What is a Management Contracting Procurement Route?
In this route, the client hires a Management Contractor to manage the entire building process who in turn hires works contractors to carry out the construction works. The Management Contractor is paid a fee over and above the construction costs. As compared to the Construction Management procurement route, where the Construction Manager does not have any direct contractual links with the trade contractors, in this route the Management Contractor has a direct contractual link with the works contractors and is responsible for the overall construction works. The design is done by a design team hired by the client and so the client bears the risk for the design.
Similar to the Construction Management procurement route, Management Contracting is also a fast track route as it enables overlapping the design and construction phase.
As the design progresses, the work packages are let and thus cost certainty is only achieved when all the works contract are finalized.
A typical project organisational structure for a Management Contracting procurement route is given below.
What are the advantages and disadvantages of the Management Contracting procurement 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.
Reference: RICS Professional Guidance, UK: Developing a construction procurement
strategy and selecting an appropriate route, 1st edition, guidance note