Construction management (CM) has generally always been perceived 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 trade contractors by the client directly, with a construction manager appointed to manage and co-ordinate the various trade contracts. It was popular in the 90s and early 00s in particular, being the procurement route adopted on some high profile projects of national significance.
CM demands intense management on the client's part (or on the client's behalf) and it can also bring a higher level of risk regarding contractor insolvency given the volume of contractors being appointed with potential resultant programme delays. Unlike a design and build procurement route, construction management does not provide cost or programme certainty until the last trade package is let by the client and there is no 'single point of responsibility' when it comes to design and workmanship risk (which a design and build contractor would provide).
Notwithstanding the high-risk stakes (and several high-profile CM failures), we are currently seeing a growing interest in construction management from clients, perhaps driven by a desire to exercise closer control over costs and design. Uptake is particularly prevalent among developers involved in large scale residencial projects.
For those considering a construction management route for their next project, below is a summary of some of the perceived pros and cons:
Pros:
- The construction of certain packages can be started before the entire scheme is designed;
- Awarding trade contracts on a detailed scope cuts down on change orders and thus the 'unknown' costs;
- Specialist trade contractors can add value to the project;
- Main contractor premium is removed from costs.
Cons:
- The complexity of administering various trade contracts and consultant appointments and time commitment from the client/ construction manager is significant;
- It can be challenging to manage delay and disruption with multiple trade contracts;
- There can be grey areas between trade contractors and where the 'blame' lies in the event of defects or issues arising with the project;
- Cooperation and sequencing between trade packages must be carefully managed and provided for contractually.
One observation from our own experiences of working on CM projects is that the key to the success of a project is either (1) the client engaging a professional construction manager with experience to manage all of the trade contracts or (2) the client having an appropriate in-house team and dedicated resource with experience in delivering complex projects to take on the construction manager role.
Time will tell if we continue to see an increase in the use of CM given the ever-increasing pressures on the construction industry in the current climate. For the moment though, the CM route appears to be making somewhat of a comeback.
If you have any questions in relation to the above, please contact Jane McMonagle or Juliet Haldane.
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