Although a site manager has contractual obligations to act in the best interests of the client, and while reputational issues also play a role, these motivations are often not as powerful as the financial rewards (and risks) generated under a flat-rate scenario. Construction management and other forms of ICE contracts are particularly suitable for complex projects that do not allow for the finalization of all aspects of the design in advance. With regard to the first point, a principal contractor for a lump sum commitment has two strong incentives to manage the delivery of commercial operators. The first is that it is directly responsible for any failure of the subcontractors. The second is that the benefit of a principal contractor for the project depends on the final amount he must pay to the contractors. The following graph illustrates the differences in contract relationships. If time, price transparency, flexibility and control are more important to you than price security and a single point of responsibility, an approach to construction management certainly deserves reflection. If you have other legal needs, please see all of our customizable service contracts. Other names for this document: Construction Project Management Agreement Are you looking for a new manager for your construction project? A construction management contract is a contract drawn up and signed by a site manager and the landowner. It allows you to define roles and responsibilities, deadlines, salaries and project details. We help you establish a construction management agreement that documents your goals and expectations.
Contractors who prefer construction management contracts are generally those who work on short deadlines for complex projects that want to maintain control and who want price transparency on the contract chain. A construction management contract is a form of “cost-plus” commitment. Construction management is a way of structuring an Early Contractor Involvement( For more information on ECI contracts, click here. Contractors will sometimes attempt to introduce financial incentives into a construction management contract to fill this gap. In traditional work management, the contractor, as the contractor`s mission officer, is responsible for managing and supervising the construction of the project on behalf of the contractor. 1. It is well suited for quick projects. The site manager may be appointed before the project is ready. The table below summarizes the main differences between a construction management contract and a flat order. The main advantages of a construction management contract are: If you want to know more about your different options, you can learn more about the different types of contract models. Construction management is very different from traditional lump sum work.
As the name suggests, a “site manager” is responsible for “managing” the work for the client – which is a completely different proposition to actually carry them out. A construction management contract is a kind of early Contractor Involvement (or “ECI”) agreement and differs in many respects from a conventional flat-rate model. This article explains the basics.