What
is Management Contracting?
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Management
Contracting is an alternative system for the procurement of buildings
- it allows the contractor to work in a constructive relationship with
both the client and the consultants, rather than being confined to simply
carrying out the works. It also places an unequivocal duty on the Management
Contractor to administer the construction in the best interests of the
client.
This
form of procurement therefore ensures a different attitude towards the
project; an attitude that traditional tendering and contracting rarely
permits. It also means better communication between the parties at all
stages of the design and construction process, by removing the traditional
'them and us' attitude, which so often evolves between the Contract Administrator
and the Builder and from which the client invariably suffers.
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Why
Management Contracting?
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As
far back as 1962 Sir Harold Emmerson, reporting on problems facing the
construction industry, pointed out that:
"… in no other important industry is the responsibility for design so
far removed from the responsibility of production."
He
concluded rightly that the client suffered as a result.
Traditional
tendering, with its short lead-in time for the Contractor combined with
the traditional forms of contract, leads almost inevitably to a conflict
of interests within the construction process. Many, if not most, traditionally
tendered contracts are awarded on the basis of cost. Such a short-term
view will often be paid for at a later date through oversights, claims
and eventually greater maintenance costs.
A
successful building project depends equally on design, buildability, planning,
programming and proper management as well as the skills of the builder.
Yet under a traditional tender system, the builder is excluded from all
of these and is given a minimal of time in which to assimilate a range
of complex information, produce a price, and if successful, organise and
execute the works at a moments notice and often under threat of penalty.
Successful
construction is a team effort and the Contractor, along with the Architect
and the Quantity Surveyor is, or should be, part of that team. Management
Contracting is a move towards achieving this goal.
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Fundamentals
of Management Contracting: JCT- MC 98
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The
principles of Management Contracting are embodied in the JCT Management
Contract 1998:
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Construction work is undertaken by a series of sub-contractors (Works
Contractors) on a tender basis. All discounts are passed on to the client.
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The Management Contractor is usually appointed (but not always), by
the commencement of the Detailed Design Stage, to contribute to: - Buildability,
Overall Project Programming, Cost Planning.
-
The Management Contractor works in a co-operative relationship with
the Client and Consultants.
-
The Management Contractor has an unequivocal duty to manage the construction
in the best interests of the Client.
- The
Management Contractor is remunerated for his Management Services, and
for the cost and risk of the construction work, by the client on an
agreed fee basis
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Advantages
of Management Contracting
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The
basic advantages of JCT-MC include the following:
-
A single overall contract, with a pre-construction phase if chosen and
a separate management fee
- Flexibility
in the construction phase just when it is needed most - adaptability
when the building is incomplete enough to adjust and improve easily
- The
co-ordination of design and construction, allowing the flow of improvisation
and adjustment, to meet client requirements during the building process,
with a reduction in the risk of claims
- A
Team effort between the Client, Designer, the Quantity Surveyor and
the Contractor, which ensures that time, cost, quality objectives and
flexibility are better maintained
- Consistent
attention to detail.
As
a guide, Management Contracting typically provides:
- Earlier
completion
- A
reduced risk of overruns of time and cost
- Enhanced
buildability and thus reduced maintenance costs
- Flexibility
in control - particularly in allowing for the possibility of accelerating
the programme
-
Possible lower capital costs for early completion
- Improved
quality and performance of the finished building
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