On construction management contracts, a construction manager is appointed on a consultancy and management basis to provide advice to the client during the pre-construction stages and then to manage the construction of the works. The works are divided into packages which are contracted to separate contractors. These contractors are referred to as trade contractors rather than sub-contractors (as they are contracted directly by the client, rather than being sub-contracted to the construction manager). The separate appointment of trade contractors should reduce the cost of contracts, as the management element is being provided by the construction manager. It also allows the advancement of some works (such as groundworks or piling) which might begin even before design of the above-ground works is complete.
Characteristics of trade contracts include:
- Trade contractors may be appointed through a single-stage procurement process, or through a two-stage process with a pre-construction services agreement for the first stage.
- Each trade contract must have its own separate practical completion certification and so they may have different defects liability periods. Certification cannot be dependent on completion of works outside of the scope of the contract. As trade contracts may be completed at different times, the construction manager must ensure that measures are in place to protect completed work from ongoing activities.
- Trade contracts (such as the Joint Contracts Tribunal (JCT) CM/TC 2011) do not include provisions for liquidated damages, instead the trade contractor indemnifies the client's direct loss and/or expense for lateness.
- Trade contracts may allow for retention, or may include a requirement for a retention bond.
- Trade contracts should include requirements to adopt collaborative practices.
- As there is no main contractor, trade contractors should provide master programmes for their works.
- Trade contractors should be required to provide regular information in relation to key performance indicators.
- Where they carry out design, trade contractors may be required to provide as-built drawings.
- On management contracts, contractors are known as 'works contractors'.
- For a detailed description of the sequence of tasks necessary on a construction management contract, see the work plan: construction management: outline work plan.
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