Construction management contract

From CEOpedia | Management online
Construction management contract
See also

Construction management contract is a document that provides the project team with access to the contractor's experience at an early stage. For this reason, the standard management contract distinguishes the pre-construction stage from the construction stage. Because of this distinction in fact, the employer has the possibility to terminate the relationship after the design phase, but before the construction work begins[1].

This form of contract should be used when[2]:

  • The Employer wishes the project to be made by an independent architect and a team of designers.
  • There is a need for early completion.
  • The project is quite large.
  • Project requirements are complex.
  • The project entails or may entail a change in the requirements of the employer during the construction.
  • The Employer requiring early completion want the maximum possible competition in terms of the price of construction works.

Condition of contract

The contracts are divided into sections. In short, these are[3]:

  • Intentions of the parties - This section includes an interpretative clause, a general statement of counterparty liabilities and provisions for contract documents and certification. There is a period before the start of construction, as well as the construction period, and the management fee for the contractor is expressed discretely for each of these periods. The contract also defines a change of project which gives the employer the opportunity to change the project scope
  • Possession and completion - The employer must notify the management executor to continue. This Means at the point between the initial contractions and construction. If The notice is not sent within one month then the contractor's employment will be deemed to have been established. However, If no notification is an error, it can be recognized as such and treated as a project extension element
  • Payment - There is no provision amending the management fee payable to the executive contractor in a range of renewations, delays, etc.
  • Determination - The Employer may establish a contract at any time. There are rules on how to deal with such a possibility so that the contractors of the work can be paid.
  • Work contractors - The main Contract obliges the contractor to use the standard terms of the employment contract, unless otherwise agreed.

Management contracting

The Principle of contract management is that the contractor is appointed in advance and on a contract with the employer. It is usually assumed that the management contractor does not take any actual construction work, but focuses on the management, cooperation and coordination of construction work. The management contractor is Expected to work as a partner with the employer in designing and implementing the project. The Main reason for this partnership is the prospect of creating a more integrated and buildable project, which will overcome the main problem of traditional strategy. A very important point is that the contractor has contracts with subcontractors, and it precisely distinguishes construction management from management contracting. Therefore, unlike the management of contractions, the risk of the interface is usually transferred by the management contractor[4].



Author: Maciej Michałek