May 24, 2023

Construction management: worth another look?

There’s no escaping the truth that construction projects of any size can be complicated.

The client’s aim is usually to have a project completed on time, on budget, and matching their design and function expectations. For the contractors and consultants involved, they want to do a good job, get paid on time, and earn enough profit to operate as successful businesses.

There are several ways to buy construction services from contractors and consultants. One reason why costs spiral, delays occur and tensions between the parties develop, however, is where the client does not choose the most suitable procurement process to achieve the commercial aims driving the project.

Clients across various sectors often engage their construction teams using the design-and-build approach. They favour the perceived cost certainty for delivery via a single contractor that takes responsibility for the whole project. But by using the “traditional” method of splitting the design and construction aspects between design consultants and the contractor, the client can retain greater control over the quality of the end product.

Partly due to the seismic shifts in the economic climate in recent years, clients are increasingly considering ‘construction management’ as an alternative route to procure their projects. This is where the employer separately appoints multiple contractors and consultants across various trades. Each contractor or consultant is responsible for their own work, and the client pays the contractors and consultants directly. The client is responsible for the coordination of the design and sequencing of all the works, the overall health and safety risks, and for ultimately delivering a synchronised project. To assist, the client also appoints a construction manager to facilitate the smooth completion of the project.

Construction management works best for clients experienced in delivering projects, and have the time and manpower to dedicate to the project. The client’s role is very hands-on so the working relationship between parties is also key.

Managing risk

Depending on the extent of the information made available to the consultants and contractors when they are engaged by the client, the client will need to manage the interface risk between all the parties to deliver a successful project. Spreading the risk of project delivery across more than one contractor under construction management can also help mitigate against other concerns, for example, if a contractor becomes insolvent. In both design-and-build and traditional procurement, insolvency of the main contractor is often catastrophic to the project outcomes. In construction management, though, the insolvency risk can be better ringfenced to the specific trade affected.

With a construction-focused client, the flexibility afforded by using construction management can lead to works starting before the full design is finalised, and a shorter timescale for project completion. The client can also make design changes more quickly.

A key factor in choosing construction management is often the lower initial cost budget, as a main contractor’s design-and-build overhead and profit percentage is non-existent. But construction management does not always guarantee cheaper delivery, as the overall cost of the project is not known until the client has engaged the last contractor.

Clients and stakeholders should assess the key commercial goals at the start of a project, and not shy away from challenging the initial selected procurement method. Construction management may be worth another look.

This article originally appeared in Construction News.

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