What is the difference between Management
Contracting and Construction Management.
Management contracting is appropriate for large scale projects requiring an early start on site.
The design is undertaken on behalf of the employer and this procurement route is ideal where work needs to be started before the design on the project is completed.
It therefore is of great assistance where the period available up to completion is restricted.
This procurement route is also suitable for projects where the design is sophisticated or innovative, requiring proprietary systems or components designed by specialists.
The management contractor does not carry out any construction work, but manages the project on behalf of the client. it is a cost-reimbursable form of contract, with the management contractor being paid a fee. All the work is undertaken by subcontractors, referred to as works contractors, in distinct works packages, employed by the management contractor. A cost plan is produced at an early stage based upon estimates of the works packages, plus preliminaries and the management contractor’s fee.
The employer appoints the architect or contract administrator, coordinator quantity surveyor and any other consultant who may be required.
There are two distinct time periods involved. During the first period, which is the pre-construction period, the management contractor should be appointed as early as possible to enable it to have an input into such matters as the design of the project , in particular the buildabillity aspect health and safety matters, preparation of the budgets for works packages, and the programme. The fee to be paid to the management contractor is usually agreed at the outset of the pre-construction period.
During the construction period the works packages are put together by the management contractor in conjunction with the employer’s professional team. The management contractor will be required to manage, organize and supervise the works contractors, to ensure that the work is carried out in accordance with the requirement of the contract and completed on time.
The management contractor is paid the final cost of all the works packages plus any preliminaries and the fee. The fee is usually a lump sum, as paying the fee as a percentage of the total of the works package is not conductive to keeping the works package costs to a minimum.
The most commonly used standard form of management contract is the JCT Management Building Contract. It is an important concept of this management contract that the consequences of any default on the part of any works contractor do not fall on the management contractor. The management contractor is required to ensure that the work is carried out without defects and on time. However, this requirement does not bite if the only reason for a breach of the obligation is a breach of the works contract by a works contractor. There is no such comfort offered to the management contractor by the Engineering and Construction Contract.
This type of procurement method is generally regarded as low financial risk from the management contractor’s point of view. The client, however is at greater risk financially than would be the case with a traditional procurement route, where the contractor works for a pre-determined lump sum. Employers can be caught out where the contract runs over a long period and unexpected inflation takes place, which results in the final cost of the project exceeding the cost plan.
Construction management offers an alternative to management contracting and in like manner is suitable for large projects where an early start on site is required. The major difference between construction management and management contracting is that the construction manager acts solely as a manager and is not in contract with the trade contractors, who undertake all of the work.
an additional difference between management contracting and construction management is that the construction manager is a first appointment and will be responsible for selecting the design team, even if they are in contract with employer.
The employer enters into separate trade contracts with each of the trade contractors who will be carrying out the work.
The construction manager acts as an agent on behalf of the employer and manages the trade contractors work and also the design.
It is usually advisable for the employer to select and appoint its own quantity surveyor, who will act independently from the construction manager to insure that impartial cost advice is being provided.
In like manner to the management contract, the construction management contract is a cost-reimbursable contract, with the construction manager being paid a fee.
The downside of this procurement route is that, if there is a serious dispute between the construction manager and a trade contractor which cannot be amicably resolved, any formal proceeding must be commenced by the employer against the trade contractor.
In like manner to management contracting, construction management is low financial risk from the construction management contractor’s point of view. The financial risk for the employer arising from the two procurement routs is also the same.
Construction Management vs. Management Contracting: A Comprehensive Comparison
Introduction: Understanding the Distinctions and Benefits
Construction management and management contracting are two distinct approaches for large-scale projects. While both offer efficient project execution and early site commencement, they differ in crucial aspects. In this article, we will delve into the nuances of construction management and management contracting, highlighting their differences, benefits, and potential risks. By gaining a comprehensive understanding of these procurement routes, stakeholders can make informed decisions for their projects.
1. Construction Management: A Managerial Approach
Construction management stands out as an effective alternative to management contracting. Unlike management contracting, the construction manager acts solely as a manager, without direct contractual ties to the trade contractors performing the work. This separation of roles allows the construction manager to focus on overseeing and coordinating the project’s various aspects.
2. Distinction: Design Team Selection
Another notable difference between management contracting and construction management lies in the initial appointment. In construction management, the employer appoints the construction manager as the first point of contact. As part of their responsibilities, the construction manager takes charge of selecting the design team, even if they are under contract with the employer. This early involvement ensures seamless integration of the design process with the overall project management.
3. Separate Trade Contracts
Under the construction management approach, the employer enters into separate trade contracts with each trade contractor responsible for specific work packages. This arrangement allows for specialized expertise and efficient allocation of resources. The construction manager acts as the employer’s agent, overseeing and managing the trade contractors’ performance, as well as the design aspects of the project.
4. Impartial Cost Advice: The Role of Quantity Surveyor
To ensure impartial cost advice throughout the project, it is advisable for the employer to independently select and appoint a quantity surveyor. This expert professional operates independently from the construction manager, providing invaluable cost-related insights. By having an independent quantity surveyor, the employer can confidently make informed decisions regarding project finances.
5. Cost-reimbursable Contract: Financial Arrangements
Similar to management contracting, the construction management contract follows a cost-reimbursable approach. The construction manager receives a fee for their services, reflecting the project’s scale and complexity. This financial arrangement aligns the interests of the construction management contractor with the successful completion of the project, minimizing their financial risk.
6. Potential Disputes: Employer’s Recourse
While construction management and management contracting share similarities in terms of financial risk for the employer, there is a critical difference when it comes to disputes. In the case of a serious dispute between the construction manager and a trade contractor that cannot be resolved amicably, the employer must initiate any formal proceedings against the trade contractor. This distinction underscores the need for effective communication and collaborative problem-solving throughout the project.
Conclusion: Choosing the Right Approach
Both construction management and management contracting offer advantages for large-scale projects, ensuring early site commencement and efficient project execution. By understanding their distinctions and assessing specific project requirements, stakeholders can make well-informed decisions. Construction management allows for comprehensive project oversight, while management contracting promotes close collaboration between the construction manager and trade contractors. Ultimately, selecting the most suitable approach depends on the project’s unique characteristics and the stakeholders’ priorities.
Remember, thorough planning, effective communication, and a deep understanding of the project’s needs are essential for successful project delivery, regardless of the chosen procurement route.