Architecture / June 11, 2018 / Oriane
The payment arrangements adopted on a contract directly affects the level of risk borne by the contractor. Where the contract is let on the basis of a drawings and specification lump sum the contractor assumes the risk for both the quantity and pricing. In lump sum contacts based on bills of quantities and remeasurement contracts the contractor assumes the risk for the pricing only. With reimbursement contracts the client assumes the risk for the quantity and pricing. The payment arrangement, therefore, directly motivates the contractors efforts to carry out the work in an efficient and economic manner. This in turn has a major impact on the final price paid by the client.
This is where the contractor works alongside or within the design team providing a construction management service. The management contractor does not undertake either the design or the direct construction work. The physical construction is carried out by specialist subcontractors, package contractors. There are two main forms of this approach: Management Contracting where the contractor employs the subcontractors and Construction Management where the subcontractors are employed directly by the client and the project is managed by the construction manager - there is no actual main contractor. Management procurement routes are associated with fast moving, complex construction projects. The early appointment of manager within the design team allows the design and construction operations to be fast-tracked while also ensuring that the required quality standards are delivered. These projects, however, tend to be expensive. Figure 1 sets out a summary of the advantages and disadvantage of various procurement approaches which may be of use in meeting project objectives.