Context
Whilst Construction Management (CM) has been out of favour over the last 5-6 risk-averse years, there appears to be signs of its return. Collette O’Shea, Managing Director for Land Securities in London recently quoted in Building Magazine (Issue 18) 2014 that she foresees a return to Construction Management despite the pricing risk for clients. She further added “if I had a project now and we were looking to procure it, then I suspect CM would be one of the routes we’d be considering.
With the increased activity in the development market, many developers are looking at alternative and creative ways to procure their developments and stay ahead of the competition. As construction prices continue to climb at an unprecedented rate, contractor’s order books continue to fill and long lead-in periods for materials, Construction Management has never seemed so appealing.
So what is Construction Management?
Construction Management is a procurement approach whereby the CM undertakes to manage the Works through trade contractors, who are contracted to the client. Value is achieve through acceleration of the overall programme, increased ability to incorporate change to the design, involvement of specialist trade contractors in design and construction, and the creation of a collaborative project culture. As noted by the RICS, the CM is paid a fee as it was any other consultant to cover for its staff costs, and overheads, etc. As a member of the professional team the CM uses its experience to optimise costs and programming, shape buildability, coordinate procurement and manage design performance.
There are many advantages and disadvantages in adopting a CM approach, as acknowledged by Simon Rawlinson in Building Magazine (Issue 35) 2006:
Advantages
- Accelerated programme overlapping design and construction
- Ability to closely manage cost during design and procurement
- Proactive management of the design and construction process to minimise impact of change and other causes of disruption
- Hands-on involvement of the client on the project
- Professional team including the construction manager focused on meeting client’s needs and integration of design and construction skills
- Full control over design including incorporation of design by specialist contractors
- Early appointment of construction advisers and specialist trade contractors
- Ability of client to influence the selection of trade contractors
- One-to-one contractual relationships
- Management focus on programme, sequencing and buildability
- Client ownership of tendering and contractual arrangements
- Opportunity to package the work to suit the capability of the trade contractors and manage on-site interfaces
- Ability to identify and act upon poor trade contractor performance
Disadvantages
- Design co-ordination risk and increased likelihood of design change
- No cost certainty until all packages are let and no single point lump-sum cost commitment
- Exposure to risk associated with construction manager and team performance. Reliance on the capability of construction manager and project team to correctly forecast consequences of change. Responsibility to fund solutions to problems should they occur
- Increased administration role for the client
- CM and professional team owe duty of care liability only
- High degree of client ownership of risks associated with design including impacts of late or incomplete and uncoordinated design
- Added complexity of one to one contractual relationships of client with all team members
- Reliance on management capability of construction manager
- Client position at centre of management requires effective decision-making
- Client exposure to performance risk and exposure to consequential loss associated with trade contractor default.
Summary
Clients embarking on a Construction Management journey can expect better control of costs during the process through the expertise of the CM and contractual relationship with trade contractors. This said, the client retains the contract risk of non-performance and requires the client to have the ability to enter into multiple contracts and make payments to each.
Design can be controlled and change incorporated more easily. Through the CM’s buildability knowledge and control of design performance a better quality should be realised.
Programming is also an advantage to the client due to the integration of the design process with the construction process, thus reducing the lead-in period before commencement.
If you require any further information on Construction Management, please contact our expert’s chris.moss@evolution5.co.uk and Darren.foy@evolution5.co.uk
