In this article, we will tackle the final procurement route of the trio, the management procurement route.
Management contracting is a procurement route in which the works are constructed by several different works contractors who work under a management contractor. The management contractor is generally appointed by the client early in the design process so that their experience can be used to improve the cost and buildability of proposals as they develop. They will also advise on packaging and the risks of interfaces. The contractor does not actually do the physical work but is paid a sum for managing the project through the various works packages.
It’s important to remember that this isn’t Construction Management, because although the Management Contractor acts as the channel through which risks are transferred between the Client and the Subcontractors, they themselves are not contractually responsible for the defaults of either party.
All of the risk is transferred between the Client and the Subcontractors in individual contracts between those parties. The Management Contractor simply manages them on behalf of the Client.
So what are the main advantages and disadvantages of using this route?
The advantages are:
- It is a fast-track route due to overlapping in design and construction process.
- Management Contractor as well as the works contractors are able to contribute to the design and planning.
- Changes in design can be accommodated easily if the relevant work packages are not let already.
- Work packages are awarded competitively at current prices.
The disadvantages are:
- For the design to be complete, the client must provide a good quality brief to the design team and allocate enough resources to the project
- Cost certainty is not achieved until all the trade packages are let.
- This route relies on an expert Management Contractor who is committed to the project.
- Design team must be managed properly for timely delivery of design.
- There could be gaps left in the works contractor packages which would not be missed by a traditional contractor.
Watch our video on The JCT Management Contract here:
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