With the upturn in the development market, some developers are  starting to think more creatively about their choice of construction  procurement method in order to get better “bang for their buck” and  gain a programme advantage over competitors.

For those keen or at least willing to move away from the familiarity  of the single point responsibility design and build route (under which  the contractor takes full responsibility for the design and build of the  project), one option for sufficiently complex or high value development  projects is the more “hands on” approach of package contracting and,  in particular, construction management.

Construction management is a procurement route in which the works  are constructed by a number of different trade contractors, managed  by a construction manager, but contracted to the client. Value is  achieved through breaking the project down into its component parts  and competitively tendering each works package. We are currently  working on a number of projects with this structure.

Whilst in the UK, construction management has traditionally been  reserved for very large or technologically complex projects, such as  Heathrow Terminal 5, its use appears to be gaining momentum for  larger or high value projects in the development sector. It has been  adopted on the first element of the second stage of the Battersea  Power Station project and more recently on the circa £300m  redevelopment of Selfridges department store in London.

A construction manager (who generally has the ethos of a contractor)  is appointed as a member of the professional team early in the design  process. He acts on the client’s behalf to work alongside the design  team so that his experience can be used to optimise cost and help  shape the “buildability” of developing proposals. The appointment of  the construction manager as a consultant, rather than a contractor, and  the fact that he does not carry out construction work, helps to preserve  his independence. It also facilitates a more open and transparent  relationship with the client than would generally be possible under the  design and build or traditional model.

In particular, with reports of swelling order books  and long lead times for certain components in the  construction industry (see article above), construction  management can offer noticeable programme  advantages for savvy developers. Whilst traditional  procurement and design and build both require the  project design to be largely (if not fully) developed  before the construction work is put out to tender, under  construction management, design, tendering and  construction overlap. This allows developers to steal a  march on competitors by early procurement on those  work packages with particularly long lead times whilst  the design of other packages is being developed.

Quality may also be improved, as early integration of  the design and construction processes means that  innovative solutions can be adopted more easily. The  professional team is directly appointed and retained  by the client, meaning that the client retains control  of design team performance. Late changes can be  made more cost-effectively by the re-programming or  redesign of later packages before they are let.

However, construction management does come with  a word of caution: to be successful, construction  management requires both experience and  commitment from the client and an appetite for  risk. To achieve the programme advantages of  construction management, the client must have  sufficient management resources (both in terms of  experience and time) to consistently steer the project  from inception to completion and must be decisive  in making decisions on the design. Indecision by the  client can lead to programme delays and, without  proper guidance, quality can suffer where there is no  single point of responsibility for the works.

The importance of the client’s appetite for risk cannot be  underestimated. Under construction management, there  is no fixed construction period or construction price,  and the client retains the risk of cost overruns and the  responsibility of the project team and trade contractors.

Whilst construction management is generally considered to be the least-adversarial procurement  route, where disputes or delay/disruption claims do arise, the lack of a single point of responsibility for  design and construction can be particularly problematic and costly. The client may find itself bringing claims  against a number of consultants and/or trade contractors in respect to a particular claim where no  one organisation can clearly be identified as responsible for a particular issue.

In short, careful consideration of the client’s needs, the  time and resources available to it and its appetite for  risk must all be carefully considered before adopting  the construction management route. Most crucial of  all - for those who need a fixed price, construction  management is best left for another day.