The Construction Management procurement route is having a period of renascence. This boom is despite a generation of developers not being aware of this option or fully understanding the many advantages that come with it.
Construction Management came to these shores from the USA in the late 80s and grew in its popularity in the early 90s following its application on successful well known projects at the time such as Broadgate.
Whilst there is a dedicated number of developers who continue to use this route regardless of the economic cycle it remains a small percentage despite the many advantages regarding programme, cost and design control and flexibility to accommodate change.
This form of procurement varies from others in the way that the Developer/Client directly appoints multiple Trade Contractors, a Construction Manager and the design team. This equal relationship to the client creates a more collaborative, non-adversarial, culture within the team and allows better alignment of the team with the objectives of the Developer/Client.
A main difference between Traditional, Design & Build procurement and Construction Management is to do with the incentives for performance. A lump-sum contract uses 100% completed drawings to establish a set price for the project. In this case the Contractor is rewarded to the extent that the project costs are less that the acceptable bid price. As a result, it’s the contractor’s objective to deliver the project for the least possible cost, from which the Developer receives no benefit. This can also jeopardise the quality of the final product.
On the other hand, a Construction Manager, who is paid an agreed fee for their work, shares a common objective with the Client to get the best price, from the right suppliers, and any cost savings made as part of this process directly benefit the client.
That’s not to say that this form of procurement doesn’t come without its risks. Developers using this procurement route need to be proactive, decisive and involved in the process in order for it to be successful. The engagement of Project Managers who fully understand the Construction Management procurement route can mitigate the risks.
Well known projects currently using the construction management form of procurement include:
Want to find out more about Construction Management?
As more and more Developers and Clients have asked us about this procurement route recently we’ve created a face to face CPD presentation to further explain this form of procurement to those who are interested. Our CPD covers the following in more depth:
Director – Project Management