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Management contracting

Management contracting is an approach whereby a management contractor (appointed by the client) undertakes and carries out the work through work contractors. These works contractors are therefore contractually accountable to the management contractor.

The client usually engages the management contractor to take an active role in the project at an early stage. Because of this, the management contractor is normally an experienced contractor. The overall design is the responsibility of the client’s consultants. However, the management contractor is normally responsible for defining packages of work and then for managing and carrying out of those work packages through separate trades or works contractors.

The advantages of management contracting are:

  • It’s beneficial for fast-track, complex projects where minimal design information is available at the start of the project
  • The technique allows for early ‘buildability’ and programming input from the management contractor acting as a consultant
  • The preliminaries and management fee can be fixed, allowing for a degree of certainty on price
  • The quality can be controlled by the design team
  • There is great scope for client changes

The disadvantages of management contracting are:

  • It’s a low-risk strategy for the management contractor as they have little responsibility due to the overall design being the responsibility of the client’s consultants
  • Although guaranteed maximum price can be achieved, the process is still fundamentally prime cost in its nature
  • Cost increases can be substantial, and there’s often a tendency for the initial cost plan to be adjusted upwards

Your task

In your area of practice, identify a project in the UK for which management contracting would be a more appropriate procurement approach than the traditional or design and build approaches.

Share your thoughts with other learners in the comments area.

Further reading

If you’d like to know more about the management contracting, you might want to read:

Hughes, W.P. (1997) ‘Construction Management Contracts: Law and Practice’. Engineering, Construction and Architectural Management, 4(1), 59-79 (ISSN 0969-9988).

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This article is from the free online course:

Contract Management and Procurement: An Introduction

Coventry University