Construction management

A return to site management?

Construction management (CM) has traditionally been viewed as a high-risk procurement strategy for clients embarking on construction projects. But is it making a comeback as a preferred route?

CM involves the appointment of numerous specialist contractors by the client directly, with a construction manager appointed to manage and coordinate the various commercial contracts. It was popular in the 1990s and early 2000s in particular, being the adopted procurement route for some large-scale projects of national significance.

CM requires intense management on the part of the client (or on behalf of the client) and it may also result in a higher level of risk regarding entrepreneur insolvency given the volume of appointed contractors with potential delays in the program that result. Unlike a design and build procurement pathway, construction management does not provide certainty over costs or the schedule until the final commercial package is accepted by the customer and there is no as a “single point of responsibility” for design and manufacturing risk (which a construction contractor would provide).

Despite the high-risk stakes (and several high-profile CM failures), we are currently seeing a growing interest in construction management from clients, perhaps motivated by a desire to exert tighter control over construction. costs and design. Adoption is especially prevalent among developers involved in large-scale residential projects.

For those considering a construction management route for their next project, here is a summary of some of the perceived pros and cons:

Advantages:

  • The construction of some packages can be started before the whole scheme is designed;
  • The award of commercial contracts on a detailed perimeter reduces change orders and therefore “unknown” costs;
  • Specialty contractors can add value to the project;
  • The prime contractor premium is subtracted from the costs.

The inconvenients:

  • The complexity of administering various commercial contracts and consultant appointments and the time commitment of the client / construction manager are significant;
  • It can be difficult to deal with delays and disruptions with multiple business contracts;
  • There may be gray areas between specialty contractors and where the “blame” lies for any flaws or problems with the project;
  • Cooperation and sequencing between commercial packages should be carefully managed and contractually planned.

One observation from our own experiences working on CM projects is that the key to a successful project is either (1) the client hires an experienced professional construction manager to handle all commercial contracts or (2) the client having an appropriate internal team and dedicated resource with experience in delivering complex projects to assume the role of Construction Manager.

Time will tell if we continue to see an increase in CM use given the ever increasing pressures on the construction industry in the current climate. For now, however, the CM route appears to be making a comeback.


Source link