection procedure that will be adopted. This might be a process of recommendation, research and interview, open competition, selective competition, or an existing relationship such as a framework agreement.

The client may have to follow a pre-determined procedure if; there are in-house rules governing appointments, if they are a local authority or other public body, or if the project will be publicly funded. Such procedures may include assessing whether OJEU procurement rules are likely to apply which can cause significant delays unless implemented early in the project.

[edit] Agreeing the nature of appointment required.

The client should agree the wording of any adverts that are required (such as OJEU adverts) and if appropriate prepare a pre-qualification questionnaire.

The client should prepare documents describing the nature of the development (if the management contractor is appointed very early in the project, this might simply be the strategic brief, whereas if they are appointed later, it could include the project brief and concept design).

The client should define the schedule of services that will be required, selection criteria, form of agreement and contract terms for the appointment.

The agreement between client and management contractor is likely to cover both pre-construction and construction activities, with a notice to proceed between the two, before which works contracts cannot be let. Collateral warranties are also likely to be required (for example for purchasers, tenants or funders). In addition the client is likely to define the works contract terms and any requirement for works contract warranties. A management contractor might be reimbursed on the basis of fixed or variable costs (the works contract costs) plus either a percentage fee, a fixed fee, or on a target-cost basis. The terms of the appointment must be clear about what is to be provided by the management contractor (such as the provision of site facilities) and whether activities constitute pre-construction or construction services.

The client should agree the form of proposal that will be requested from candidates.

The client prepares a formal request for proposals.

[edit] Preparing a list of possible candidates.

The client prepares a long-list of possible candidates, either from recommendations, existing relationships or expressions of interest received in response to adverts.

The candidates may be required to complete a pre-qualification questionnaire, or there may be some other assessment procedure (such as interviews) that results in the preparation of a short-list that will be invited to submit proposals. Such assessments may include assessing experience and capability, checking professional indemnity insurance, assessing CDM competence, checking references and so on.

The client should put in place procedures for responding to queries from candidates.

Short-listed candidates are invited to submit proposals in response to the client's request for proposals.

[edit] Selecting the preferred candidate and making the appointment.

The client collates responses to queries from candidates and issues these responses to all candidates.

The client receives and opens the candidates' proposals and makes a record of the fee proposals of each candidate. In some circumstances, fee proposals may be submitted in a sealed envelope and opened separately from the rest of the proposals so that the assessment procedure is not initially prejudiced by the fee (which it may be possible to negotiate down).

The client assesses the candidates' proposals (including the personnel the management contractor will use on the project). The client may seek advice from existing consultants or independent client advisers.

The client invites the candidates to interview, identifies the preferred candidate(s) and opens negotiations with the preferred candidate(s).

The client appoints the selected candidate and arranges a start-up meeting with the management contractor and the consultant team.

The client informs other candidates that they have been unsuccessful. It is best practice to give clearly thought-out, specific feedback to unsuccessful candidates as they have take the time to prepare proposals often for no fee. Candidates greatly appreciate this feedback and will be more likely to express interest in future projects.

NB. This appointment will generally cover pre-construction and construction services, however progressing to the construction phase will be dependent on the client issuing a 'notice to proceed' and may involve the addition of definitive particulars to the contract.