Characteristics of Management Contracting

a) Clients and contractors adapt this system once they gain experience, which suggests that it has merits.
It is generally recognized that its adoption requires mutual trust.
b) The management contractor is appointed much earlier. He is able to become a member of design team
and contribute his expertise and mainly his management expertise.
c) An effective method for the client retaining control of the design whilst drawing on the experience of a
construction specialist as part of the Professional Team.
d) The Management Contractor is paid a fee for its services as well as enters into contract with the client
for work packages, generally separate works contractors are appointed to carry out work packages
under the management contractor.
e) This type of arrangement tends to be used on complex projects where early input from a construction
specialist is required.
f) Decisions regarding appointment of subcontractors are made jointly by designers and management
contractor thus making use of wider experience. Specialists’ contractors and subcontractors compete at
second stage ensuring economical tenders which benefits the client.
g) Lines of communication are shorter between management contractor and client than with the
traditional procurement method.
h) The client has direct control over the management contractor, who is the main contractor, so that the
project is completed in a better way and in shorter time.
i) The main functions of the management contractor may include acting as principal contractor, cost
planning and cost control, consenting for works contracts, coordinating and managing works contracts,
coordinating commissioning, collating pre construction information and construction phase plan,
monitoring key performances and managing the site.
 MECHANISM
• Works constructed by a number of different works contractors
• Client appoint management contractor early in the design process so that their
experience can be used to improve the cost and buildability of proposals as
they develop and to advise on packaging
• Agreement between client and management contractor will cover both pre-
construction and construction activities, with a notice to proceed between the
two, before which works contracts cannot be let
• Client should define the work contract terms and any requirement for works
contract warranties
• A decision needs to be made as to whether the client wishes to retain
the services of both an independent cost consultant and a management
contractor or to transfer cost planning, reporting and cost control as
a service to be provided by the management contractor.
• A judgement has to be made on the competence and experience of
the management contractor's proposed quantity
surveying and cost estimating team and whether the client has a competent
individual to police the financial aspects of the management
contractor’s consultancy agreement.
 MECHANISM (cont’d)
• Then the management contractor make contract with sub-contractors or
specialists (called work contractor). Basically, the works is sub-contract to
other contractors who are directly employed by management contractor.
Management contractor is responsible for administration operation of work
contractors. Management contractor doesn’t play role in actual design or
construction work.
• Actual construction is let in packages and undertaken by various work
package contractors.