Project and construction management

Overview

The principal retains a project manager to control, manage and co-ordinate the project. The scope of work of the project manager is to oversee the design and construction of the project from conception to completion.

The principal engages the consultants and the contractors. Usually, the principal will not engage a single head contractor. Instead, it will engage directly under individual contracts the parties who normally are subcontractors to a head contractor. Under this method, those parties are called trade contractors.

By directly engaging each party individually, the principal retains control of the project, but communicates with all consultants and contractors via the project manager. The project manager is often the superintendent under the trade contracts.

This model is often used to deliver large commercial projects on a fast-track basis.

One variation of this model is a construction management or ‘package contracting’ model, where the principal separately engages design consultants and construction managers to manage the trade contractors. That means that the project manager is not responsible for the entire project but will be responsible for managing an individual trade contractor and its relevant design consultant.

Contractual relationships

Other delivery methods use a project manager or development manager in the role of principal’s representative.

Advantages

• Enables fast completion of the project – can proceed with early work packages while finalising design and the scope of other work packages that can be delivered later in time.
• The principal has more flexibility – can amend individual package contracts without the cost and time of amending a head contract.
• The principal retains control over the entire project life-cycle.
• The project manager provides expert advice in selecting designers/contractors as well as giving the principal practical advice throughout the building process.
• The project manager assists with budget and cost control.
• Useful where the project is large or complex or where the scope of work is uncertain at the outset.
• Promotes greater collaboration in delivery.
• Some standard form contracts are available.

Disadvantages

• Can be more costly from a contract administration perspective – engaging both a project manager and letting/managing multiple contracts.
• The principal assumes total project cost risk (there is no head contractor with a lump sum contract price for the project).
• There are more contractual interfaces to be managed.
• There is no single point of accountability (ie the principal may have to identify and pursue potentially a number of contractors).

Standard form contracts

AS 4915-2002: Trade contract
AS 4916-2002: Construction management
AS 4917-2003: Construction management trade contract general conditions
PM2: MBA Project Management Agreement.