Management contracting is a procurement route in which the works are constructed by a number of different works contractors who are contracted directly to the client, via arrangement by R&M as the management contractor. R&M is generally appointed by our clients early in the design process, so that our experience can be used to improve the cost and build-ability of proposals as they
develop, as well as to advise on packaging (and the risks of interfaces). It also enables some works contracts to be tendered earlier than others, and sometimes, even before the design is completed (for example, piling might commence whilst the detailed design of above ground works continues). This can shorten the time taken to complete the project, but does mean that there will be price uncertainty until the design is complete and all contracts have been let.
Management contracting differs from construction management in that management contractors contract works with contractors directly, whereas construction managers only manage the trade contracts, the contracts are placed by the client.
In legal terms, the management contractor is acting as a principal whereas the construction manager is acting as an agent. This means that on a management contract, the client only has one contract to administer (whereas with construction management there can be many contracts for the client to administer.
The agreement between client and management contractor is likely to cover both pre-construction and construction activities, with a notice to proceed between the two, before which works contracts cannot be let.
The most important aspect of selecting the management contractor is the quality and cost of the project management team they put forward. The team leader, the financial manager and the planner are crucial throughout the process as is the field production manager during the construction stage. The management contractor’s staff costs during construction are likely to be between 5% and
7% of construction costs, but the quality and effectiveness of staff could easily change the financial outcome of entire project by 10%.
Key aspects of Management Contracting
- Advising on the development of the brief (if appointed at this stage)
- Advising on appointments (such as site inspectors)
- Advising on the feasibility, interfaces, build-ability, cost and programming of the design
- Advising on statutory approvals
- Defining key performance indicators for works contractors
- Advising on the need for mock ups, samples, tests and inspections
- Acting as the principal contractor
- Cost planning and cost control
- Preparing a construction programme and defining methods of working on site
- Advising on the packaging of production information
- Tendering works contracts
- Consenting to sub-contracting of work by works contractors
- Arranging for site accommodation, welfare facilities, fences, hoardings, roads and walkways, drainage, power and water supply
- Co-ordinating setting out
- Arranging labour for certain site activities (such as cleaning)
- Managing site inspectors
- Co-ordinating the release of information
- Managing and co-ordinating works contracts, including acting as contract administrator, carrying out inspections, issuing instructions and certificates etc
- Co-ordinating the work of statutory undertakers