Construction Management & Management Contracting

Question 1

724 What is construction management?

Answer 1

Construction management is a procurement strategy where the construction manager manages trade contractors who carry out the actual work. There is no contractual link between the CM and the TC. The contractual link sits with the Client and the TC. The Client administers the TC contracts including payments etc. The CM will get paid a fee for managing the works.
* CM coordinates and plans the works
* CM has no vested interest in the financial outcome of the project
* No contractual link between CM and TC
* Other than professional negligence the CM carries little risk

Question 2

725 What are the key advantages?

Answer 2

• Speed of getting to site
• Overall project duration reduced from overlapping design and construction
• CM can provide buildability and programming advice
• Changes in the design can be made without paying a premium
• Prices may be lower due to direct contracts with TC
• Employer has means for redress with the TC through direct contractual ties

Question 3

726 What are the key disadvantages?

Answer 3

• Price certainty not achieved until after the design has been completed
• The Client will most likely have to bring in a company to manage the administration of the contracts CM & TC
• Procurement strategy requires an informed, experienced and proactive Client to work
• Multiple points of contract for contract management

Question 4

727 When might construction management be appropriate?

Answer 4

• The employer is experienced and construction and has the resources to manage the project
• When the Client wants an early start on site
• If the design is not complete or is subject to change
• If the project is technically complex and requires detailed engagement of specialist consultants or trade contractors

Question 5

728 What is the riskiest procurement route for the employer?

Answer 5

CM as the employer places individual contracts with the TC which removes the risk from the CM.
Management Contracting

Question 6

729 What is management contracting?

Answer 6

This is a procurement strategy where the Client appoints a MC to manage the entire building process who then places individual contracts with the WC to carry out the works.

Question 7

730 What are the key advantages?

Answer 7

• Overall duration can be reduced by overlapping design and construction.
• MC can provide buildability input
• Single point of responsibility
• The Client doesn’t need to manage the contractual relationship with the WC.
• Trade packages are let competitively and transparently
• There is a considerable amount of flexibility in the design with changes being made throughout construction.

Question 8

731 What are the key disadvantages? (216)

Answer 8

• Price certainty not achieved until the design is complete
• Requires an informed and proactive Client to be successful
• Depending on how much the MC is being paid they may be a disincentive for the MC to minimise cost.

Question 9

732 When might management contracting be appropriate?

Answer 9

• When an early start on site is a priority
• Flexibility in design is required
• Buildability input is required
• Where cost certainty is not a priority

Question 10

733 What is the key difference between management contracting and construction management?

Answer 10

Management contracting the MC holds the contractual link with the trade contractors. With Construction management the Client holds the link between themselves and the works contractors.