Management contracting is a project management approach where a client contracts a management contractor to oversee and coordinate the construction process on their behalf. This involves the client engaging with a management contractor early in the project’s development to provide expert advice and direction throughout its lifecycle. Let’s explore the concept of management contracting, its key features, and how it operates in practice.
Overview of Management Contracting
Management contracting is a procurement strategy commonly used in construction projects. In this arrangement, the client retains control over the project’s design and finances while delegating the management of construction activities to a specialized contractor. The management contractor acts as the client’s representative, working closely with architects, engineers, and subcontractors to ensure the project is delivered on time, within budget, and to the required quality standards.
Key Features of Management Contracting
- Early Involvement: Unlike traditional contracting methods where the contractor is engaged after the design phase, management contracting involves the contractor from the project’s inception. This allows the management contractor to contribute expertise during the design development stage, offering valuable insights into constructability, cost implications, and scheduling considerations.
- Collaborative Approach: Management contracting fosters collaboration among project stakeholders, including the client, design team, and construction professionals. The management contractor acts as a central point of coordination, facilitating communication and decision-making throughout the project lifecycle.
- Risk Sharing: Management contracting involves a degree of risk-sharing between the client and the management contractor. While the client retains ultimate responsibility for project outcomes, the management contractor assumes responsibility for managing construction-related risks, such as site safety, quality control, and subcontractor performance.
- Flexible Procurement: Management contracting offers flexibility in procurement by allowing the client to engage with the management contractor under various contract forms, such as cost-plus, fixed fee, or target cost contracts. This flexibility enables the client to tailor the contract arrangement to suit the project’s specific requirements and risk profile.
- Performance-Based Payment: Payment to the management contractor is typically linked to project performance metrics, such as milestones achieved, quality standards met, and adherence to budget and schedule. This incentivizes the management contractor to focus on delivering results and achieving project objectives.
How Management Contracting Works
- Pre-Construction Phase: The client engages with the management contractor during the pre-construction phase to develop project objectives, establish budget and schedule parameters, and select the design team. The management contractor provides input on constructability, value engineering, and procurement strategies.
- Design Development: The design team collaborates with the management contractor to develop detailed designs and construction drawings. The management contractor reviews the designs for compliance with project requirements, feasibility, and cost-effectiveness. Value engineering exercises may be conducted to optimize project value and reduce costs.
- Procurement of Trade Contractors: The management contractor assists the client in procuring trade contractors and suppliers through a competitive bidding process. The management contractor evaluates bids, negotiates contracts, and manages subcontractor relationships on behalf of the client.
- Construction Phase: During the construction phase, the management contractor oversees on-site activities, including mobilization, site logistics, quality control, safety management, and progress monitoring. The management contractor collaborates with subcontractors to ensure work is completed according to specifications and schedules.
- Project Closeout: Upon project completion, the management contractor facilitates the closeout process, including final inspections, commissioning, and handover of the facility to the client. The management contractor ensures that all contractual obligations are fulfilled, and any outstanding issues are resolved before project closure.
Example of Management Contracting
Suppose a commercial developer decides to construct a new office building. Instead of hiring a traditional general contractor, the developer opts for a management contracting approach. They engage a management contractor early in the project’s development to provide input on design optimization, procurement strategies, and cost management. Throughout the project lifecycle, the management contractor collaborates with the developer, architects, engineers, and subcontractors to deliver the project on time and within budget while maintaining quality standards and adhering to safety regulations.
Conclusion
Management contracting is a collaborative project management approach that offers several advantages, including early involvement of the contractor, risk sharing, flexibility in procurement, and performance-based payment. By engaging a management contractor to oversee construction activities, clients can benefit from expert advice, streamlined project delivery, and enhanced project outcomes. Management contracting promotes collaboration among project stakeholders and facilitates effective decision-making, leading to successful project completion.
References
- Ashworth, A., & Perera, S. (2018). Cost and Management in Construction: A Strategic Approach. Routledge.
- Smith, N.J., & Merna, T. (2019). Managing the Construction Process: Estimating, Scheduling, and Project Control. Routledge.
- Cooke, B. (2018). Construction Planning, Programming, and Control. John Wiley & Sons.