Management Contracting & Construction Management Method

 

Procurement Methods and Strategies in Construction

In construction, selecting the appropriate procurement method is critical for aligning project objectives, managing risks, and achieving efficient delivery. Let’s explore some commonly used procurement strategies, their characteristics, processes, risk-sharing frameworks, advantages, and disadvantages. 

3. Management Contracting

• Characteristics:

  • The client hires a management contractor to oversee and coordinate multiple trade contractors.
  • Flexible and collaborative approach.

• Process:

  1. The management contractor is appointed early in the project.
  2. Work packages are tendered to trade contractors.
  3. The management contractor supervises execution and is directly involved in the work.

• Risk Sharing:

  • The client retains risks for design and construction.
  • The management contractor assumes risks for coordination.

• Advantages:

  • Early contractor involvement improves buildability and cost estimation.
  • Overlapping work packages accelerate the project timeline.
  • Flexibility to accommodate changes during construction.

• Disadvantages:

  • Requires strong management expertise.
  • The client bears significant risks for overruns and delays.
  • High administrative costs due to multiple contracts.

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4. Construction Management Method

• Characteristics:

  • The client appoints a construction manager as an advisor and coordinator.
  • Trade contractors are directly contracted by the client.

• Process:

  1. The construction manager is hired to provide expertise during design and construction.
  2. Trade contractors are directly contracted by the client.
  3. The construction manager coordinates and advises throughout the project.

• Risk Sharing:

  • The client assumes most risks, including design, construction, and coordination.
  • The construction manager does not take execution risks but provides advisory services.

• Advantages:

  • High level of control for the client.
  • Facilitates effective coordination between stakeholders.
  • Promotes cost transparency.

• Disadvantages:

  • Significant risk burden for the client.
  • Requires strong client involvement and expertise.
  • Potential delays due to coordination challenges.

 Pooja Mattapalli

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