As highlighted in our previous article in the JCT Series, there are three procurement routes under JCT Contracts: Traditional, Design and Build, and Management.
In this article, we’ll look at the third and final option — the Management procurement route.
What is Management Contracting?
Management contracting is a procurement route where the works are carried out by multiple specialist works contractors, each working under a Management Contractor.
The Management Contractor is typically appointed early in the design process so they can contribute valuable insights into cost, buildability, packaging of works, and risk management. While they coordinate and oversee the project, they don’t carry out the physical works themselves. Instead, they are paid a management fee to deliver the project through the works packages.
It’s important not to confuse Management Contracting with Construction Management. The key difference lies in the allocation of risk:
- In Management Contracting, the Management Contractor acts as a middle channel. They facilitate the project but are not contractually responsible for defaults by the client or the works contractors.
- In Construction Management, risk is transferred directly between the client and each contractor through separate contracts.
Advantages of Management Contracting
There are several reasons why clients may opt for this route:
- Fast-track delivery: Design and construction can overlap, reducing the overall programme length.
- Collaborative input: Both the Management Contractor and works contractors can contribute to design and planning decisions.
- Flexibility for changes: If work packages haven’t yet been let, design alterations can be made relatively easily.
- Competitive procurement: Work packages are awarded at current market prices, potentially driving cost efficiency.
Disadvantages of Management Contracting
However, this procurement path isn’t without challenges:
- Strong client brief required: The client must invest in a clear, high-quality brief and provide sufficient resources to the design team.
- Cost uncertainty: Final cost is only known once all trade packages have been awarded.
- Dependence on expertise: Success relies heavily on the capability and commitment of the Management Contractor.
- Design management demands: The design team must be carefully managed to avoid delays in delivery.
- Risk of gaps: Unlike traditional contracting, there’s a possibility of gaps in scope between work packages if not managed properly.
Final Thoughts
The management procurement route offers flexibility and speed, making it attractive for projects where design changes are likely or where time is critical. However, it requires a skilled Management Contractor, strong client leadership, and a well-managed design team to succeed.
When choosing a procurement route under JCT, the decision ultimately comes down to the project’s priorities, whether that’s cost certainty, speed, flexibility, or collaboration.
Watch our video on The JCT Management Contract here:
How we can help
Here at Metroun we can offer you commercial support when working on a construction project. We can tailor the support to suit your needs. Want to be commercial independent? We can provide industry ready templates. Require a full-time QS? We can provide you with highly skilled Quantity Surveyors to manage the commercial aspect on your projects. Need some extra support? We can provide you with guidance and support as and when you need.
