Construction Management (CM) represents another management-oriented procurement route where the client appoints a Construction Manager to oversee and coordinate the construction project. However, a key distinction from Management Contracting is that in CM, the client enters into direct and separate contracts with multiple trade contractors for the various aspects of the construction work.
Similar to the traditional separated procurement route, the project design in CM is carried out by design consultants directly appointed by the client. However, instead of engaging a single main contractor to execute the entire construction, the client establishes individual contracts with various trade contractors, such as those specializing in structural work, masonry work, mechanical and electrical services, and interior finishes. The Construction Manager acts as a consultant or agent to the client, providing professional management services aimed at coordinating the activities of these numerous trade contractors and the client’s design team. Notably, the CM does not have a direct contractual relationship with the trade or package contractors. In essence, the client takes on a more direct role in the contractual framework of the project, directly managing relationships with multiple entities, while the Construction Manager provides the necessary expertise and coordination to facilitate a smooth project progression.
Features of Construction Management
Several characteristics define the Construction Management approach. The client establishes multiple direct contracts with each of the package contractors involved in the project. The Construction Manager operates as the client’s agent, acting solely as a manager and coordinator without a direct contractual link to the trade contractors. Consequently, the client takes the responsibility for managing and administering these multiple direct contracts, a task that can be quite demanding. CM offers significant flexibility in terms of design, procurement strategy, and the phasing of construction, allowing the client to adapt to changing circumstances as the project evolves. Similar to Management Contracting, the early appointment of a CM can facilitate an early start potential, enabling some trade packages to be tendered and commenced before the entire design is finalized, reducing the overall project duration. The CM can also contribute their buildability knowledge and programming advice during the design and project planning stages, working along with the client’s design team. A key differentiator is the absence of a contractual link between the CM and the package contractors; the CM’s role is purely advisory and coordinative. This procurement route usually affords the client a high degree of control over the project, as they maintain direct relationships with all the key stakeholders involved.
Advantages of Construction Management
Construction Management presents several advantages. Clients gain greater control over the project by having direct contractual relationships with all the trade contractors, which can influence the project’s execution, quality, and potentially cost. There is a possibility for cost savings as the client might be able to eliminate the overhead and profit margins associated with a traditional main contractor by contracting directly with trade specialists. CM offers considerable flexibility to accommodate design changes and adjustments throughout the construction process without necessarily incurring a premium from a main contractor. The early contractor input provided by the CM during the design phase is valuable in terms of buildability, cost implications, and project programming. The potential for a reduced project duration exists by overlapping the design and construction phases through the early commencement of some trade packages. The roles, responsibilities, and risks for all parties involved are generally clearly defined under a CM arrangement. Clients also have direct remedies with the package contractors due to the direct contractual links, providing a clear path for addressing any issues or non-performance. Finally, the client enjoys transparency in costs, having complete visibility over the amounts payable to each of the package contractors. Overall, Construction Management can be particularly advantageous for clients who desire a high level of control, seek potential cost savings, and require flexibility, provided they possess the capacity and willingness to manage multiple contracts effectively.
Disadvantages of Construction Management
However, Construction Management also has several disadvantages. The client faces a significantly increased administrative burden due to the need to manage multiple separate contracts with the various trade contractors, including procurement, payments, and coordination. Similar to Management Contracting, price uncertainty can be an issue, as the total project cost is not fully known until all trade packages have been let, which can occur relatively late in the project. With multiple trade contractors working directly for the client, there is a higher risk of conflicts arising between them regarding scheduling, coordination, and responsibilities, and the client may need to play a role in resolving these disputes. This procurement route demands a client who is knowledgeable about construction processes, contract management, and project coordination, as they are taking on a more active role than in other methods. While direct contracting might save on a main contractor’s margin, the client may need to engage more consultants or a highly experienced Construction Manager, potentially leading to higher overall professional fees. Changes to later trade packages can negatively affect packages that are already in progress, potentially leading to increased costs and delays if not managed carefully. Finally, there is no single point of responsibility for construction, as the responsibility for the overall construction delivery is distributed across multiple package contractors, which can make it more challenging to hold one party accountable for the entire project’s success. In summary, while offering significant control and potential benefits, Construction Management can be demanding for clients who lack experience or resources in managing multiple construction contracts and requires careful coordination to mitigate the risks associated with a fragmented responsibility structure.