How would you define contract management? This is how one member of the IACCM described it: However, these types of contracts can also involve penalties, i.e. lump sum damages, for the delayed completion of the work. In this context, early completion of the work could offer additional incentives to the client. A contract is the document that expresses the results of negotiations between the different stakeholders of a particular project. It defines rules and responsibilities and defines risks. According to the World Economic Forum, negotiation and coordination with others are two of the top ten skills needed to succeed in 2020 – and negotiation and coordination are also the best skills when it comes to defining and managing contracts. Add clarity, completeness and scope, and you get a great deal. There are several types of construction management contracts that can be signed between a client and a construction manager. A “CM as Agent” agreement is a contract in which the CM acts exclusively as a consultant and manager, while the client signs all contracts with the various professionals who will work on the website, as well as other purchases based on the advice of the CM.

Clients will sometimes try to introduce financial incentives into a construction management contract in an attempt to fill this gap. If time, price transparency, flexibility and control are more important to you than previous price certainty and a single point of responsibility, a construction management approach is definitely worth considering. 3. The client retains control at all times and benefits from the expertise of a site manager whose interests coincide with his own. 4. The contracting entity shall be less exposed in the event of a solvency event affecting the site manager (compared to a flat-rate main contractor). A complete construction contract can include up to ten different documents that define all the responsibilities and risks related to the different aspects of the project. Here are a few examples: Construction management is very different from the classic flat-rate order. As the name suggests, a “site manager” is hired to “manage” the work for the client – which is a very different proposition from its actual realization.

The owner assumes most of the risk by agreeing to pay for the time and materials spent on the construction. The contractor undertakes to complete the work for this fixed amount, whether the construction exceeds or falls below the agreed price. Construction cost management is a paid service in which the site manager (CM) is solely responsible to the owner and acts in the interest of the owner at each stage of the project. The site manager provides unbiased advice on topics such as: Simply put, contract management is about defining resources, relationships, and risks. In our previous blog post, we introduced two common types of construction contracts – unit prices and fixed or fixed price contracts. In this article, we focus on two other construction management contracts – time, material, and cost plus contracts. For clients or buyers who manage construction, it is invaluable to identify the types of construction contracts that will be used and how this will affect the overall price of the final project. Because of the importance and value of quick reference and disclosure for this type of construction management contract, we have dedicated these two blog posts to the topic.

1. It is well suited for accelerated projects. The site manager can be provisioned before the design is complete. Project meetings are held at regular intervals to discuss progress on the site and any concerns or questions. The discussion and decisions made at the meeting should be documented. [2] Lump sum contracts are used in particular when the scope of work and the timetable are agreed by both parties. If you want to know more about the different types of subcontracting models used in the construction industry, you can read more about them here. A construction management contract is a type of early contractor participation agreement (or “ICE”) and differs in many ways from a traditional flat-rate model. This article explains the basics. The first option is when the owner signs individual commercial contracts with subcontractors.

In this case, the customer processes all payments to the subcontractor for the work performed. To ensure that the assignment of responsibilities to the CM is transparent and understandable to both the CM and his client, the details of a GAC are often established and agreed under the auspices of a recognized and standardized third-party framework. For example, the Canadian Construction Documents Committee offers standardized contracts for CM as an agent and CM at risk (CCDC 5A and CCDC 5B, respectively). While a site manager may be contractually obligated to act in the best interests of the principal, and while reputational issues also play a role, these motivators are often not as strong as the financial rewards (and risks) that result from a general scenario. .