Management contracting and its use

Understanding Management Contracting in Construction Projects

Management contracting and its use are important in construction procurement because they offer a flexible way to manage complex building projects. In this method, the client appoints a management contractor who oversees the entire construction process. Unlike other methods, the management contractor does not do the actual building work but manages various subcontractors hired to carry out different parts of the project.

In South Africa, management contracting is commonly used on projects where time is critical or when the design is still ongoing while construction begins. The management contractor provides early input into cost, programming, and risk management. This allows the client to start work quickly, often before the full design is complete, which can save time and reduce delays.

How Management Contracting Works

1. The client appoints a management contractor early in the project.
2. The management contractor advises on design and construction methods.
3. Subcontractors are selected and contracted by the management contractor.
4. The management contractor manages the subcontractors and the construction process.
5. The client pays the management contractor a fee plus the cost of subcontracted work.

The client benefits by gaining expert advice and having more control during construction. The management contractor can recommend changes to save costs or avoid problems before work progresses. This method suits large or complicated projects where design and construction overlap.

One key advantage is that management contracting allows for faster project starts because tenders for subcontractors can be called in stages. It also spreads risks differently compared to traditional methods. The management contractor takes responsibility for managing risks related to subcontractors and time delays.

However, this method requires a high level of trust and cooperation between the client and the management contractor. Clear contracts and good communication are essential to avoid disputes. The client must also have a good understanding of the process and the ability to manage the contracting team.

In summary, management contracting and its use provide a practical, flexible solution for construction projects that require speed and adaptability. It is ideal where the client wants expert advice during construction and is comfortable with an open-book approach to costs.