Construction
Traditional, design and build, management contracting or construction management? How each route compares on cost certainty, speed, quality, design control and risk.
Kisiel Group
19 April 2021
What sort of developer are you? It sounds like an odd question, but it matters when choosing a procurement route for your next development. Which of these matters most to you?
Your style will influence the choice, but so will the type and complexity of the project, your experience, your team’s skills and your attitude to risk. The answer may differ between developments, especially if you run several at once.
Less common routes include measured term contracts (mostly for maintenance), partnering (long-term collaboration, often for large landlords) and the Private Finance Initiative (mostly public sector).
Match the risk and responsibility of your project to the route. Each has its own qualities and no route is best in every case.
Design and build: a fixed price for both design and construction gives cost certainty, though lump-sum tenders can be hard to compare if they are not detailed.
Construction management: you contract each package directly and competitive tendering keeps you in control of cost and quality, but it is time-consuming and needs experience.
Traditional: a set price for construction from a bill of quantities or drawings. Design changes are priced as variations.
Management contracting: you pay the package costs plus a management fee, and costs need to be kept within agreed parameters.
Design and build: good for speed. A single point of contact co-ordinates design and construction, so work can start quickly.
Construction management: can take time to set up, depending on how quickly you, the design team and your in-house team complete the design and let the packages.
Management contracting: can be lengthier, as you rely on the management contractor to put all the packages in place.
Traditional: the slowest to set up, as the design, specification and tender are completed before construction starts.
Traditional: the best option if quality is your priority, as you control the design and specification throughout.
Construction management: you control quality through each package and can adjust for changes.
Management contracting: similar, but control of each package rests with the management contractor.
Design and build: you rely on the contractor to meet your requirements. A good contractor may propose alternative materials but should maintain your quality standard.
Traditional: the greatest design input, as the design is completed and approved before tender, and can be adapted during construction.
Construction management: your design team creates the design and you then let the packages. Changes after work starts mean renegotiating contracts.
Management contracting: similar, with changes negotiated through the management contractor, which may add fees.
Design and build: you control only what is clearly stated in the Employer’s Requirements, then hand design responsibility to the contractor.
For more design control on design and build, a novated route lets your architect take the scheme through planning before being novated to the contractor to continue the design under the contractor’s management.
Construction management: very hands-on and requires development experience, as you negotiate every package.
Traditional: involved in the detail, especially design and specification changes.
Management contracting: less hands-on, as packages are managed by the management contractor.
Design and build: the least involvement. You set out what you want at the start and receive a finished product at completion.
Design and build: transfers most risk. The contractor is responsible for design, construction and defects.
Construction management: riskier, with no single point of responsibility, as you hold contracts with many parties.
Management contracting: also riskier, with contracts held between the management contractor and the trades.
Traditional: the developer carries the design risk, and split responsibility can lead to disputes over whether a defect is a design fault or poor workmanship.
Design and build suits fairly straightforward projects. For more complex work, such as buildings in conservation areas or listed buildings, the traditional route may suit better.
Any project can face delays from technical issues, material supply and trade co-ordination, and budgets can be stretched. The more knowledge and experience you bring, the more procurement options you have.
Experienced developers with a strong in-house team may prefer construction management on complex projects. If you are risk-averse, design and build passes more of the risk to the contractor.
Decide which route best suits your next development. It may not be the same as your last. There is no right or wrong answer, just a different path.
Tell us about it. You will speak to the people who make the decisions.
